Newbie testing a system

[Tenapenny]

And I think you have a totlaly wrong view on the matter.

Who cares if a TRADE is profitagble, as long as the trader is profitable?

Yes, proper management will not make the bad trade profitable, but it will make sure that your exposure is limited. Capital conserved. And the profits of the good trades outweight the profits of the bad trades.

Noone says it is a perfect strategy, but it says that with good risk management one can live with 50% good trades. Not a good scenario by any means, but risk management can make one profitable.)


Sounds like a "one size fits all" stratergy, not taking into account time-frames and all the other variables. I prefer a "made to measure" statergy where I'm in control managing everything from entry to exit and everything in between. And I DO care if a trade is profitable, but I don't care about small losses, just move on to the next trade.

 

[tomorton]

Whether a randomly entered trade is 50% likely to be profitable, or can be made at least that by good position and money managanement, is all beside the real point. The fact that anyone can think the market owes them money based on a blind entry like this suggests a failiure to take responsibility for one's own destiny. This is a pure gamble: gambling isn't defined by the market and it isn't defined as a matter of odds, its founded on the flawed attitude of the trader/gambler - failure to take personal responsibility for decisions ansd self-development. So successes come randomly but can never be enough, while failures can be just marked down to random and capricious market action, it wasn't the trader's fault because he just made a rondom entry, so no pain there then.

Its like going for an exam or interview you haven't prepared for - if you pass you are just a brilliant candidate - if you fail, there's nothing to worry about, you're not a failure, because you didn't prepare anyway. For me, anyone who contemplates profitability with real money from random trade entries has already failed.

 

[new_trader]

Whether a randomly entered trade is 50% likely to be profitable, or can be made at least that by good position and money managanement, is all beside the real point. The fact that anyone can think the market owes them money based on a blind entry like this suggests a failiure to take responsibility for one's own destiny. This is a pure gamble: gambling isn't defined by the market and it isn't defined as a matter of odds, its founded on the flawed attitude of the trader/gambler - failure to take personal responsibility for decisions ansd self-development. So successes come randomly but can never be enough, while failures can be just marked down to random and capricious market action, it wasn't the trader's fault because he just made a rondom entry, so no pain there then.

Its like going for an exam or interview you haven't prepared for - if you pass you are just a brilliant candidate - if you fail, there's nothing to worry about, you're not a failure, because you didn't prepare anyway. For me, anyone who contemplates profitability with real money from random trade entries has already failed.

An excellent post. The attitude of certain people is typical of all the book learned newbies who enter this profession with starry-eyed fantasies about the simplicity of making money from it. Random entries..

 

[jackolan]

For me, anyone who contemplates profitability with real money from random trade entries has already failed.

It certainly seems many people took my post the wrong way I wasn't advocating a strategy of random entries... I simply wanted to know what the odds are of a random trade going so badly wrong that it would never break even.

As was said by zupcon, without knowing the probabilities associated with a random trade it is impossible to determine whether your skilled trade was any better. In other words, if you're using a strategy (your own or someone elses) and you can't definitively explain why you are performing better than random chance... then maybe you aren't.

So, I'd still appreciate an answer to my actual question (what the odds are of a random trade going so badly wrong that it would never break even over a reasonable period, e.g. 2 months). I appreciate that the answer to this is difficult to assess - which is why I'm asking for the input of more experienced traders. But an experienced judgment would be better than nothing for my purposes.

Unfortunately, I can't do this from charts as I don't have a source of 15 minute (or less) candlesticks that goes back more than 45 days. When I look at the daily charts, I can see several candidate days back in May 2005 where a sell would potentially have had to wait until Sep 2008(!) for a break-even but as I can't see the intra-day information for those days I can't see whether ALL sells on those days would be affected, or whether some (say 50%) would have broken even on the same day.

Doing the same for a buy, then there are days in May 2008 where you would still be waiting. But again, I can't see "into" the day to find out how badly the market moved away.

Thanks guys!

Jack