51%

This is a discussion on 51% within the General Trading Chat forums, part of the T2W Archive category; >> That whole notion of having a system that's got a 51% chance of leaving you with profit (R:R 1:1) ...

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Old Mar 30, 2011, 8:28pm   #43
Joined Oct 2006
Re: 51%

>> That whole notion of having a system that's got a 51% chance of leaving you with profit (R:R 1:1)

I would presume, that having a 1:1 system, you would need to be more on par with a 60% strike rate to cover slippage, commissions and then enough to stay ahead of the game.

I use a 2:1 system. In Theory one would need a 33% strike rate to “break even”. I find over hundreds of trades that it hovers around 42%, enough to cover any slippage and commissions.

A few years back I used a 3:1, but found my strike rate to drop down to the 38% range. This meant statisically more losing trades and in reality it didn’t come out any better than 2:1. For me 2:1 suits me, but then everyone has their own thresholds that suits them.

>> I need a system that's much higher so that when I make mistakes or there's a power outage or I need the toilet or get a phone call

I found I was never really good a “discretionary” trading, and it caused more mental pain than it’s worth. I fell into systematic trading, of having a clear set of rules which had to be adherred to with no exceptions. Now when when trade you are more a robot to your rules, but as an emotional human executing them, I found I would bend the rules :-) Which leads to technology. If your rules are clear and can be written down, they most likely can be turned into computer code which can then execute the trades for you. I turned my systems into computer code which now execute my rules and thus now there is no need to “watch the market”. Also I can trade multiple systems over multiple financial instruments with ease. This leads you to having more time on your hands. If you do fun things outside the market and lead an active, fulfilled life, there is very little inclination to mess with it, but just let it do it’s thing.
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Old Mar 30, 2011, 8:28pm   #44
 
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Re: 51%

Quote:
Originally Posted by shadowninja View Post
The time-frame is irrelevant. The number is all that matters.
I'm not sure I agree with this.

I mean, I do in principle but time frame has to come into it!

For example, part of the criteria for a robust system is that it holds up under different market conditions.

So if you had 40 trades all taken on one day and 40 trades taken over 4 years, I would rather back the latter.

OK, it's still, perhaps, a statistically insignificant number but its at least been open to shifting market cycles. And I do think that gives it some weight.
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Old Mar 30, 2011, 8:35pm   #45
 
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Re: 51%

In a sense and for example, a day on a 1min trigger trigger is worth x days on say a 1hr or y months/years on a 1day trigger. If you take the dramatic 2.11.62 - 1.3505 fall in cable we see many such moves of this pro rata magnitude on the 1min chart.

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Originally Posted by trader_dante View Post
I'm not sure I agree with this.

I mean, I do in principle but time frame has to come into it!

For example, part of the criteria for a robust system is that it holds up under different market conditions.

So if you had 40 trades all taken on one day and 40 trades taken over 4 years, I would rather back the latter.

OK, it's still, perhaps, a statistically insignificant number but its at least been open to shifting market cycles. And I do think that gives it some weight.
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Old Mar 30, 2011, 8:36pm   #46
 
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Re: 51%

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Originally Posted by robster970 View Post
If TD gives us the mean and Standard Deviation of his 45 trades, I think I can work out the likelihood of him achieving this by accident.
Thank you Robster but then it's all just going to get a bit silly, isn't it?

I'm aware that a monkey can eventually come up with the random letter placement to form the complete works of Shakespeare and that no one ever made any money in this game through skill but purely by chance because for a big enough sample size there are always going to be that one wiiiiiiiiiiiiiiiiiiiiiiiiiiiii

Sorry, I fell asleep on my keyboard ;-)
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Old Mar 30, 2011, 8:37pm   #47
 
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Re: 51%

reply to my pm you rampant homosexual
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Old Mar 30, 2011, 8:45pm   #48
 
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Re: 51%

Quote:
Originally Posted by trader_dante View Post
Thank you Robster but then it's all just going to get a bit silly, isn't it?

I'm aware that a monkey can eventually come up with the random letter placement to form the complete works of Shakespeare and that no one ever made any money in this game through skill but purely by chance because for a big enough sample size there are always going to be that one wiiiiiiiiiiiiiiiiiiiiiiiiiiiii

Sorry, I fell asleep on my keyboard ;-)
I don't think so as this thread is about empiricism and I was about to demonstrate that you weren't the proverbial monkey even with a sample size of 45.

Have it your way then, I'll take my calculator off somewhere else.
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Old Mar 30, 2011, 8:48pm   #49
 
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Re: 51%

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Originally Posted by robster970 View Post
I don't think so as this thread is about empiricism and I was about to demonstrate that you weren't the proverbial monkey even with a sample size of 45.

Have it your way then, I'll take my calculator off somewhere else.
Bring your calculator to the next seminar when Dentist arranges it :-)
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