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Attachments: TEB: Random Entry - Coin Toss Great with R.R.R.
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TEB: Random Entry - Coin Toss Great with R.R.R.

  • #101
  • Jul 22, 2014 11:18pm Jul 22, 2014 11:18pm
Hi TEB63 (is that your age?, never mind)

...stick at it, have you seen Van Tharp's study exactly like this? He ran program that flipped a coin to enter the market and used a trailing stop of a multiple of the average true range. He claimed it was successful. It simply hammered home to me the importance of aiming for some 5R or even 10R trades.

Also William Eckhart states the following: "The human tendency to always select the comfortable choices leads most people to experience worse than random results (less than 50/50)." I can see where he's coming from, I see it all the time....
  • #102
  • Jul 23, 2014 2:45am Jul 23, 2014 2:45am
Quoting Hyperion
Hi TEB63 (is that your age?, never mind) ...stick at it, have you seen Van Tharp's study exactly like this? He ran program that flipped a coin to enter the market and used a trailing stop of a multiple of the average true range. He claimed it was successful. It simply hammered home to me the importance of aiming for some 5R or even 10R trades. Also William Eckhart states the following: "The human tendency to always select the comfortable choices leads most people to experience worse than random results (less than 50/50)." I can see where he's coming...
you make an excellent point Hype. Most traders trade technically, that requires many choices, humans suck at choices and end up with a 50% win rate (about the same if they used a coin toss funnily enough), they also made a bad choice of RR, usually too low and end up going sideways or slowly dwindling their account and sanity to zero.
tradewith60
  • #103
  • Jul 23, 2014 3:25am Jul 23, 2014 3:25am
I would strongly suggest also reading the book "Fooled by Randomness", interesting read.

Funny how when people see a random sequence they think its non random, bit like roulette or even market patterns. In theory a coin is a 50/50 trading system, however you never know how far a move will occur.

Bit like a 25/75 system, as long as when the 25% of moovers actually MOVE then you are ahead and just have to work it. With a straight random coin toss be prepared for a big draw down but overall you should be ahead if risk reward is at an acceptable level.

Yes I have asked the same questions and tried with simulation and real money and am still asking the same questions???? Bollinger Bands can add some more statistically probabilities but even then the markets are the markets. Cut your losses and let your profits run!
  • #104
  • Jul 23, 2014 5:01am Jul 23, 2014 5:01am
Quoting TEB63
Hi Guys : I wanted to have some fun and show, what I believe is R.R.R, (Risk to Reward Ratio) is more important a systems. Random Entry - Coin Toss Great with R.R.R. Trying to predict whether a currency pair will go up or down is almost impossible. Some say we would have the same chance of success if we tossed a coin, and put a BUY trade if it came up heads and a SELL trade if it came up tails. Though I do not believe this, I do believe GOOD S.E.T. (Stop/ Entry/Target) Rules & R.R.R. is more important. It's all about money management (M.M.)....
Do you use any specific indicator for the SDZ and RN?
And what do you mean by SMZ? Or is it just a misspelling?
What time zone do you live in? Though with this method it shouldn't even matter, am i right?
Sorry for the stupid questions :-) The idea seems nice, I will start testing this this evening!

Have a nice one, everybody,

Emil
  • #105
  • Jul 23, 2014 5:15am Jul 23, 2014 5:15am
Quoting TEB63
Hi Guys : I wanted to have some fun and show, what I believe is R.R.R, (Risk to Reward Ratio) is more important a systems. Random Entry - Coin Toss Great with R.R.R. Trying to predict whether a currency pair will go up or down is almost impossible.
If you remember Tom Basso made money on a coin toss strategy in Trade Your Way To Financial Freedom by Van Tharpe. If I remember rightly he was long term trend follower and for the test they used 3 x atr as a stop.
  • #106
  • Last Post: Jul 11, 2018 3:26am Jul 11, 2018 3:26am
I dont think its a 50/50 probability that price will go up 40 pips (take profit) or down 20 pips (stop loss). Its not a binary situation, price can up 35 and then down 55 and you get stopped out. Given that price zig zags its a lot more likely to reach 20 pips in one direction first than it is 40 pips in the other. Maybe when you toss the coin reverse the trade and go for the stop loss! Small but more frequent profits??
If you have equal take profit and stop loss levels say 20 pips you still lose either way on the spread.
Maybe the more mathematically inclined can work this out for the rest of us.
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