Risk Reward Myth

This is a discussion on Risk Reward Myth within the Psychology, Risk & Money Management forums, part of the Methods category; Originally Posted by TheBramble Well done to hoodoo for responding to a 6 month old thread, but yes, the whole ...

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Old Jun 7, 2011, 11:06pm   #31
 
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Re: Risk Reward Myth

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Originally Posted by TheBramble View Post
Well done to hoodoo for responding to a 6 month old thread, but yes, the whole R:R is bogus.

The likelihood that anyone can accurately calculate their likely reward is patently absurd. Your risk is the only thing over which you have any control.

You get to choose when and if and where to enter. And you get to chose where and when you exit. Thatís it.

You make a 1:1 well done. You make a 1:3 really well done. You make a 1:0.01 Ė itís not a loss. You make a 1.01. Well done. Itís not a major loss.

"absurd "..?? - well that depends on how good your edge is and whether your reading the price action correctly - instead of a " random " entry with no defineable edge .. !!

R4/R5 gets hit occasionally too !!

Last edited by theroguetrader; Jun 7, 2011 at 11:17pm.
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Old Jun 7, 2011, 11:11pm   #32
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Re: Risk Reward Myth

these last few threads on probability have really been an eye opener for me here.

seems to be that alot of people just see the markets as a finite sample space, and if you can find some set of circumstances that yield a positive expectancy you are home and dry.

:-?
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Old Jun 7, 2011, 11:14pm   #33
 
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Re: Risk Reward Myth

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I mean if the reasons for your long trade are still good, and its gone against you, buy more!
But losers average, didn't you hear?
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Old Jun 7, 2011, 11:16pm   #34
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Re: Risk Reward Myth

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Originally Posted by theroguetrader View Post
"absurd "..?? - well that depends on how good you edge is and whether your reading the price action correctly - instead of a " random " entry with no defineable edge .. !!

R4/R5 gets hit occasionally too !!
WTF has that got to do with what I said?

Quote someone else in future if you want a 'reason' for your random responses. Here's a tip: pick one that is remotely connected with what you want to get off your chest.
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Old Jun 7, 2011, 11:21pm   #35
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Re: Risk Reward Myth

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But losers average, didn't you hear?
Im not averaging a loser, I'm scaling into a winner

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Old Jun 7, 2011, 11:29pm   #36
 
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Re: Risk Reward Myth

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Originally Posted by TheBramble View Post
WTF has that got to do with what I said?

Quote someone else in future if you want a 'reason' for your random responses. Here's a tip: pick one that is remotely connected with what you want to get off your chest.

whose quoting who ? - i said something and you just shot it down by saying it was " plainly absurd " -

well your just " plainly wrong " - and that is an " ABSOLUTE TRUTH " .... !!
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Old Jun 7, 2011, 11:31pm   #37
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Re: Risk Reward Myth

I wasnít quoting anyone. I was making an original observation.

Go away muppet.
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Old Jun 7, 2011, 11:38pm   #38
 
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Re: Risk Reward Myth

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Originally Posted by TheBramble View Post
I wasnít quoting anyone. I was making an original observation.

Go away muppet.


[B]well quoting an original observation, that ANYONE with half a brain cell plainly knows is incorrect, saying its FACT and even worse " agreeing with it " - makes you more of a muppet than me then doesnt it ..??

sad thing is - you actually believe it !! - ur not related to george osborne are ya ..??
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Old Jun 7, 2011, 11:47pm   #39
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Re: Risk Reward Myth

Okay, I'll bite.

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Originally Posted by theroguetrader View Post
statistically speaking, trading the market with a 1:1 risk reward ratio and no strategy or trading edge has a 50% chance of success
You talk absolute nonsense. Breaking even is not success.

