Yes, I can.
First, I did NOT say, "You should trade one particular pair over another."
Here's the original quote:
ViennaTrader: Only trade ONE PAIR until you master this. When you keep changing pairs, you increase your chances of stringing losses together. By trading ONE PAIR, you know sooner or later you will catch the reversal off the daily low.
Mathematically, when you reduce all choices down to "ONE," that physically and logically eliminates
all other choices. In other words, "ONE PAIR" cannot exist in the same domain as all
other pairs, because of the unique exclusionary property that you assign to "ONE PAIR" by logical definition. So, by excluding all others, you thereby give "ONE PAIR" its unique identity and thus you define "ONE PAIR" to be "specific" by definition. Logically, this is flawless.
So, based on the accurate representation of your own post, the question still stands: What makes "ONE PAIR" logically more uniquely qualified to be traded under your system/methodology than any other pair, not having the same unique attributes. Again, a logically flawless question.
Let's assume you are trading a-pair and it makes a new daily low.
That's called an illogical assumptive, given the declaration made above, that "ONE PAIR" excludes all other pairs (inherently defined by the declaration: "Only trade
ONE PAIR..., which by logical definition must extend to and include
a-pair as well. In other words, the underlying premise is flawed from the beginning when an explanation to the previous question is initiated with an illogical assumptive that includes items which were previously excluded by definition. Thus, everything else that flows from this illogical assumptive must likewise be considered part of the underlying flawed premise itself.
...You enter a rat reversal and get stopped out. You wait and enter again with the same result. On the third attempt price goes on in your direction to make a new daily high. You more than recover the first 2 losses.
Well, only if a leap in logic as large as the assumptive itself ensues after the third trade. Here's why:
RESULTS.
1) price within 20 pips of the daily low - that is OPPORTUNITY
2) red candle closes
3) green candle closes - note the high price of the green candle.
4) enter long at the green candle's high price
5) STOP LOSS IS 10 PIPS
6) Take whatever profit you can.
Bullet point number six in the declared procedure is what creates a direct conflict and contradiction in the statement:
You more than recover the first 2 losses.
The reason for this, is that bullet six is classic open ended assumption without specific definition. Therefore, the trader cannot establish nor include positive expectancy on the target - because the trader does not know where the target exists. And, without knowing where the target exists, it includes
all targets in existence which would allow for a 1 Pip target to be included within the definition of:
6) Take whatever profit you can.
Considering the total number of trades made by the trader using this system/method, the given spread of the platform in use, slippage and the physical reaction time of the trader him/her self, a 1 Pip target is less than a probabilistic occurrence per trade and would most likely leave the trade with an aggregate total loss on the session. So, this forces the trader to go up the probabilistic chain of possible target outcomes to values that exceed 1 Pip. However, with every increment above the 1 Pip lower limit, the mathematical probability of striking a higher target is reduced, and so on. This is the inherent problem with open ended assumptive target declarations that do not have positive specification.
On the other hand, if you trade a-pair and lose, then b-pair and lose, then c-pair and lose, you may have missed the reversal off the a-pair low of the day.
Unfortunately, you've just strung together three inconsistent illogical assumptive declarations, which compounds the error in the underlying premise. Here's why: Pair "A", Pair "B" and Pair "C," have
unknown outcomes, theoretically. Not knowing the outcome of either pair in the assumed matrix of pairs used, mathematically guarantees that neither pair can carry more
or less positive outcome weight than another pair in the same matrix. Therefore, there can be zero (no) net gain in trade outcome probability, by remaining with "ONE PAIR' over another in the matrix, because they all mathematically carry (share) precisely the same equivalent p-factor. Basic differential equations (calculus) makes this true. The differential in probabilities for a positive outcome from Pair "A," can be no higher than Pairs "B" or "C" - specifically because all pairs share the same unknown outcome from the start AND because no pair is removed from the matrix of pairs used to form the differential probability. Therefore, it would be mathematically and logically impossible for the following assumptive declaration to be true:
...When you keep changing pairs, you increase your chances of stringing losses together. By trading ONE PAIR, you know sooner or later you will catch the reversal off the daily low.
Which, by the way, assumes a fourth, unstated and unfounded declaration:
That there will be a reversal of the daily low.
How does the trader know this? Do all currency pairs reverse from their daily low AND continue to climb in price? Is it possible that some currency pairs simply continue making incremental daily lows throughout the majority of the trading session, before retracing upwards near the close?
But to be fair with you some pairs have a better bottom wick frequency distributions than others. Those pairs are the ones you want to trade. GBPUSD is one such pair.
Over the last 1000 days the bottom wick of the GBPUSD was 20 pips or higher over 70% of the time. That means an entry within 20 pips of the daily low usually was profitable.
That is empirical and historical data (evidence) that is very useful information and it is not to see that you included it here. However, when you speak of "bottom wick frequency distributions" occurring over the "last 1000 days" on GBP, you do not make mention of the what the full cyclical distribution looks like. Or, what the displacement of that same distribution turns out to be when you include all bottom wicks that ultimately resulted in a continuation of the downward price pattern before reaching any specified target target level.
Outside of that fact, I will give credit for having at least posted a portion of the bottom wick distribution pattern - regardless of how incomplete that representation might be in this thread, thus far. Maybe you can clarify or add the full cyclical distributions where the trend was continued and no designated target was struck. But, in order to do that, you will have to eventually deal with bullet number six above, which right now, stands a one of the biggest problems for this system/method.
Thanks for replying.
