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High probability methods

  • #1
  • First Post: Feb 11, 2012 5:17pm Feb 11, 2012 5:17pm
I want this thread to be focused on how to..

1. Create high winning probability methods.
2. Sharing high probability methods.

High probability meaning that you should be able to if following the rules correctly winning 70% or more of your trades.


This is my input to the thread..
normally you use a risk reward ratio like.. risk 1 and get 3 reward..
So you can have a low winning probability and still make money.

So to get a high winning probability.. do the opposite.. risk more to gain less. (Not sure on what kind of ratio though.)

But I would like to know if you can get a higher winning probability with help of method instead of risk-reward ratios.
  • #2
  • Feb 12, 2012 9:06am Feb 12, 2012 9:06am
Damn, No replies yet?

Quoting Proffesor Pi
So to get a high winning probability.. do the opposite.. risk more to gain less. (Not sure on what kind of ratio though.)
I think the kind of ratio would be something like 1:1 or 2:3.

But..

With my system I traded with before I always placed my stop loss (risk) where.. if reached.. the trade was most likely not going to go the direction I wanted it to. So placing it further away just seems stupid and pure gamble because your analyze tells you that it's not going to your direction.

Also, The traders I've seen that have OVER 90% winning probability (including breakevens) they have said that they use risk:reward ratios of 1:2 and 1:3.

So I know it has to be something about their method that gives them that high winning probability.. not about the risk:reward ratio.
  • #3
  • Feb 12, 2012 9:28am Feb 12, 2012 9:28am
Quoting Proffesor Pi
Damn, No replies yet?



I think the kind of ratio would be something like 1:1 or 2:3.

But..

With my system I traded with before I always placed my stop loss (risk) where.. if reached.. the trade was most likely not going to go the direction I wanted it to. So placing it further away just seems stupid and pure gamble because your analyze tells you that it's not going to your direction.

Also, The traders I've seen that have OVER 90% winning probability (including breakevens) they have said that they use risk:reward ratios of 1:2 and 1:3.

So...
R:R and the method are all one and the same. You may have a great entry system that moves 1:1 in your favour but then moves back and stops you out. Once you know this you can take advantage of it.

First you need to find a system that gives good entry signals though
  • #4
  • Feb 12, 2012 9:46am Feb 12, 2012 9:46am
Quoting willf
R:R and the method are all one and the same. You may have a great entry system that moves 1:1 in your favour but then moves back and stops you out. Once you know this you can take advantage of it.

First you need to find a system that gives good entry signals though
Not only entries but exits as well and moving the sl and managing the trade.
Entries alone are useless if you don't know how to do the rest.

And that's what I thought a method was.. extries, exits, stop loss etc.

System = Everything basically.. It includes the method and money management, position sizing, etc.
  • #5
  • Feb 12, 2012 1:19pm Feb 12, 2012 1:19pm
Quoting Proffesor Pi
Not only entries but exits as well and moving the sl and managing the trade.
Entries alone are useless if you don't know how to do the rest.

And that's what I thought a method was.. extries, exits, stop loss etc.

System = Everything basically.. It includes the method and money management, position sizing, etc.
Think you ready to move on from the Rookie forum. Even some experienced traders still think its about winning percent or entry rules.
  • #6
  • Feb 12, 2012 2:23pm Feb 12, 2012 2:23pm
Quoting CodeMeister
Think you ready to move on from the Rookie forum. Even some experienced traders still think its about winning percent or entry rules.
Hmm, Thanks.. But Even if I might be able to make solid posts on trader section, the questions I'm asking feel very rookie-ish right now.

Winning percent is important but it's not something you can work into your system when creating it.. since it's a stat that's resulting from an extreme number of trades you've done with your system.

So I really made this thread hoping someone can prove me wrong or share a completed system available to public or (wishful hoping) some info on "something" you need to implement into your system that differs from "normal" systems that you need if you want to reach those insanely high 70-99% winning probability systems.

Also, What do you think is a solid number of done trades before you can put a somewhat true winning percentage to it?

That's really what is stopping me.. I need high winning probability since I'm going to do some risky high "gambling" trades.
And reason I want High Risk is because I don't want it to take lots of years.

