Do you think statistics work in trading? | Page 6 | Forex Factory

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Do you think statistics work in trading?

  • #101
  • May 15, 2014 8:03am May 15, 2014 8:03am
Thank you shellsnail.
You have a much more rounded view of trading than most.
It is a business like any other. Using the same constructs as other businesses will lead to better results.
Cheers H
  • #102
  • May 15, 2014 8:27am May 15, 2014 8:27am
Short answer: Yes.

It can help you find your "edge", or trading mantra or whatever you want to call it.

Most people(myself included) don't have a handle on what type of Statistical study to run on a set of data or for that matter how to interpret the results so yeah most of the time you will find the answer to be NO.

There is a reason why statistics is a field of study at colleges et al. Whether one can make a call on whether statistics failed them or whether the study they conducted did not have the right input or the results were not interpreted the way they should have been is subjective.
  • #103
  • May 22, 2014 5:17pm May 22, 2014 5:17pm
Ya. I think it works. Otherwise all the forum, indicator and all the expert traders would not talk on this and also will not waste their time on this. But I can not assure that strategy will work all the time. I think if you can analysis it properly then it will work 70% properly. Some rare case are too rare. You will be able to know it with MACD indicator which is too good for all kind of trader.
  • #104
  • May 24, 2014 8:45am May 24, 2014 8:45am
Quoting wookey
Hello, I am a mathematician, so I like when every action is explained mathematically. I use various statistics in my trading systems starting from support/resistance (to see which level statistically more accurate) to validating patterns (for instance if a certain kind of engulfing patter has more probability to work). My systems have moderate success trading automatically. So I am pretty happy with them and math behind them. However few weeks ago my friend, also a math graduate, pointed out to me that his research shows that statistics does not...
Ok, some valid questions. Some statistical analyses suggest that the market movements appear to be not so different from a coin flip, say 50-50. That's fine. Your conclusion that it means it IS a coin flip and we can't find an edge is not a valid conclusion.

Here is a simple example. A midwife delivering babies says that it's about 50-50 boys or girls, completely random, no way to predict. She even has statistical data to show that it is around 50-50. One reaction is to say, ok it's all random nothing I can do. Another reaction is to say, well it may be random, but can I know the result earlier. So we build machines and a few months into pregnancy we can determine the sex of the baby. In theory, it coulod be determined soon after conception. Yet the statistical data of 50-50 isn't wrong.

As for statistics applied in the market, there are tons of hedge funds doing this. In fact the most successful hedge fund there is RenTech are also the most mathematical in the way they operate.
  • #105
  • May 24, 2014 2:20pm May 24, 2014 2:20pm
The fact is, without the essentials: knowledge, mathematics, statistic, history, internet connection and a pc... you can not do well in trading.

But the question is, is having all of that enough to do well?

Most of the time not, you do need other variables, and some of those include how you deal with random events, as it becomes important to survive, more then past data and "infallible" formulas.

There is no holy grail, only people that know how to use their qualities and skills on their best interest... and people who don't.
  • #106
  • May 24, 2014 6:13pm May 24, 2014 6:13pm
Hi all,

For me personally, I have to use statistics in order to be profitable. So the answer to the thread question is a resounding YES!.

I didn't become a consistently profitable trader, until I became very disciplined with a statistical rules based approach that includes optimized TP/SL, Risk/Reward Ratio, filtering for trending vs range-bound price action, Time of Day, etc.

Great trading to all,
Ric
  • #107
  • Last Post: May 24, 2014 8:00pm May 24, 2014 8:00pm
Quoting shellsnail
{quote} .........? No strategy is profitable, only the trader is. Statistics are useful to analyse the trader's behaviour and outcomes of his behaviour - ......... Did you ever hear businesses talk about strategy as if the organisation's execution of the strategy doesn't matter or as if changing external conditions doesn't matter? It's weird that when it comes to trading we seem to think that everything can be predictable and made systematic when in fact a lot of it is dynamic and changing all the time... Trading is in the real world, .............
Right on the money.
And I sincerely hope this makes you truck loads of money.
Cheers, H
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