...in my humble opinion the exit is the most important aspect of any system because ALL systems have a kernel of credibility but lack, usually, one or a couple of key tweaks to turn them into profitable money machines. This is were experience comes to play. With experience one can know which elements to keep and which to tweak. Having spent my 10k+ hours and more in demo and live trading. I have experienced more ‘black swan’ moments than I would ever wish.
So, in the spirit of good will and wishing to give something, I offer this advice to any aspiring trader. It is worth the effort, don’t give up.
...there was once a mechanic who went to visit a client having problems with his very expensive 4 color printing machine. The mechanic looked at the machine, walked around it a couple of times. He took out a listening rod and listened to the machine in a couple of places. Finally he went to his bag, took out a delicate little shiny hammer. He went to a specific point at the machine and with a determined and crafted poise he struck the point with a very precise and calculated hit. Instantly the whirling machine sounds changed and there was a more melodic tone in the air. The machine started spitting out copy after copy at very precise intervals of time. The machine was fixed. After a few discussions and suggestions from the machinists the invoice was handed to the owner. The owner looked wide-eyed at the amount to be paid. It was a bill for $1320.00. “You were here for less than 30 mins” said the owner “How do you rate that then?” The mechanic raised his head from the pad from which he had just written the invoice and looked at the owner. “Well” he said. “There’s 20 dollars an hour. And there’s 1300 dollars for my experience in knowing where to strike the hammer “ It’s the knowing where to strike the hammer that’s important in most endeavors. In trading this is the equivalent to the knowing where to exit in trading.
Do you mean expectancy in terms of R as Vantharp describes or do you mean expectancy in dollars as shown in Myfxbook?
i have not heard of vantharp so had a quick read online. i agree he said ' So in the real world of investing or trading, expectancy tells you the net profit or loss you can expect over a large number of single-unit trades. If the total amount of money lost is greater than the total amount of money gained, you are a net loser and have a negative expectancy. If the total amount of money gained is greater than the total amount of money lost, you are a net winner and have a positive expectancy.'i was thinking expectancy in pips for forex.why it is good is after hundreds of live trades you can get a idea of return after all the good and bad trades and costs.i currently have a system that has a expectancy between 2-3 pips after 137 trades on 1 pair usd/jpy.with 20 pip stop loss.i am very happy with that as i can increase lot size more and more if i retain same numbers over more and more time.so is around 10% of stop loss.if you have big stop losses and big take profit your expectancy should should be higher.
to add to confusion there are many traders with negative pip expectancy and positive dollar expectancy. also the other way around.positive pip expectancy and negative dollar expectancy.for a robust system have both and play it safe.