variance as a target | Forex Factory

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variance as a target

  • #1
  • First Post: Edited Jun 25, 2017 12:12pm Mar 6, 2016 6:33am | Edited Jun 25, 2017 12:12pm
Variance from the mean is as a target. hmmmmmmmmmm . bang. take profit. bang. take profit. bang. take profit. ................... Boom, that's it. Every time price varies from the mean there is profit to be had. Every Single Time. Well, that is the theory any how. Thought may make some interesting discussion fodder. so thus the thread. Enjoy life, be nice.

UPDATED:

important post to understand the idea>>>> post number 2.

I've found a trading system that takes advantage of variance that can be found here>>>> https://www.forexfactory.com/showthread.php?t=583322

Read his first post and watch his two videos in that post. Variance is 100% guaranteed in markets.
  • #2
  • Edited 7:32am Mar 6, 2016 6:42am | Edited 7:32am
so here's the story. where to start. all right.

Was studying poker strategies online, came across something really interesting.

Please allow me to illustrate with an example. O.k. so the question becomes:

what is a better starting hand in texas holdem: a, spades, 6 clubs OR kind diamonds and Queen Diamonds?



i think the probability is that the ace 6 is 52% and kq suited is 48% heads up. So everyone agreees that the ace 6 must make more money right? right?

WRONG!

THE PROBABILITY IS IRRELEVANT TO ACTUAL PLAY.


in other words, the king queen suited outperforms the ace 6 statistically over millions of hands in real online poker, in terms of what hand makes more money(equity performance)!

That is fantastic. but why? Well, it plays better. and it doesn't play as bad? in other words you can win a boatload of money hitting a flush or a straight or even a straight flush withe kq suited, and its possible to lose a lot of money when you hit your second pair with the ace 6 off suit... but with the king queen the queen will win lots of money. i.,e equity of the second pair is one factor. amount won with straights and flushes is another factor. etc. so actual performance is King, not probability.



anyhow, the phenomena is that the probability is deceiving to actual performance. does this exist in trading also? if so, who what when why how?

etc.
  • #3
  • Edited 7:08am Mar 6, 2016 6:48am | Edited 7:08am
but i digress too... i also discovered in my reading another very interesting point. the math guys know this point, but i've not seen it discussed in detail from strategic point of view, in trading.

anyway the article was talking about variance in poker. the point being in a typical session of poker a player will be up x% in terms of equity and down Y % in terms of equity very regularly. Rarely would a player lose all his chips quickly or go up 100% quickly.

i noticed with my own strategy that i was often up or down (or both) 50% but rarely did i get above 100% or lose entire stack in the first few hours of play. Apparently, I had a very volatile strategy.

SO I THOUGHT IF I SIMPLY BANK MY POSITIVE VARIANCE every time WHEN IT IS IN PROFIT. BANG. I WILL BE GOLDEN.

Query: can we do something similar in trading?


Are there any indicators for variance?

is there a way to measure ones strategics's variance and thereby optimize the target?

can one measure the variance of a period...for example the monthly variance modality the weekly, the daily, etc.?


anyhow u guys get eh idea
  • #4
  • Mar 6, 2016 7:10am Mar 6, 2016 7:10am
http://www.forexfactory.com/showthre...42#post8792042

variable....hmmmmmmmmmmmmmmmmmmm

http://www.forexfactory.com/showthre...57#post8734957
  • #5
  • Mar 6, 2016 7:15am Mar 6, 2016 7:15am
so what if i simply reduce my negative variance with MM and bank my positive variance at optimum levels

how about we use reverse martingale strategy for mm...

so for every loss reduce by 50% the failures in terms of lot size for next set or whatever. you guys get the ideas.
  • #6
  • Mar 6, 2016 8:13am Mar 6, 2016 8:13am
why do traders always leave out the winning side when they discuss martingales strategies?

