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Pure Risk to reward trade System - 1 to 3- Totally random entries

  • #121
  • Jul 30, 2012 8:13pm Jul 30, 2012 8:13pm
Quoting Ati Baia
half the time is 50Pips Loss/ half the time is 150pips profit.

Well I botched that up. That's what I get for trying to think while women's beach volleyball is on.
  • #122
  • Jul 30, 2012 9:01pm Jul 30, 2012 9:01pm
Trade 13 Mon, July 30, 9:58pm Gpbusd buy 1.5725
dice rolls where 6 and 3
  • #123
  • Jul 30, 2012 9:07pm Jul 30, 2012 9:07pm
Quoting spyderman
But aren't you negating the force of all those by the fact that from the beginning you are randomizing your entry.

It may be true that you have a trend, but if you enter on a coin flip your odds are still 50/50 of entering the right way. Same with the other reasons I would think.

Let's say we have a pair that always goes one way 158 pips then reverses and goes the other way 50 pips. Let's say further that we know exactly when those swings start and finish. But if we flip a coin we're still going to lose half the time.

the point is (and this is why card games do not really apply) we are trying to get into a trend - ride a wave
rather then cards odds I think it would be better to think of fly fishing
you cast and bait in and out -win or lose the bait is the cost of the cast not the odds of the game
  • #124
  • Jul 30, 2012 9:10pm Jul 30, 2012 9:10pm
Quoting Ati Baia
half the time is 50Pips Loss/ half the time is 150pips profit.

To my understanding: TEB63 is randomizing the entry in a "none random market".



If approx. 200 pips are the average of a move in one direction than he could be profitable.

Not so sure how it works out in action: actually in such case one might try to open a trade long and one short of the same pair and just let them run
"To my understanding: TEB63 is randomizing the entry in a "none random market".

you got it !!
  • #125
  • Jul 31, 2012 2:47am Jul 31, 2012 2:47am
The math is nice, but useless if you do not know the variables. You say "Let's say you have a 40% chance of hitting your Tp of 150pips before hitting your SL of -50pips", but you have no idea if this value is correct or not. So that assumption inserted in the equation changes into a fact?

I like this experiment. Go on Teb!

John

Quoting Donko
Alright had to register to comment on this atrocity to basic game theory. Just for a little background I'm brand new to forex and came over from online poker after the US DoJ got they're panties in a twist over online gambling. One of the things that really interested me in forex is how similar it is to zero sum games such as poker. Anyways on to the thread.

Let's establish some common ground first:

1. Forex trading ...
  • #126
  • Jul 31, 2012 5:36am Jul 31, 2012 5:36am
Quoting TEB63
you have a trend which you do not have in games
That is not really correct. You do have trends in games and other random events.
Just try this "Random Chart Generator" : http://www.forexfactory.com/showthre...50#post4686250
Personally i have not tested the one in that link so i am not sure how well it works but i have tested a couple of others. If the one in the link do not work just Google and you will find others.
The result from generators like that are 100% random so it have absolutely nothing to do with any market but still you can not tell the difference. If you look at a random chart like that it can just as well be EURUSD. You will see trends, ranging, Support/Resistance areas, and all the well known candlestick patterns and chart patterns like head and shoulders, triangles and so on.

For your experiment to be profitable you need trend all the time, or at least most of the time, but the markets are not trending most of the time and even those markets that do trend well you will see the trends change and the time of changing can last just as long as the trend so there you will have losing periods that last as long as the winning periods. This was simplified to make my point but anyway...

Arctic4x
  • #127
  • Jul 31, 2012 6:07am Jul 31, 2012 6:07am
Quoting Arctic4x
That is not really correct. You do have trends in games and other random events.
Just try this "Random Chart Generator" : http://www.forexfactory.com/showthre...50#post4686250
Personally i have not tested the one in that link so i am not sure how well it works but i have tested a couple of others. If the one in the link do not work just Google and you will find others.
The result from generators like that are 100% random so it have absolutely nothing to do with any market but still you can not tell the difference. If you...

this is silly

a card game- if there is no cheeting is totally random.
you may see patterns but even they are randon
I do, do math - but I am not going to get into which
math theory is right. I tend to use pure mathematics but that is me.

