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How to improve the odds in trading

HolyCow
Jan 30 2014 at 20:06
41 posts
JC, r:r is there for a reason, small or big TF it does not matter if one risk 40 pips to make 20 over time he is going to lose.
again, everything depends upon strategy. r:r is not taken form the heaven but arrives through back testing of probabilities. one can set r:r 5:1 and lose his shirt. There must be tested r:r over time.
first trading plan should have positive expectancy. then other things should be tested. But if there is an edge than r:r becomes important. proven statistically possible r:r going to pull account from DD incurred during bad periods and here another important thing is daily $ loss limit to avoid getting big hits when things are not working and also have limited period to trade.

JC (johncarrus)
Jan 30 2014 at 23:47
42 posts
I would never use a set R;R of 2:1 risk/reward.. but when i initially enter.. i try to put my SL in a place where it is highly unlikely to be hit. Then i exit with my TP where it is highly likely to hit. I adjust each trade depending on conditions. I exit early when it goes against me. My main goal is to have the least amount of drawdown as possible. Sure i can make 400 pips plus a month but when the market is bad.. i'll surely lose 400 pips. I'd rather claim 100 good pips and risk losing 100 pips with odds highly in my favor. This is still a theory in my head.. demoing it out the last 2 months with good results.. gonna do one more demo month then i'll go live. I'll keep u posted.

When the waves are good- Ride them, If they are not, wait for the next set
Donex
Jan 31 2014 at 02:57
90 posts
Maybe it's just me, but whenever I see a system with a negative R:R ratio, it always has huge drawdown. If it's a small sample maybe it hasn't had one yet, but eventually it will happen.

Yes, agree some of the returns of these systems are phenomenal, but the drawdown is a worry. Not a problem when trading a small account and you're prepared to lose it all, eg 1K, you get a 50%+ drawdown, you think ' Ahh what the heck leave it and lets' see what happens', try doing that with something more substantial. Say 50K or 100K

Hate your losers more than you like your winners
HolyCow
Jan 31 2014 at 09:41
41 posts
JC, you can run but you cannot hide ;) I mean your stop orders.

It is not going to help thinking you will have such a high hit rate that it will cover your loses. The math is not there. If you cannot have bigger winners than losers on average that gonna hurt. Firstly no one knows what market will do next moment. So, you can have a huge losing streaks...with larger stops then take profits you will not be able to recover.
High probability trade at one time turns into serial loser next time and then back to high probability winner again with time. Hence, plan should be followed and not to be changed every time losing period starts or there will be never consistency. and I believe in fixed R:R. then the trade is being managed of course with trailing stop. I think going less than 1:1 is not very good.
Good luck man!

JC (johncarrus)
Jan 31 2014 at 17:55
42 posts
Donex posted:
Maybe it's just me, but whenever I see a system with a negative R:R ratio, it always has huge drawdown. If it's a small sample maybe it hasn't had one yet, but eventually it will happen.

Yes, agree some of the returns of these systems are phenomenal, but the drawdown is a worry. Not a problem when trading a small account and you're prepared to lose it all, eg 1K, you get a 50%+ drawdown, you think ' Ahh what the heck leave it and lets' see what happens', try doing that with something more substantial. Say 50K or 100K




I'm actually expecting to see the opposite. As I am entering in only very high probability trades.. I might put my foot in my mouth a few months from now.. but demo trading is going well so far lol

When the waves are good- Ride them, If they are not, wait for the next set
JC (johncarrus)
Jan 31 2014 at 18:01
42 posts
HolyCow posted:
JC, you can run but you cannot hide ;) I mean your stop orders.

It is not going to help thinking you will have such a high hit rate that it will cover your loses. The math is not there. If you cannot have bigger winners than losers on average that gonna hurt. Firstly no one knows what market will do next moment. So, you can have a huge losing streaks...with larger stops then take profits you will not be able to recover.
High probability trade at one time turns into serial loser next time and then back to high probability winner again with time. Hence, plan should be followed and not to be changed every time losing period starts or there will be never consistency. and I believe in fixed R:R. then the trade is being managed of course with trailing stop. I think going less than 1:1 is not very good.
Good luck man!


I always tackle a strategy with the assumption i will have about 7 losing trades in a row. With that in mind, I only risk 20% of my account max in those 7 losing trades total.

I know noone knows what market will do.. thats why i'm scalping.. getting in and getting out to minimize my risk. My strading strategy isn't completely fixed on hard rules.. I assess it thoroughly each time to see if each trade is worth the risk. I know there will be losers.. i plan for them and i do my best to avoid them. Every trade opportunity an indicator gives isn't going to be a good trade. I don't follow completely fixed entry rules although i use a generalized rule for all trades which make them similar. I'm not getting into my strategy yet because I don't want to reveal the golden goose if it is one lol. Last months trading went well. I made 6% conservatively with 2% drawdown. I did have my big loss but... that loss came because i made 2 really dumb mistakes which i've learned from.