So since I want it to go "fast" I don't think I have time to create several different systems and test them all for thousand of trades to find out if they have a high winning probability or not... I'm looking for a shortcut.
Hope someone can help me out with that!
  • #7
  • Feb 12, 2012 2:27pm Feb 12, 2012 2:27pm
Unfortunately there is no shortcuts in this industry. In my opinion trading need lot of screen hours.
  • #8
  • Feb 12, 2012 2:31pm Feb 12, 2012 2:31pm
Quoting Proffesor Pi
Hmm, Thanks.. But Even if I might be able to make solid posts on trader section, the questions I'm asking feel very rookie-ish right now.

Winning percent is important but it's not something you can work into your system when creating it.. since it's a stat that's resulting from an extreme number of trades you've done with your system.

So I really made this thread hoping someone can prove me wrong or share a completed system available to public or [color=Magenta](wishful...
Good luck with that

It took me around 3 years to be profitable, 1000's of screen hours and lots of patience. I would be very surprised if you do it any quicker.
  • #9
  • Feb 12, 2012 2:35pm Feb 12, 2012 2:35pm
Quoting willf
Good luck with that

It took me around 3 years to be profitable, 1000's of screen hours and lots of patience. I would be very surprised if you do it any quicker.
What is your definition of being profitable?
Because if it's just going + then I am also profitable.
And it took me about half a year.
  • #10
  • Feb 12, 2012 2:41pm Feb 12, 2012 2:41pm
Quoting Proffesor Pi
What is your definition of being profitable?
Because if it's just going + then I am also profitable.
And it took me about half a year.
Profitable means a positive net return per month consistently in my opinion.

If you are profitable then congratulations but why start this thread? What's wrong with what you are doing?
  • #11
  • Feb 12, 2012 2:48pm Feb 12, 2012 2:48pm
Quoting willf
Profitable means a positive net return per month consistently in my opinion.

If you are profitable then congratulations but why start this thread? What's wrong with what you are doing?
I like that definition.

But my problem is that I don't have large enough capital for low risk trading and I have a low winning probability.

I would like to start doing some high risk trading but it would be certain suicide with my low winning probability.

I want a high winning probability so when I start making high risk trades I won't blow my account up before I get a winning trade cause of a low winning probability.

So I would have to scrap the system I got right now for a new one with high probability if I want to switch to high risk.
  • #12
  • Feb 12, 2012 2:53pm Feb 12, 2012 2:53pm
So what's your R:R and % of winners to losers? Your starting capital would be good to know but if you don't want to post that I understand.
  • #13
  • Feb 12, 2012 3:17pm Feb 12, 2012 3:17pm
Quoting willf
So what's your R:R and % of winners to losers? Your starting capital would be good to know but if you don't want to post that I understand.
I make sure my R:R is around 1:3 at least.. Then I let my profits run while I keep moving the SL.
I won about 40% of the trades.. I haven't traded a long time so I probably have a big standard deviation number.
Also keep check on possible profit targets and am extra cautious on exiting the trade on them if there are signs of turning around.

Traded for about 2-3 months just and skipped a week here and there due to laziness and since the money you get from
low risk trading with just a few thousand is just not motivating enough. Made around 1-15 trades per week.


Not sure how this info will help though?
  • #14
  • Feb 12, 2012 4:00pm Feb 12, 2012 4:00pm
Quoting Proffesor Pi
I make sure my R:R is around 1:3 at least.. Then I let my profits run while I keep moving the SL.
I won about 40% of the trades.. I haven't traded a long time so I probably have a big standard deviation number.
Also keep check on possible profit targets and am extra cautious on exiting the trade on them if there are signs of turning around.

Traded for about 2-3 months just and skipped a week here and there due to laziness and since the money you get from
low risk trading with just a few thousand is just not motivating enough. Made around 1-15 trades...
If your R:R is consistently 1:3 then I don't see a problem. If it's not then yes you need to increase your winning % because 40% would be too low. But based on these figures here's what I see.

5 Trades per week (Average)
Risk 1% Per Trade
Reward 3% Per Trade
40% Win Rate
Winning Trades= 6%
Losing Trades= -3%
Net Gain= 3% (Per Week)

Based on $1000 Starting Balance after 12 months you could compound this to $4,662.54 and after 24 months $21,739.28 and that's just risking 1% per trade.

If you increased your risk to 2% per trade then compounded you would have $21,597.23 after 12 months and $466,440.17 after 24 months.