all that mathers is 4x is a lot A LOT less random then poker and any math that works with poker will not work with 4x more to the point all the effects are at the table in pokerin 4x you have no way to know most of them and then you have the trend - maybe you have a "little" in cards I have no idea where it would come from but in FX it is a "big" trend so you comparing "apples" and "cars"

cheers
  • #128
  • Jul 31, 2012 6:36am Jul 31, 2012 6:36am
Quoting TEB63
a card game- if there is no cheeting is totally random
Yes correct
Quoting TEB63
you may see patterns but even they are randon
Yes of course. That was partly my point. That tells how similar the markets are to random events
Quoting TEB63
4x is a lot A LOT less random then poker
Probably. Personally i agree with you on this but a lot of really smart people that study this are not so sure. Anyway even if it is not random i will say it acts and looks like random. Have you tested the random generator in my last post? Whatever you think of it you will probably find it interesting
Quoting TEB63
and then you have the trend - maybe you have a "little" in cards I have no idea where it would come from but in FX it is a "big" trend
I am not really talking about cards but any constantly repeating random events and if you study it a little you will find that the the trends are not just a "little" as you say. They are just as big and clear as in the markets.

Arctic4x
  • #129
  • Jul 31, 2012 6:47am Jul 31, 2012 6:47am
Trade 14 tue July 31, 7:40 am usdusd sell 1.2275
dice rolls where 1 and 6
  • #130
  • Jul 31, 2012 7:11am Jul 31, 2012 7:11am
Quoting Arctic4x
Probably. Personally i agree with you on this but a lot of really smart people that study this are not so sure. Anyway even if it is not random i will say it acts and looks like random.

Arctic4x
I would not agree

If you move to day or week chart there is no random it move as it should
It changes as new information comes. To those who do not understand this it may look random, but if you know the rules it is not.

Ie. If you are driving and you do not know the rules
You see people moving and then others are stopped it may look random -
If you do not know what stop signs and stop lights are for.
But in fact driving is not random
(Unless you drive with my wife and it may undo everything I say lol)


Below the day chart I would again say you have no random in fact anything but - you have the other way - you have total manipulation of the markets ie. stop hunting – making a market etc,

I would say in fact the 4x is never random – never- someone or something is always in control.

Rather than the random thing
Rather think of it being run by elephants and we just try to be a flee on one of the elephants

My thoughts
  • #131
  • Jul 31, 2012 7:33am Jul 31, 2012 7:33am
Quoting TEB63
If you move to day or week chart there is no random it move as it should
If someone post two charts with no info about what market and time frame it is and tell me one of them is 30min tf and the other is a daily chart and ask if i can tell what chart is the daily i would not be able to do that. It would be a guess. Maybe most traders can do that? I don't know but i sure can not...
Are you saying you can tell the difference?

Arctic4x
  • #132
  • Jul 31, 2012 9:31am Jul 31, 2012 9:31am
this is "wrong" in common sense.

if what u said below is true, why not you focus trading daily/weekly chart? due to the spread cost taking less % in daily/weekly timeframe and your "non-random" reading of the chart, you should get incredibly rich right away.

Quoting TEB63
I would not agree

If you move to day or week chart there is no random it move as it should
It changes as new information comes. To those who do not understand this it may look random, but if you know the rules it is not.
My thoughts
  • #133
  • Jul 31, 2012 9:39am Jul 31, 2012 9:39am
the gist of donko's post is simply

EV = chance2up * (chance2win * 150 + chance2lose * -50) + chance2down * (chance2win * 150 + chance2lose * -50)

because you do coin-flip:
chance2up = 50%
chance2down = -50%

now if in bullish and bearish market, the chance2win and chance2lose stay same. how come EV is NOT zero?

it is ridiculous that many readers disregard the answer to this question/equation but saying crap like "randomizing" or "non-random"

simply say: if this EV equation is wrong, then TEB's system is promising, go on testing.

otherwise, crap, move on to next system.

people like to dream......

Quoting Donko
Still with me? let's make up some numbers to hammer this home. I'll even throw you a bone and give you favorable odds (at least according to the way you claim the system works). Let's say you have a 40% chance of hitting your Tp of 150pips before hitting your SL of -50pips. If we throw all this along with your random direction pick (ie 50/50) into an eq equation we get:
ev= (.4)(150)+(.6)(-50)=30pips, great we made money, except we left one major variable out... the buy sell choice which is a 50/50. If we add that in we get [b][color=red]ev= ((.4)(150)+(.6)(-50))+(-1(.4)(150)+(.6)(-50))=0...
  • #134
  • Jul 31, 2012 10:48am Jul 31, 2012 10:48am
Quoting charvo
this is "wrong" in common sense.

if what u said below is true, why not you focus trading daily/weekly chart? due to the spread cost taking less % in daily/weekly timeframe and your "non-random" reading of the chart, you should get incredibly rich right away.

