You are using an out of date browser. It may not display this or other websites correctly.

You should upgrade or use an alternative browser.

You should upgrade or use an alternative browser.

Paul

law of averages/probability blah

as traders, we can never say for certain that a particular trade is gonna go in a certain direction, but if we can develop a strategy or system where the odds are in our favor (like the casino operators) and our winning trades more than compensate our loozers, then we're in the money

Ra! for math

I think we trade with some form of probability inbuilt into our decisions for example:-

At any given time running a slow stochastic/19 on a 30minute

chart at or near the top of its range the probability of a fall in the chart is greater than a further rise "on average" , if this is not the case then why use the indicator......although we do not carry out a formal analysis using probability theory we accept [on most trades] what we see .......as do the professionals...

Maths 1 Complete blind Guesswork 0

IMHO

Throughout history we have looked at ways of recording what has happened from the amount of rain that has fallen or the number of crops that have yielded well. When we have a good crop we have recorded how that was achieved. Did we we use this fertilizer or that.. selective breading was developed in this way by taking the best cattle for a particular purpose to achieve (with higher probability) the best heard.

Surely we are doing the same whether we use FA or TA we are looking for what we consider the best parts of history to repeat itself so that it will give us the edge we are all looking for. And Based on our interpretation of of these statistics then we make a trading decision sometimes right sometimes wrong.

Trading by equations is not easy because we all see the same information differently and then there is a multitude of other factors to consider before we trade. Does it fit our R/R profile or money management rules and our ability to implement them always dictates the success or failure of every setup.

my only comment is that it is not the 'market' which is 'chaotic'.

It's the traders !

if that is so then mathematics may only prove satisfactory

in statistical terms and therefore has no meaning.

does it play an important part in trading ?

well I suspect the use of mathematics helps to keep it 'chaotic' ?

But not in the way most people think. Given that the market can and does do anything, maths has little or no relevance except in pricing options, derivatives or spreads etc. Maths applied to pure price is just adding another layer of personal beliefs. (Fibs etc)

According to Tharp "setups and entry each are about 10% of the equation, exits are about 30%, and position sizing is about 60%"

It is in position sizing that maths is critical to success. as they say is it all about how much or how many contract to use per trade. If you think about it, if trading is at best a 50/50 game (i know it is a negative game actually given commissions, tax etc) applying a constant number of contracts to each trade will at best lead to making no money over time. The secret is adding to the size of the bet when proved correct. So I start with a single unit bet, given I have no guarentee that the bet will be right (I am hopeful 'cause of analysis etc). If it proves wrong them my loss is a single unit. On the other hand if price action proves my annalysis correct I quickly increase bet size to capitalise on run. Hopefully the leverage correct bets more than outway my regular small losing bets.

That is were maths is critical to success- POSITION SIZING.

PS What is your definition of the long term. A day -trader might think 8 hours is long term, a position trader might think a month is a long term, whereas a historian might think 100 years is a long term.

All comes back to your belief systems. ie don't really understand your question in relation to your original query-is maths important to trading.

- Replies
- 10

- Views
- 811

- Replies
- 0

- Views
- 199

- Replies
- 1

- Views
- 1K

AdBlock Detected

**We get it, advertisements are annoying!**

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.