Quote:
Originally Posted by theroguetrader View Post
(minus fees) over a long series of trades. ie - most traders should approximately breakeven over the long run because trading with a (truly) random entry and a 1:1 risk reward is the same as a random coin toss -
Now you get to the point. Except we can't be successful trading in fantasy land where spreads, commission, slippage, fast markets, order entry errors, and vig do not exist. These costs exist, so hypothetical scenarios which don't include them are useless in the real world. (and a good indication that the person talking such a hypothetical is either deliberately blowing smoke or doesn't have a clue)

Quote:
Originally Posted by theroguetrader View Post
the MAIN THING that definitely prevents MOST PEOPLE from making money in the market is OVER TRADING .. !! traders who just jump in and out of the market on " emotion and greed ", will not only suffer many more losing trades, but they will also rack up a lot more fees via spreads and (or) commissions over the course of a year than traders who stick to the higher time frames and understand the value of self discipline and having PATIENCE. Trading lower time frames causes many traders to over-trade because they end up thinking they see many more trading signals worth trading, when in reality there is just a lot more ďjunkĒ signals and ďnoiseĒ on lower time frames -
What prevents most people from making money in the market is that they do not know where to trade and why. Whether they trade frequently or infrequently simply dictates how much vig they pay and is a factor in how quickly they blow up. "Junk signals" and "noise" - what nonsense you talk. A trader making an error or getting it wrong is not the fault of the market, noise, junk, or anything else.

Quote:
Originally Posted by theroguetrader View Post
Human beings have a tendency to see patterns that donít really mean anything.
This is a correct statement.

As for your chart, let me draw you another one. Easy to say you bought the pin bar in hindsight. How do you know whether to take profit at 1R, 2R, or 3R?

Isn't a double top a valid sell signal? So when Joe Wanabee sells short there, he is wrong no matter what. Whether he sets his fantasy target to 1,2,3 or 5R doesn't matter - the market is never going there without stopping him out first. This is why made up R:R is irrelevant.


What is wrong with this site and trading sites in general is that every idiot spouts off like a know it all. You set yourself up to be flamed by going around telling everyone what THE MOST IMPORTANT THING IN TRADING is according to your own limited point of view. The real shame is that some people choose to believe this without taking the effort to think for themselves. Totally useless and a waste of time.

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Originally Posted by theroguetrader View Post
RISK/REWARD IS " THE " most important thing in trading !!

if you take your profit at R1 - you might as well toss a coin -
if you take your profit ar R2/R3 - you could be(WRONG) on half your trades and still be in PROFIT - OVER TIME !!
Anyone who goes around preaching this as though it is gospel is suspected of having a room temperature IQ. I've made this point five or six times in different ways in as many days on this site. It seems as though people are determined to be dumb losers who don't think, don't improve, and ultimately don't profit in the markets. Their choice.

I'll leave the incurably deluded to their risk:reward ratios. Whatever makes you happy.
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Old Jun 7, 2011, 11:53pm   #40
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Re: Risk Reward Myth

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Originally Posted by TheBramble View Post
Apologies to all the Gannites and Ellioticians who routinely hit tops and bottoms at pre-ordained levels to the pip and times to the second. Wealthy as Croesus, every man jack of them.
No need to apologise to the special class who can do this.
Maybe take a look at - http://web.archive.org/web/200507070...logs.com/pmtc/
$5k to over $8 million in six weeks trading the emini with Gann / price and time structure.

There is a chap who used to post here by the name of fudgestain who completely kills the futures markets using price and time. There are many others. Evidently you are not successful as you do not believe success is possible.

If it was possible, why haven't you turned yourself into Croesus?
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Old Jun 8, 2011, 12:03am   #41
 
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Re: Risk Reward Myth

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Originally Posted by hoodoo man View Post
Okay, I'll bite.



You talk absolute nonsense. Breaking even is not success.



Now you get to the point. Except we can't be successful trading in fantasy land where spreads, commission, slippage, fast markets, order entry errors, and vig do not exist. These costs exist, so hypothetical scenarios which don't include them are useless in the real world. (and a good indication that the person talking such a hypothetical is either deliberately blowing smoke or doesn't have a clue)



What prevents most people from making money in the market is that they do not know where to trade and why. Whether they trade frequently or infrequently simply dictates how much vig they pay and is a factor in how quickly they blow up. "Junk signals" and "noise" - what nonsense you talk. A trader making an error or getting it wrong is not the fault of the market, noise, junk, or anything else.


This is a correct statement.

As for your chart, let me draw you another one. Easy to say you bought the pin bar in hindsight. How do you know whether to take profit at 1R, 2R, or 3R?

Isn't a double top a valid sell signal? So when Joe Wanabee sells short there, he is wrong no matter what. Whether he sets his fantasy target to 1,2,3 or 5R doesn't matter - the market is never going there without stopping him out first. This is why made up R:R is irrelevant.


