Firewalker's Journey: A path of discovery in search for enlightenment

This is a discussion on Firewalker's Journey: A path of discovery in search for enlightenment within the Trading Journals forums, part of the Reception category; * Attached weekly chart with and without S/R...

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Old Aug 13, 2006, 11:44pm   #148
 
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DAX overview last week 07-11 August

firewalker99 started this thread * Attached weekly chart with and without S/R
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Old Aug 15, 2006, 2:16pm   #149
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price is moving in a direction............i see it ....why do i need anything other than that to enter the trade if i am with the trend.....???and i am entering buy dips sell rallies?? by the way, 50% system is coin flip.....emotional pain trap....for most.....i can't imagine working like a fool for a few years and coming up with a 50% system....wow...what a waste of time....there are 2 people i have learned from that influenced my system.........dbphoenix originally and later mr. marcus....thanks to both......
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Old Aug 16, 2006, 10:35am   #150
 
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Originally Posted by ymonly
price is moving in a direction............i see it ....why do i need anything other than that to enter the trade if i am with the trend.....???and i am entering buy dips sell rallies?? by the way, 50% system is coin flip.....emotional pain trap....for most.....i can't imagine working like a fool for a few years and coming up with a 50% system....wow...what a waste of time....there are 2 people i have learned from that influenced my system.........dbphoenix originally and later mr. marcus....thanks to both......
Sorry, but I strongly disagree. I can respect your opinion, but you'd call people fools when they come up with a 50% system? Let me first state that I, personally, would be looking for a higher success ratio and would not feel comfortable with a 50% system. But what I'm thinking is of no matter. A win:loss ratio of 50:50 can be very very profitable, if accompanied with a risk:reward of 1:5. Doesn't even need to be that high. Anybody can do the maths: from a risk:reward 1:2 a 33% system would still be breakeven (of course this isn't realistic because it doesn't account for trade costs, slippage, commission,...) but you get my point. To what benefit is a 80% system if it incorporates signals which appear only once a week and you have to place your stop at 20 points with a target of only 5 points?

The only argument I find to hold some truth is that a low success ratio causes - indeed - emotional distress. As for most people the confidence level in a 75% system would be much higher than compared to a 50-50 system. So it's purely pyschological, some people feel no discomfort, others are more risk-averse. If somebody would have as much faith in his 40-60 system than in his 60-40 system - assuming both have a positive expectancy - than I cannot see any rational argument why this person would be a fool and had wasted his time coming up with this kind of strategy.

All this of course means in no way that I would be content with a 50-50 system so if anybody would answer this post, with all due respect comments in the likes of "well fine it that suits you" aren't what I'm looking for.

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Old Aug 16, 2006, 12:59pm   #151
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Originally Posted by firewalker99
A win:loss ratio of 50:50 can be very very profitable, if accompanied with a risk:reward of 1:5. Doesn't even need to be that high.
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You are, of course, bringing in the argument of close stops. If your lack of tolerance to a loss is clearcut, with no dillydallying on exits, then lower than 50:50 is possible. It can't be brought home often enough. If a trader hangs on too long to a losing trade it doesn't matter how good his ratio is, his gains will be mediocre, at best.

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Old Aug 16, 2006, 1:03pm   #152
 
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Originally Posted by Splitlink
You are, of course, bringing in the argument of close stops. If your lack of tolerance to a loss is clearcut, with no dillydallying on exits, then lower than 50:50 is possible. It can't be brought home often enough. If a trader hangs on too long to a losing trade it doesn't matter how good his ratio is, his gains will be mediocre, at best.

Split
Of course, one has to obey to his system and take a loss whenever it's there and go beyond that and look for a next possible entry. If a trader hangs on too long to losing trades, then even if his system provides him with a high probability for success, he could still me on the way to liquidating his account...
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Old Aug 16, 2006, 1:49pm   #153
 
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All of which remains anchored in what one has read and what one has heard and what one has been told rather than in what one has experienced.

Yes, a win rate of 50% can be profitable with a profit:loss of 5:1. And when you've demonstrated that you can consistently accomplish a 5:1 profit:loss ratio, please get back to me. Until then, I suggest you pay closer attention to what ymonly had to say. Being satisfied with a win rate of 50% or less is usually a beginner's rationalization for being too lazy to find something better (experienced traders know what risk:reward really means*).

Db

*Edit: i.e., that risk:reward has to do entirely with probability. Pulling some target out of thin air is meaningless. Unless one has some idea of the probability of a target being reached, what is probable is that he will be disappointed. As for "risk", the market couldn't care less what the trader is willing to risk; it's up to the trader to determine what the market demands. He can then decide whether he wants to risk that much or not. Simply placing a stop somewhere according to how much the trader can afford to lose often does little more than guarantee that the trader will in fact lose it.

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Old Aug 16, 2006, 3:08pm   #154
 
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Originally Posted by dbphoenix
All of which remains anchored in what one has read and what one has heard and what one has been told rather than in what one has experienced.

Yes, a win rate of 50% can be profitable with a profit:loss of 5:1. And when you've demonstrated that you can consistently accomplish a 5:1 profit:loss ratio, please get back to me. Until then, I suggest you pay closer attention to what ymonly had to say. Being satisfied with a win rate of 50% or less is usually a beginner's rationalization for being too lazy to find something better (experienced traders know what risk:reward really means*).
Like I said, this was a generalization and had in no means any reflection on my personal thoughts nor targets. Everything I said was based on the simple mathematical promise of expectancy and not on what trader x or y has proven to do or said he was able to do so. For the record, I'm not willing to trade anything with a 50% win rate because after all I've been through I want something to have (a lot of) confidence in. So until - or if - I reach that point, I'll keep looking, trying, reading, searching, observing, analyzing...
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