the people who make money do do day and over
do you think the banks would trade on a 5 min chart
no - at news maybe - but other no

the issue for day charts you need very big stops and targets
so you need a lot of money to make a lot of money

but the banks all know where money is going
again if things change they will change where they are going
lol
  • #135
  • Jul 31, 2012 10:49am Jul 31, 2012 10:49am
Quoting charvo
the gist of donko's post is simply

EV = chance2up * (chance2win * 150 + chance2lose * -50) + chance2down * (chance2win * 150 + chance2lose * -50)

because you do coin-flip:
chance2up = 50%
chance2down = -50%

now if in bullish and bearish market, the chance2win and chance2lose stay same. how come EV is NOT zero?

it is ridiculous that many readers disregard the answer to this question/equation but saying crap like "randomizing" or "non-random"

simply say: if this EV equation is wrong, then TEB's system is promising, go on...

I do not think this will make a big a mount of money
esp. this time of year.
  • #136
  • Edited 12:04pm Jul 31, 2012 11:29am | Edited 12:04pm
Quoting TEB63
the issue for day charts you need very big stops and targets
so you need a lot of money to make a lot of money
I have heard this many times. Even my "mentor" from the past used to say this and he was (is) a pro trader for many many years. So you are not the only one saying this so i guess there have to be some truth in it.
Anyway for some reason i can not really see why it is like that.
I use % of my acc for risk and reward (stop loss and targets) so the way i see it things work the same way if i scalp and my SL is 5 pips or if i am trading a very high TF like maybe weekly and the SL is hundreds of pips. I would still risk the same amount of Dollars. I do not trade that high TF but the point is IF i did i would still risk the same pr trade.
Maybe what you mean is that you will make less money because of less number of trades? I have heard that argument many times before but then just trade more pairs. If you are scalping then things happens to fast to monitor a lot of pairs and also the the spread will be a big factor because of small targets so maybe the only pair with small enough spread is example EURUSD anyway.
But if you trade example daily you have no problem monitor as many pairs as you want and because of big SL and targets the spread on most pairs will not be a problem.
Maybe a very active scalper with a high frequency system that use heavy compounding compared to a position trader that trades daily charts and higher will be able to make a small acc grow faster and more? I don't know... I think many other factors are just as important and would often even work the other way..

Arctic4x
  • #137
  • Jul 31, 2012 12:56pm Jul 31, 2012 12:56pm
Does this work when you change the absolute value of the TP and SL but keep the RRR at the same 3:1 rate and the lot size constant? I think theoretically it should but may not over a shorter time span. Any thoughts?
  • #138
  • Jul 31, 2012 2:31pm Jul 31, 2012 2:31pm
i agree,

in fact, high TF requiring larger SL and more risky is total BS.

one of consistently-quoted crap.

show me the proof otherwise......

On the other hand, if using a fixed lotsize, trading high TF saves significantly on spread cost than lower TF, because spread cost vs TP/SL is much smaller.

Quoting Arctic4x
I have heard this many times. Even my "mentor" from the past used to say this and he was (is) a pro trader for many many years. So you are not the only one saying this so i guess there have to be some truth in it.
Anyway for some reason i can not really see why it is like that.
  • #139
  • Jul 31, 2012 3:22pm Jul 31, 2012 3:22pm
Quoting 60minuteman
if they're totally random entries what are you hoping to learn...
That random entry makes money...itīs been proven before...makes very little though....better than loosing...like 95 % of so called experts that loose money, and time, and more money buying expensive courses, books and software...
  • #140
  • Jul 31, 2012 3:40pm Jul 31, 2012 3:40pm
[quote=TEB63;5866176]



I think most FXer spend all their time on systems when they should get to know RRR and MM

Totally agree
postion size, meaning every time you risk the same.
Flip a coin and itīs a pure 50 /50 chance..anyone who does not agree "thinks " they can predict the future ...at any given moment, nobody "knows" if the market will go north or south...whatever your indi says.

BUT: the moment you put a SL, Trailing stop, etc...THEN itīs not 50/50 anymore...the closer the STOP, you will be stopped more often...the farther the TP ...the same....and you are back to the beginning...sometimes it will work...maybe after 100 trades...next 100 trades you might loose...Itīs been tested before...and with a reasonable trailing stop it tends to make little money....since you limit your loss and let profits run....which is the golden rule of trading...
Forex is random but it trends beautifully.
I would change TP to trailing an adjusted, comfortably distant (dayly adjusted) ATR...you might hit some monster winners...
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