"Toss Up"

alanb41252

1
264 0
"Toss Up""

A quote from Elder's " Come into my Trading Room" says :-

" A good system gives you an edge in the long run, but there is a great deal of randomness in the markets, and any single trade is close to a toss-up".


This implies that no matter what you do or how much technical analysis you apply, you are still facing a more or less 50-50 scenario. ie. up or down

So while technical analysis is a valuable and proven tool, it is possibly a waste of time to go overboard on it when facing a " toss of the coin" situation.

Pay heed to TA - yes - but back your own personal judgement and just go with the flow.

IMHO good money management and a good feel for probabilities is the real key to this numbers game.

Any comments ? !!
 

Wise Pranker

Newbie
5 0
Agree with you about how important good money management is. And personally I oly trade based on strong signals based on the rpice chart and don't use contrived indicators.

I donlt think the percentage of winningtrades is something very useful to look at -
I know one trader who skims tiny percentages on lightening fast trades who claims to have >90% of trades making a profit.
I also know of another trader who goes for the occasional big win but accepts that >75% of their trades will make a loss.
Both of these make a tidy profit int he long run doing doing what they do.

Its not the percentage chance of making a profit from any given trade it is the expected profit from a trade that measures the success of a system.

W.P.
 

neil

Legendary member
5,167 747
URANUS Trading Signals

Found this on a web site discussing ADX/DMI indicators:

http://www.elitetrader.com/vb/showt...0624#post320624


In our book, Computer Analysis of the Futures Market, we tell an amusing anecdote about a trader who seemed a bit loony because he used a Coke bottle with a broken radio antennae sticking out of it to receive trading advice from other planets. This advice, like most trading advice, was only related to the entries. When the voice from the Coke bottle told him to enter a trade he would come back to my desk and want to put the trade on right away saying something like: "They are buying soy beans on Mars, buy some beans for me".

The other traders sitting around the board room would overhear these frantic orders and became quite interested in this strange trading advice. Naturally they were quick to make fun of the trader when he was losing but they didn't have much to say when he was winning. The trader with the Coke bottle eventually learned that to avoid ridicule he had to take his losses quickly and hold on to his winners as long as possible. His trading steadily improved and he wound up being a surprisingly good trader. Obviously, his reliance on trading advice from other planets had nothing to do with his success. His entries were no better or worse than random but he had learned to be very good at his exits.

We should do the same.

Seems like a "Toss Up." ?

:eek:




__________________
neil
 

Trader333

Moderator
8,590 922
AlanB,

I agree with you. From an historical perspective and over 101 trades on futures (which I dont trade anymore) I had the following results :

Losing Trades = 45

Breakeven Trades = 51

Winning Trades = 5

Total Profit after trading costs £4119

It was only money management that allowed this as a 5% win rate is pretty low.

Cheers

Paul
 

Salty Gibbon

Experienced member
1,535 6
Yeah. Go with the flow.

Throw caution to the wind.

It's only money.

To hell with TA !!! lol
 

Finlayson

Well-known member
410 10
when I first started trading I was shown 2 things, an entry signal & a trade management technique..........I thought at first that the 'entry signal' was the important thing & was the reason for my profits.

I now know it is the other way round. the 'entry' signal was just a mental trigger too put me in the market. then came the important part of the trade management.

I have now learnt to read markets better , so I can take better entries.........but I still use the same 'management technique' & think this is the important part.

once we have made a decision & entered the market anything can happen!........so it must be what we do after we have entered that counts
 

Trader333

Moderator
8,590 922
Throwing caution to the wind was the last thing I did here. I just cut my losses immediatley or if the market moved a small way in my favour and reversed I got out at breakeven and, as the saying goes, let my profitable trades just run and run.


Paul
 

jpwone

Well-known member
254 3
<i> I just cut my losses immediatley or if the market moved a small way in my favour and reversed I got out at breakeven and, as the saying goes, let my profitable trades just run and run.
</i>

And that single sentence sums up all you need to know about trading.
 

CityTrader

Established member
665 26
Alanb... I agree with you, except the statement the TA is a "proven" tool.
But then regular readers will know my feeling on TA, backed up by the huge amount of abuse I got couple of months ago!
 

alanb41252

1
264 0
Good for you Wayno.

I have followed your lead and just given Murphy's " Technical Analysis Of The Financial Markets" to my dog for shredding.
 

JTrader

Guest
5,741 506
During an unsuccessful trading session I sometimes think that I may as well choose a random entry, which should present a 50/50 success rate. This is because technical analysis cannot guarantee success.
However, I consider TA a valuable tool in justifying my decision to enter a trade, stacking the odds in my favour, and due to my trading style resulting in more than half of my trades being profitable, I therefore believe my decisions to enter trades will present odds of more than a 50/50 chance of success.
However, as I am also aware that the markets can and often do react in ways that you would not have envisaged I therefore think a lot of market action is random.
If any trade has a 50/50 chance of making profits, I would find it extremely hard to trade if less than 50% of my trades were profitable.
Overall I find TA useful, especially with hindsight, but, it cannot guarantee success.
 
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