What is wrong with this site and trading sites in general is that every idiot spouts off like a know it all. You set yourself up to be flamed by going around telling everyone what THE MOST IMPORTANT THING IN TRADING is according to your own limited point of view. The real shame is that some people choose to believe this without taking the effort to think for themselves. Totally useless and a waste of time.



Anyone who goes around preaching this as though it is gospel is suspected of having a room temperature IQ. I've made this point five or six times in different ways in as many days on this site. It seems as though people are determined to be dumb losers who don't think, don't improve, and ultimately don't profit in the markets. Their choice.

I'll leave the incurably deluded to their risk:reward ratios. Whatever makes you happy.

[B]TOTALLY CORRECT - break - even is NOT success !! - The pressure is completely off tho and you can look at your trade analytically WITHOUT any emotions clouding your judgement !!

if your trading a " well defined/confluent " pin bar in either direction - even if the trade goes DOWN THE PAN - the price will still get to the end of the pin before pulling back - so if you enter at say the 50 % level - you make a profit ANYWAY !!

" How do you know whether to take profit at 1R, 2R, or 3R "......??

You can take a profit at ANY POINT on the pin - all your doing is altering the risk by entering on different positions on the pin .. !! -
Im saying your " PROFIT TARGET " should me meausured in MULTIPLES OF YOUR RISK - NOT " swinging for the fences " - like MOST people do ... !! (GREED)

Last edited by theroguetrader; Jun 8, 2011 at 12:38am.
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Old Jun 8, 2011, 12:16am   #42
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Re: Risk Reward Myth

Quote:
Originally Posted by hoodoo man View Post
No need to apologise to the special class who can do this.
Maybe take a look at - http://web.archive.org/web/200507070...logs.com/pmtc/
$5k to over $8 million in six weeks trading the emini with Gann / price and time structure.

There is a chap who used to post here by the name of fudgestain who completely kills the futures markets using price and time. There are many others. Evidently you are not successful as you do not believe success is possible.

If it was possible, why haven't you turned yourself into Croesus?
A rambling, disjointed and illogical response. But Iíll do my best to make sense of your delirium for the benefit of those who donít know who you are.

Gannites/Ellioticians a special class? Undeniable, but not in the way you suggest. A large class of successful traders? Unlikely. You state there are many others. Who? Donít dodge. Name names to we can confirm your claims.

The only ones who have ever claimed to be experts in the field write books about it which convey nothing of utilitarian value. Thatís true of most gurus who write books on any subject so no special insight there. That some may be genuine experts and that it may be a genuine technique is of course possible, but extremely unlikely.

Was I successful using Gann/Elliot techniques? No. Of course not. Never got the hang of how anyone could seriously consider it as a viable trading methodology given its infinite divergences, exceptions and modifications which explain away every event Ė after the event and to be fair, even when I discovered it lacked sufficient credentials to warrant further study, never felt the need to expend the effort necessary to empirically invalidate it either.

Where did you get the view that I consider success per se as impossible? I am, successful in making money using more traditional and basic trading techniques as have been documented, albeit infrequently, in the posts on this site. Posts with which you are well acquainted I suspect.

$5k to over $8 million in six weeks trading the emini with Gann / price and time structure.

LOL

That youíre not a new member to this site and claim knowledge of a member who hasnít posted for a couple of years is no surprise to me. That it is to the mods, and that you are still here, is a surprise.

You may want to augment your provenance with this site by mentioning the nature of Fudgestainís off-site activities and why when Mr. Marcus blew the whistle on him he disappeared forever.

$5k to over $8 million in six weeks trading the emini with Gann / price and time structure.

Some things never change.

Take care.
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Old Jun 8, 2011, 12:16am   #43
 
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Re: Risk Reward Myth

Quote:
Originally Posted by hoodoo man View Post
Okay, I'll bite.



You talk absolute nonsense. Breaking even is not success.



Now you get to the point. Except we can't be successful trading in fantasy land where spreads, commission, slippage, fast markets, order entry errors, and vig do not exist. These costs exist, so hypothetical scenarios which don't include them are useless in the real world. (and a good indication that the person talking such a hypothetical is either deliberately blowing smoke or doesn't have a clue)



What prevents most people from making money in the market is that they do not know where to trade and why. Whether they trade frequently or infrequently simply dictates how much vig they pay and is a factor in how quickly they blow up. "Junk signals" and "noise" - what nonsense you talk. A trader making an error or getting it wrong is not the fault of the market, noise, junk, or anything else.