When the waves are good- Ride them, If they are not, wait for the next set
JC (johncarrus)
Jan 31 2014 at 18:11
42 posts
https://www.myfxbook.com/members/johncarrus/1hr15min-scalp/790266

Here's my current demo account. I might be living a fallacy but i'll test it for a while to see how it plays out. Drawdown at 2% and gains 6.5% in January. The major dip you see was 2 losses in a row which happened because i accidently closed a trade while trying out the new trading app, then jumped back in like an idiot to make back my losses which occurred more losses.

New rule is.. if i'm emotional in my trading .. turn it off for the day.. Emotions have no place in this market.

As you can see i'm taking small profits at a time.. I do see the downside of this and am thinking about trying to capture more pips in another account. But with slow and steady profits this month with low DD. I see potential. I did profit in December as well but i was trading micro units so you can't see it on the equity curve. My first month of trading i always do micro units so i can build up the account slow in case i hit a big DD from the start.. Also it helps me fine tune my trading strategy before initiating it.

When the waves are good- Ride them, If they are not, wait for the next set
wlk1
Jan 31 2014 at 18:15
69 posts
I'm in agreement with @Donex . Systems with inverted RRs will eventually blow up. I've seen systems on this site with almost linear upward growth running for 2-3 years, but with one bad run, it melts down. Just take my earlier mathematical example and make the numbers more extreme, and you can easily figure out why.

The market will go up, failing which, it will go down.
JC (johncarrus)
Jan 31 2014 at 18:21
42 posts
wlk1 posted:
my 2 cents, on how to improve your odds, statistically and mathematically.

1. trade a bigger time frame. a larger time frame will require a larger SL and TP, but your spread will remain the same. you'll probably trade less too. don't work so hard to make your broker richer.

Assume : RR = 1:2, SL = 20pips, TP = 40pips, spread = 3pips win ration = 50%
After 100 trades ==> Win = +2000pips, Loss = -1000pips spread = -300pips ==> P/L = +700pips

Assume : RR = 1:2, SL = 60pips, TP = 120pips, spread = 3pips win ration = 50%
After 100 trades ==> Win = +6000pips, Loss = -3000pips spread = -300pips ==> P/L = +2700pips


2. It matters less how often you're right or wrong, than how much you make when you're right, and how much you lose when you're wrong.

Assume : S/L = 40pips, T/P = 10pips, win ratio = 75%
After 2 losses in a row ==> -80pips ==> need 8 wins to break even
After 3 losses in a row ==> -120pips ==> need 12 wins to break even

Assume : S/L = 10pips, T/P = 40pips, win ration = 25%
After 2 losses in a row ==> - 20pips ==> need 0.5 wins to break even
After 8 losses in a row ==> -80pips ==> need 2 wins to break even

I'm not sure what the statistics are, but I think the chance any system will take 2 losses in a row is very plausible, and probably a system that can make 8 wins in a row.


I'm not here to argue or start a shit storm, its just an opinion,


I'm not here to argue either and I truly Value everyones thoughts and opinions. Can you guys post your favorites accounts on myfxbook so i can take a look at them?


Those are great points.. as this (Theory) is just an experiment at this point. I do hear that swing trading is the way to go for big money. My main goal here is to be right 80% of the time.. which so far I am with 50 trades on my belt. I don't think that's luck because I screen my trades very closely. But again.. This is just a test :)

Also.. can you guys post your personal trading accounts? I would love to see how you guys are doing.. Thanks!

When the waves are good- Ride them, If they are not, wait for the next set
Donex
Jan 31 2014 at 23:42
90 posts
johncarrus posted:

I'm not here to argue either and I truly Value everyones thoughts and opinions. Can you guys post your favorites accounts on myfxbook so i can take a look at them?


Those are great points.. as this (Theory) is just an experiment at this point. I do hear that swing trading is the way to go for big money. My main goal here is to be right 80% of the time.. which so far I am with 50 trades on my belt. I don't think that's luck because I screen my trades very closely. But again.. This is just a test :)

Also.. can you guys post your personal trading accounts? I would love to see how you guys are doing.. Thanks!


Hey JC

I don't think anyone in this thread is arguing or being belligerent, but rather as yourself just giving opinions.

I'm sure like everyone else, I wish you well and hope you achieve your quest. Unfortunately in FOREX, forward testing is governed by time. Would be nice to forward test a system for 1 year in 1 week, but the reality is that to forward test a system for 1 year, it actually takes 1 year and of course it also needs a fair sample size of volume.

Your results are great for a month, but it's just a month. Your trading strategy goes against all the mathematical probabilities so that is why I feel in the long run it will fail. But hey, I hope I'm wrong. I know you said you're filtering out the bad trades and taking only the good ones, but unless you have a reliable crystal ball then that will also eventually fail you. (Again, I hope I'm wrong)

There are plenty of people selling winning systems in roulette. Most of them work but only short term. In the long run, the mathematical edge cuts in and they will lose all their winnings and capital.

In my experience, you can't fight the maths, the maths will always win and conquer. Better to get the maths on your side rather than against you.

Again, I wish you well and I hope you prove me and the others wrong. I'll be the first to admit that I was wrong and congratulate you for doing the seemingly impossible. Good luck with it, and that's a genuine good luck.

You can view members systems by going to their profile, and if they have any public systems you'll be able to see them.

Hate your losers more than you like your winners
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