58 per cent of chance is a good percentage to start trading?

[RubenOliveira88]

Hey all,


I'm quite new on this - but here we goes my question:

I analyzed a sample with about 20.000 stock prices (stocks of 30 companies from US stock exchanges markets)
I developed a kind of machine learning with statistical analysis behind and after 2 days I got my algorithm which is predicting short positions with a percentage of correctness = 58% -> result came after test the algorithm against sample of 2000 stock prices entries.
My algorithm correctly predicted short positions in 58% of the time and was wrong 42% of the time.
So my question is the following: 58% of chance is a good percentage to start trading? My algorithm has any value?

Thanks for the help,
Do you have any kind related experiences?

 

[tomorton]

Win rate isn't going to be a great guide to profitability, and I suspect its derived almost entirely from an entry pattern, which is also a poor guide to profitability. Risk / money / position management rules will be absolutely vital for this approach to work.

For example, if you have 420 losers per 1000 trades, how would your account look if you got 100 straight losers from Day 1? Not likely perhaps but you might see what I'm pointing to.

 

[RubenOliveira88]

Win rate isn't going to be a great guide to profitability, and I suspect its derived almost entirely from an entry pattern, which is also a poor guide to profitability. Risk / money / position management rules will be absolutely vital for this approach to work.

For example, if you have 420 losers per 1000 trades, how would your account look if you got 100 straight losers from Day 1? Not likely perhaps but you might see what I'm pointing to.

Thanks a lot!! I think I will have to do some stress testing to see if the algorithm is consistent enough then.
Position management will not be a concern I think so. The goal is to buy and sell in precise time periods without looking to price. It's pure analytical methodology. I'm thinking about to trade always the same amount of money.... I will test it further. Hope I can bring good news.

 

[NVP]

hey there

assuming the 58% relates to a distinct movement of the instrument enough to accommodate a 1:1 risk return ......then it’s a good start

i known many traders who do well under 50% due to good risk returns letting the trades run

so what next ?

N

 

[tomorton]

Hi, I have just started my journey in this world of trading. I have started a few courses on *edited* and am just collecting information as I go through the articles here.
But like it is said by @NVP, I did read that even with an accuracy of 50%, traders do manage to make money as they enter the trade at the right time (and also exit at the right time)
I guess apart from the algorithms, you should have a disciplined and focused mind to make the most of the trade.

Absolutely. Read about the Turtle Traders. They didn't rely on indicators and they didn't have any secret Chinese chart pattern or a special market wave analysis system for their entries. I have never heard whet their win rate was. They just followed price up when it went up and down when it went down, they got back out into cash when price went the other way and they added to their winning positions to maximise the value of their capital. This allowed them to make millions.

 

[NVP]

Absolutely. Read about the Turtle Traders. They didn't rely on indicators and they didn't have any secret Chinese chart pattern or a special market wave analysis system for their entries. I have never heard whet their win rate was. They just followed price up when it went up and down when it went down, they got back out into cash when price went the other way and they added to their winning positions to maximise the value of their capital. This allowed them to make millions.

it was low dude ....around 35% i think

but the runs on the winners were mainly colossal ..........

thats why the turtles that stayed around and followed the system all became millionaires....but many moved on as it was so so soul destroying

im the same i could not bare to trade such a big Drawdown system

N

 

[NVP]

Absolutely. Read about the Turtle Traders. They didn't rely on indicators and they didn't have any secret Chinese chart pattern or a special market wave analysis system for their entries. I have never heard whet their win rate was. They just followed price up when it went up and down when it went down, they got back out into cash when price went the other way and they added to their winning positions to maximise the value of their capital. This allowed them to make millions.

they used a basic donchian pattern named after one of the "sponsors" of the scheme......

 

[NVP]

Hi, I have just started my journey in this world of trading. I have started a few courses on *edited* and am just collecting information as I go through the articles here.
But like it is said by @NVP, I did read that even with an accuracy of 50%, traders do manage to make money as they enter the trade at the right time (and also exit at the right time)
I guess apart from the algorithms, you should have a disciplined and focused mind to make the most of the trade.

if you are below 50% Win rate ....you must have to have a very disciplned system that runs the winners...that means a real real good exit strategy ......if you are exiting too early on a sub 50% win rate you have just written off all your capital ...believe me