what do i mean? nothing really, but.... if your thinking about martingales you're really just thinking about never losing any money at all trading. i find that line of thinking too greedy.

have we forgotten that most traders will have wins and losses? don't need to double down on every trade. isn't that just stupid.

why can't one simply take back a small portion of ones losses and keep all of ones winnings? we must remember that any strategy has winnings. its only the smallest of edges that differentiates most strategies....

why couldn't one say simply start with 0.5 lots and use a factor 1.11% rather than doubling? is increasing your edge by 0.111% not enough?

what gives people
  • #7
  • Mar 6, 2016 3:00pm Mar 6, 2016 3:00pm
Quoting dagoods
why do traders always leave out the winning side when they discuss martingales strategies? what do i mean? nothing really, but.... if your thinking about martingales you're really just thinking about never losing any money at all trading. i find that line of thinking too greedy. have we forgotten that most traders will have wins and losses? don't need to double down on every trade. isn't that just stupid. why can't one simply take back a small portion of ones losses and keep all of ones winnings? we must remember that any strategy has winnings....
Good point and thank you for your interesting thread. I have using the following money management scheme on my trading and I have been successful since I started using it since the beginning of 2015.
Lot size = (Sqrt((Max Balance - Current Balance) / Stop Loss in Dollars)) * initial lot size
Initial lot size must be small less than %0.5 of your balance, probably around %0.2..


The square root function makes it a very less risky sort of martingale. It makes it very hard to lose your account completely.. But your system must take a large profit once in a while, like 6 or 7 times your stop loss..Never move the SL to break even or never take partial profits..
  • #8
  • Jun 25, 2017 11:09am Jun 25, 2017 11:09am
Quoting GoldTheHun
{quote} Good point and thank you for your interesting thread. I have using the following money management scheme on my trading and I have been successful since I started using it since the beginning of 2015. Lot size = (Sqrt((Max Balance - Current Balance) / Stop Loss in Dollars)) * initial lot size Initial lot size must be small less than %0.5 of your balance, probably around %0.2.. The square root function makes it a very less risky sort of martingale. It makes it very hard to lose your account completely.. But your system must take a large profit...

it appears someone way smarter than i already made banking the variance work as a system... just found this recently



https://www.forexfactory.com/showthr...5#post10016205 link to this thread >>>>> https://www.forexfactory.com/showthread.php?t=583322

the first two videos in his thread explain the idea....taking advantage of banking variance in equity.... really pretty cool if you ask me
  • #9
  • Jun 25, 2017 11:49am Jun 25, 2017 11:49am
Quoting dagoods
Every time price varies from the mean there is profit to be had.

I think you might just as easily, and just as truthfully, say "Every time price moves there's profit to be had".

It's potentially perfectly true but of course it doesn't explain how.

And what you've said also begs the question of exactly what you mean by "mean" - a term which there are several ways of defining.
  • #10
  • Jun 25, 2017 11:56am Jun 25, 2017 11:56am
Quoting Quickly
{quote} I think you might just as easily, and just as truthfully, say "Every time price moves there's profit to be had". It's potentially perfectly true but of course it doesn't explain how. And what you've said also begs the question of exactly what you mean by "mean" - a term which there are several ways of defining.
this is a discussion thread...so....
what do you think?

i'll be very interested to read all your great ideas....

i've shared in the previous post what someone way smarter than i did.....

https://www.forexfactory.com/showthread.php?t=583322

have you watched his videos in post one of his thread? he is simply taking advantage of his equity swings (variance). The variance is 100% guaranteed. a market cannot exist without variance.

i'm currently interested in correlation divergence..... anyone cares can search my posts
  • #11
  • Last Post: Sep 23, 2017 10:53am Sep 23, 2017 10:53am
https://www.forexfactory.com/showthr...7#post10321337

makes sense to my silly brain

profiting from the natural fluctuations in movement of the markets, i.e. variance.
price will move, fluctuate, vary, is 100% certain.
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