Probability Mystique

[pedro01]

x

 

[arabianights]

are you paying or earning the spread?

 

[pedro01]

are you paying or earning the spread?

LOL !

Aren't smart-arses supposed to derail threads after they have actually gone somewhere.

Mods - can you close this thread please ?

I officially give up with this site.

 

[donaldduke]

1) If you toss a coin at 10:30 every day, enter long on heads, short on tails. Enter the E-mini S&P with a 5 point stop & 5 point target. What will the win rate be ?

2) If you roll a dice at 10:30 every day, enter long on 1 & 4, short on 2,3,5,6, with a 5 point stop & 5 point target. What will the win rate be ?

3) If you toss a coin at 10:30 every day, enter long on heads, short on tails. Enter the E-mini S&P with a 2 point stop & 4 point target. What will the win rate be ?

1.A bit less than 50%
2.A bit less than 50%
3.A bit less than 33%

 

[N Rothschild]

pedro this has been done a few times

 

[arabianights]

LOL !

Aren't smart-arses supposed to derail threads after they have actually gone somewhere.

Mods - can you close this thread please ?

I officially give up with this site.

Nothing to do with being a smart ****; it makes an absolutely massive difference.

 

[firewalker99]

1.A bit less than 50%
2.A bit less than 50%
3.A bit less than 33%

Yip, but obviously those numbers would only come close in the long run...

 

[donaldduke]

Nothing to do with being a smart ****; it makes an absolutely massive difference.

Not sure if it will make a massive difference to the win rate as 5pts on ES = 20 ticks.

 

[arabianights]

Not sure if it will make a massive difference to the win rate as 5pts on ES = 20 ticks.

Potentially 11:9 ratio then... that's a big edge

 

[donaldduke]

Potentially 11:9 ratio then... that's a big edge

The orginal question asked about win rate, not magnitude of the wins or losses.

By earning the spread you gain an extra tick on your winners and lose one less tick on your losers.

But I dont think the win rate changes at all.

 

[arabianights]

Depends what running for 5 points means, really. To me that would be the difference between entry and exit prices but you could take midpoint or whatever I suppose.

Pedantry r00lz

 

[cpngtw]

Oh my dear smart trader Pedro and his admirers from the other thread 🙂lol🙂. What my dear Pedro wants to prove is his not yet famous formular

%win rate = (100 / (profit ticks + stop loss ticks)) x stop loss ticks​

with the unconditional blessing from Mr Charts 🙂lol🙂

Look, the win rate is nothing more than either the rate of wins vs number of trades

win rate = # wins / # trades x 100​

or look at a different angle,

win/lose ratio = # wins / # losses​

These numbers are calculated regardless of how much money won or lost per trade.

Now you could argue that changing R/R could change the winning probability, but there is NO guarantee that increase or decrease the Risk/Reward would increase or decrease the Winning probability. That depends on your strategy, the market sideway or trending, volatile or quiet, etc.

Therefore, there is no DIRECT & FORMULATED relationship between win rate and Risk/Reward. With your examples, Pedro, try back testing with large data set of all majors using R/R ranging from 15, 30, 60, 100 or so, and see what happens!

Yes, you could use random entries, but the market is random or not is still debatable and not the topic here, and that doesn't prove your formula!

One of his admirer Zupcon suggested that this formula presents the EXPECTANCY🙂 If you want, we could dive in to that but in no way this formula is the expectancy!

 

[zupcon]

One of his admirer Zupcon suggested that this formula presents the EXPECTANCY🙂 If you want, we could dive in to that but in no way this formula is the expectancy!

You really are a stupid **** arnt you

In fact so ****in stupid, you cant actually read or comprehend the simplest of sentences. I'll say it again numb nuts, the win rate is inversely proportional to R/R, the expectancy may or may not improve with R/R but only in the unlikely event someone with your **** for brains actually had an edge. In a random system the expectancy will remain constant

Is that clear enough for you ?

 

[Skill Leverage]

lol, that was the best post I've read in ages. Much more fun than trying to start my own argument.

Here's an easy but interesting one:

If the test for HIV was 99% accurate (that is to say, it is 99% likely to give the correct diagnosis), and HIV were to affect 1 in 10,000 people, would the test be worth doing?

EDIT: I should say, would the test be worth doing on the 4 million people living in our fictional country (probs in Africa)

 

[cpngtw]

If the test for HIV was 99% accurate (that is to say, it is 99% likely to give the correct diagnosis), and HIV were to affect 1 in 10,000 people, would the test be worth doing?

EDIT: I should say, would the test be worth doing on the 4 million people living in our fictional country (probs in Africa)

tested on 10,000 people is different than tested 100 people 🙂

 

[cpngtw]

You really are a stupid **** arnt you

In fact so ****in stupid, you cant actually read or comprehend the simplest of sentences. I'll say it again numb nuts, the win rate is inversely proportional to R/R, the expectancy may or may not improve with R/R but only in the unlikely event someone with your **** for brains actually had an edge. In a random system the expectancy will remain constant

Is that clear enough for you ?

thanks so much for your insight 😆

 

[cpngtw]

You really are a stupid **** arnt you

In fact so ****in stupid, you cant actually read or comprehend the simplest of sentences. I'll say it again numb nuts, the win rate is inversely proportional to R/R, the expectancy may or may not improve with R/R but only in the unlikely event someone with your **** for brains actually had an edge. In a random system the expectancy will remain constant

Is that clear enough for you ?

And in fact, Risk is more closer to Expectancy! 🙂

 

[Skill Leverage]

Actually it doesn't matter how many people you do it on really, but it helps you think it out.

It seems no-one found it as interesting as I did at uni anyway!

 

[Gumping]

Actually it doesn't matter how many people you do it on really, but it helps you think it out.

It seems no-one found it as interesting as I did at uni anyway!

😆 Thou art correct indeed. I work in the pharma industry where probabilities on clinical trials are stretched to the max. to justify things all the time.

I also recall watching an episode of watchdog where they were dealing with complaints from people who got pregnant while using a contraceptive device that was deemed in trials to be effective in 95% of cases and had sold 100000 units.

 

[fifty2aces]

lol, that was the best post I've read in ages. Much more fun than trying to start my own argument.

Here's an easy but interesting one:

If the test for HIV was 99% accurate (that is to say, it is 99% likely to give the correct diagnosis), and HIV were to affect 1 in 10,000 people, would the test be worth doing?

EDIT: I should say, would the test be worth doing on the 4 million people living in our fictional country (probs in Africa)

Should see around 100 times as many false positives as correct positives, so probably not worth doing. I guess you could do it more than once if the inaccuracy is random rather than systematic. (i.e. if people show false positive at random, rather than certain people being particularly susceptible to it)