This is a correct statement.

As for your chart, let me draw you another one. Easy to say you bought the pin bar in hindsight. How do you know whether to take profit at 1R, 2R, or 3R?

Isn't a double top a valid sell signal? So when Joe Wanabee sells short there, he is wrong no matter what. Whether he sets his fantasy target to 1,2,3 or 5R doesn't matter - the market is never going there without stopping him out first. This is why made up R:R is irrelevant.


What is wrong with this site and trading sites in general is that every idiot spouts off like a know it all. You set yourself up to be flamed by going around telling everyone what THE MOST IMPORTANT THING IN TRADING is according to your own limited point of view. The real shame is that some people choose to believe this without taking the effort to think for themselves. Totally useless and a waste of time.



Anyone who goes around preaching this as though it is gospel is suspected of having a room temperature IQ. I've made this point five or six times in different ways in as many days on this site. It seems as though people are determined to be dumb losers who don't think, don't improve, and ultimately don't profit in the markets. Their choice.

I'll leave the incurably deluded to their risk:reward ratios. Whatever makes you happy.

" Except we can't be successful trading in fantasy land where spreads, commission, slippage, fast markets, order entry errors, and vig do not exist " - [B]all wonderfull excuses for people who refuse to see whats in front of their eyes -

" set & forget " - !! - its not orbital mechanics dude, its only trading !!
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Old Jun 8, 2011, 12:26am   #44
 
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Re: Risk Reward Myth

Quote:
Originally Posted by hoodoo man View Post
Okay, I'll bite.



You talk absolute nonsense. Breaking even is not success.



Now you get to the point. Except we can't be successful trading in fantasy land where spreads, commission, slippage, fast markets, order entry errors, and vig do not exist. These costs exist, so hypothetical scenarios which don't include them are useless in the real world. (and a good indication that the person talking such a hypothetical is either deliberately blowing smoke or doesn't have a clue)



What prevents most people from making money in the market is that they do not know where to trade and why. Whether they trade frequently or infrequently simply dictates how much vig they pay and is a factor in how quickly they blow up. "Junk signals" and "noise" - what nonsense you talk. A trader making an error or getting it wrong is not the fault of the market, noise, junk, or anything else.


This is a correct statement.

As for your chart, let me draw you another one. Easy to say you bought the pin bar in hindsight. How do you know whether to take profit at 1R, 2R, or 3R?

Isn't a double top a valid sell signal? So when Joe Wanabee sells short there, he is wrong no matter what. Whether he sets his fantasy target to 1,2,3 or 5R doesn't matter - the market is never going there without stopping him out first. This is why made up R:R is irrelevant.


What is wrong with this site and trading sites in general is that every idiot spouts off like a know it all. You set yourself up to be flamed by going around telling everyone what THE MOST IMPORTANT THING IN TRADING is according to your own limited point of view. The real shame is that some people choose to believe this without taking the effort to think for themselves. Totally useless and a waste of time.



Anyone who goes around preaching this as though it is gospel is suspected of having a room temperature IQ. I've made this point five or six times in different ways in as many days on this site. It seems as though people are determined to be dumb losers who don't think, don't improve, and ultimately don't profit in the markets. Their choice.

I'll leave the incurably deluded to their risk:reward ratios. Whatever makes you happy.

" A trader making an error or getting it wrong is not the fault of the market, noise, junk, or anything else "... !!

Your right, its not, but if " the trader " takes the time to learn some basic " price action set ups " - waits PATIENTLY for their edge to appear, because they know EXACTLY what theyre looking for - and then calmly take the trade - they wont make so many mistakes by taking RANDOM entries through OVER TRADING will they ? !!
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Old Jun 8, 2011, 12:35am   #45
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Re: Risk Reward Myth

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Originally Posted by TheBramble View Post
That youíre not a new member to this site and claim knowledge of a member who hasnít posted for a couple of years is no surprise to me. That it is to the mods, and that you are still here, is a surprise.

You may want to augment your provenance with this site by mentioning the nature of Fudgestainís off-site activities and why when Mr. Marcus blew the whistle on him he disappeared forever.
Fudgestain posts as Cheese on Elite Trader. What were his off-site activities?
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