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agreed. but noone said we are required complementary actions. that was used for a specific example. take the case of having a trailing stop, being a proper trailing stop, acting different from buys and sells. i dont 'believe' that it would result in a 50/50 with /0 slippage. the Van K. Tharp...

bah the past 10 posts have been wasted trying to explain two ideas. 1) in a no cost world. we can negate expectancy of any system. 2) Steveyd was incorrect by saying you can't obtain 50% profitability given ANY system(entry, exit), obtaining 50% by flipping a coin. can we move on...

read it again. the coin flipping was in response to the statement by Steveyd that you cant guarentee 50% profitable trades on random entries / any exit strat. nothing to do with negating expectancy. stop taking about multiple accounts! :p

you're kidding right? where are you getting this perfect hedging / multi account stuff from? i used the paper trading account as an example of how to get the same entry and exit signals, using a single TP and SL regardless of actually trading long or short. the idea is this. single account...

gah. ok. lets run it in the buy case. say it buys at 1.5$. so the SL is at 1.495 and the TP is at 1.6. so it runs and either stops at 1.495 or 1.6. yay. so in the case of 1.6 we made .1. in the case of we lost 0.005. double yay. now watch this. this is where the magic happens. flip the coin...

eh? you dont have to actually place the orders on the paper trading account. i was using it as an example for how to get independent entry / exit signals regardless of being in a long or short position. common illiquid. its not complex. ill put it to you another way say we have a system...

note. this is very important when trying to understand any of this. everything must be the exact same when flipping between buy and sell. the entry and exit points in the BUY case must be the exact same in the sell case. an easy way of doing this is by always running the buy case and said...

I agree this is the key issue needing discussion here. I am not 100% convinced that this is the case. Why are we limited to exp close to 0? We just need the exp to be greater than cost in any case. incorrect. give me an exit strategy out of the set of all possibly exit strats, say S, we do...

i do believe you just managed to contradict yourself. you just said there was zero expectancy if the PT and SL were the same, by that implying that it is possible to get a non zero exp when they are different or using TS. note we are looking for a non-zero expectancy in the 'no cost world'...

how is that different from waiting till a price moves 50 cents in one direction and opening a single position in that direction? only playing 1 account fees, 1 spread and 1 round trip commission, . instead of 2 acct fees, 2 spreads and 2 commissions. note this is not a random entry trading...

hound. i dont understand how any of those points has anything to do with this thread's topic of random entry trading. understanding why a basic statistical idea works or does not work is key when hoping to understand the market. the term optimal and trading strategy should never be used in...

does a trailing stop invalidate that first statement?

interesting. this may be a very good method of gauging the relative value of differing money management systems.

ah really? an unbalanced PT and SL still results in a zero expectancy? an idea like that is'nt intuitive to me.

why cant we make the system an infinite game (or ... reasonably infinite) . pass it down through the generations and such.

leveraging is a sure fire way to turn a profitable system into a blow out. if you were to keep increasing leveraging you'll find a draw down which wipes the account out and stops the system. obviously as leveraging increases, the size of the movement (price, not PL) required to kill the system...

basing this on a purely random entry system. using a backtested exit strat of a stop loss at -5 and a take profit a +5, ignoring costs. to show a ~0 expectancy. then using a stop loss -10 and a take profit of 1 to show a backtested skewed expectancy (either positive or negative). if i had MT4 i...

i have no idea where the flaw is. from a mathematical stand point, it 'seems' sound . given a 50/50 distribution. no cost. equal pay out in either case, say stop loss at -5 and take profit at 5. the expected profit should be 0 over a long enough time. i know based on experience that it is fairly...

telling me my logic is flawed (i already know this) is not the same as telling me where my logic is flawed. at which point of my example do i make an assumption that is false is really the question i am asking.

I was thinking more about this idea. Is the problem that because as you grow your # of trades the chances increase of a streak that will close out the account?