Newbie testing a system

Hi,

I'm a newbie trying to figure out the odds of making money in this game

I think I've pretty much figured it for the most likely scenarios... but I don't have sufficient experience to judge the long term odds.

For those of you who've been around a while I'd appreciate any comments you have on the following hypothetical...

Assuming a random punter (no skill or judgement, just pure random choice) puts on a spread bet (sell or buy, it doesn't matter)... what are the chances that the market would then move against him and never come back to a break even position? At least, not come back within say two months.

I see a lot of scenarios where it can take a week to 10 days to come back to break even... but it seems that the "never come back" scenario is rare... I'm trying to get a handle on how rare... maybe twice a year?

Thanks in advance...

Jack

It sounds like you need to look at a chart. If what you think were true, everyone would be able to make money except maybe twice a year. And that's obviously the case - at least not with the markets I'm looking at.

I have heard it's possible to have no stop and never take a loss, only taking 100 pips at a time when the market moves in your favour. I'll be ****ed if I'm trading that way, though.

Mr Random punter will blow his account fairly quickly. No skill. No judgement. Why bother?

Mr Random punter will probably do a hell of a lot better than 90% of punters. Mr Random punter will hit the 1st major trading milestone (achieving break even) way faster than the majority of traders. Mr Random punter may well survive long enough to develop some discretionary skills.

Taking random entries and exits (in a structured learing environment, by which I mean detailed retrospective analysis, compiling good statistics, maintaining a trading diary etc) is beyond a shadow of a doubt the most effective approach any trader can take.

I honestly cannot comprehend how anyone can progress as a trader, without building on a random methodology. Without it, you have no idea if skill and judgement are a statistically valid edge, or simply luck.

Unless you understand the effects that random chance might play, you are screwed.

then, based on your observation, that once or twice a year is enough to completely wipe you out, as it will never come back. it will happen eventually, you are playing russian roulette, but instead of bullets you are killing yourself with time.

I am assuming that you are going to trade without a stop loss, becuase you have to hold to at least break even and you dont know haw far in the red it will go before it comes back.

any trade can be that one that doesnt come back, you just wont know until your are wiped out.

I would never trade like this........

I agree to an extent, jackolan may well progress as a trader in a structured learning environment. I just think that Mr Random Punter would be just that, a random punter, and with no structured learning environment the market will take him out sooner rather than later.

Hi jackolan - Don't try this with serious money. Though price movements look random on a small scale, they are actually just difficult to predict. The markets are not random on the larger scale, they have an inherent upward bias. But over any realistic trading period, this upwards imbalance is normally so slight that it is not worth trading - unless you are a long term buy and hold investor prepared to wait 20 years. That is fine, though it is also aided as a strategy by the dividend income over the holding period - but I think its not what you mean and certainly isn't trading.