Of course this is just what could happen and it makes a lot of assumptions that you can consistently achieve a 40% win rate with R:R of 1:3 but if the possibility of making half a million dollars in 2 years isn't motivation enough then I don't know what else to say.


Good luck
  • #15
  • Feb 12, 2012 4:18pm Feb 12, 2012 4:18pm
Quoting willf
If your R:R is consistently 1:3 then I don't see a problem. If it's not then yes you need to increase your winning % because 40% would be too low. But based on these figures here's what I see.

5 Trades per week (Average)
Risk 1% Per Trade
Reward 3% Per Trade
40% Win Rate
Winning Trades= 6%
Losing Trades= -3%
Net Gain= 3% (Per Week)

Based on $1000 Starting Balance after 12 months you could compound this to $4,662.54 and after 24 months $21,739.28 and that's just risking 1% per trade.

If you increased your risk to 2%...
Hmm, Those numbers look insane but the calculation seems very good too.
Wish I traded more than I did so I could bring some more accurate stats.

But you've convinced me at least to dig up the old system and give it another try
  • #16
  • Edited 7:23pm Feb 12, 2012 7:12pm | Edited 7:23pm
Quoting hariusa72
Unfortunately there is no shortcuts in this industry. In my opinion trading need lot of screen hours.
Very true. Malcolm Gladwell has suggested 10,000 hours as the amount of time required to master a skill. Definitely, you need 1000 hours hands on.
  • #17
  • Feb 12, 2012 8:01pm Feb 12, 2012 8:01pm
Proffesor, the questions you are asking demonstrate you are new. Willf said it took him 3 years. That is about average. Go demo every system and indicator you can find for 2 to 3 years, then the light will go on hopefully, then trade small lots of real money and adjust from there. Like Willf said there is no short cut, no holy grail, no magic indy. Study, study study is the only way. A bachelors degree takes 4-5 years. This is the same learning curve. Hoppwood said trading is more like a train wreck - my sentiments exactly. There are a few sharp tacks sharing their info in FF. Subscribe to their threads, try their systems, methods, etc. That alone will take you 3 years - but you will learn what you need to know. Hope this helps.
  • #18
  • Feb 12, 2012 8:39pm Feb 12, 2012 8:39pm
Quoting JumpJack
Proffesor, the questions you are asking demonstrate you are new. Willf said it took him 3 years. That is about average. Go demo every system and indicator you can find for 2 to 3 years, then the light will go on hopefully, then trade small lots of real money and adjust from there. Like Willf said there is no short cut, no holy grail, no magic indy. Study, study study is the only way. A bachelors degree takes 4-5 years. This is the same learning curve. Hoppwood said trading is more like a train wreck - my sentiments exactly. There are a...
I did post this in rookie section because I also think this question seems a bit rookie-ish.
But you shouldn't judge people on how long they've traded.. Even though I've only traded for 2 months.. 4 months study before.. I went positive those two months and I know more about trading than many experienced traders that have traded for years which can be seen by stuff they say.

Shortcut = Someone that wants to help out or share their system or parts of it or just anything to help along... the more help the better the shortcut is.
  • #19
  • Feb 12, 2012 8:48pm Feb 12, 2012 8:48pm
Prof, if you have been at this only 4 to 6 months, you dont know what you are doing yet. You might think you do but i assure you dont. I dont want to say much more about this - dont have the time. Just read other comments on other threads about this and they will confirm my suggestions. and what ever you do, do not risk real money until you have demo for couple years and tripled a few of your accounts with the system you prefer. JJ
  • #20
  • Feb 12, 2012 9:22pm Feb 12, 2012 9:22pm
Quoting JumpJack
Prof, if you have been at this only 4 to 6 months, you dont know what you are doing yet. You might think you do but i assure you dont. I dont want to say much more about this - dont have the time. Just read other comments on other threads about this and they will confirm my suggestions. and what ever you do, do not risk real money until you have demo for couple years and tripled a few of your accounts with the system you prefer. JJ

Listen to him prof he is good in explaining 2 to 3 months is = none in experience once you start to loose trades then it will finally frustrate you and you know what happens don't think you can acquire fx in 1 or two years it needs lot of dedication on full time basis and lots of screen hours to manage with and one final day all the new traders will understand this theory
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