OP's statistics is insufficient to establish efficacy. A few hundred data points in a few months or a couple of years are not enough to establish if his method really works long term.
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1:1 Risk:reward gives me a 90% win rate but...
- Thread starter metatrader54
- Start date
Great advice sir. I did exactly that. Went back to school to study economics 101, Introduction to Finance, read up on McMillan and Hull, studied VBA to at least understand what the professionals are talking about and do some modeling on my own.To take it from the top I’d say read Markowitz and then try to do a study on CAPM and it’s evolution over time. Churn through white papers. Get familiar with the latest iteration of modern portfolio theory.
Familiarity with financial accounting is a decent bonus, at the end of the day it helps to have a general idea of how assets are priced and what factors tie into that. You could even compare some local real estate listings, underwrite and price them yourself for a practical exercise. What are some factors that make one asset more or less attractive than another one?
To get at trading more directly once you have the background information on finance read Hull. He’s recommended very often. But after that it gets harder to find good literature that talks about next steps. You have to get good at reading between the lines, taking white papers and correcting their errors, sifting through tons of junk on forums for a few gems, etc.
I hope @metatrader54 takes your comments to heart (unless he/she is already a finance professional) and starts reading up on the fundamentals of finance, forex...
Playing blackjack is gambling unless you understand the probability.
Regards,
So true if you trade options!!! I didn't know the other systems/instruments also followed such statistics?There is an indirect relationship between the avg winning pct and the avg reward / avg risk.
A stable winning system at a reward to risk ratio of 1:1 is going to converge to around 70%.
At an avg 80% winners, now you're having to risk 2x the reward.
At 90%, you're at 3x+ risk vs the reward.
Trend trading system can easily be 40-60% winners with 1.5:1 to 2.5:1 range of avg reward to risk ratio.
Please read post again, I repeated said this is extremely basic idea and lacked A LOT of details.oh,yeah?? you trade with sth that even mathematicians find hard to define..
so what's your IQ ?? must be high I guess..
So how long would work? I've backtested it over 10 years of data across multiple currency pairs?OP's statistics is insufficient to establish efficacy. A few hundred data points in a few months or a couple of years are not enough to establish if his method really works long term.
Hull?To take it from the top I’d say read Markowitz and then try to do a study on CAPM and it’s evolution over time. Churn through white papers. Get familiar with the latest iteration of modern portfolio theory.
Familiarity with financial accounting is a decent bonus, at the end of the day it helps to have a general idea of how assets are priced and what factors tie into that. You could even compare some local real estate listings, underwrite and price them yourself for a practical exercise. What are some factors that make one asset more or less attractive than another one?
To get at trading more directly once you have the background information on finance read Hull. He’s recommended very often. But after that it gets harder to find good literature that talks about next steps. You have to get good at reading between the lines, taking white papers and correcting their errors, sifting through tons of junk on forums for a few gems, etc.
Options, Futures and Other Derivatives (6th Edition)?
Do people still even use CAPM? Why is it so popular? I did read up on it before but concluded that it's just a system curve fitted on history and doesn't really work anymore.
It's not that good, you lose 2 trade and 2R is gone, every 10 trades you are only left with 6-7R, minus comissions thats even less.I don't get what the issue is... with a 80-90% win rate on a 1:1 RR being traded live already, what more are you asking for? You can compound the crap out of it until you hit liquidity and slippage problems.
I've got a degree in finance. To be honest, I often think that traders on forums and professional traders/finance guys are completely different things, even to the point that retail/forum traders aren't even "finance" people, there's a ton of things in the corporate world that they don't know, technical analysis is a joke (I am using), do they understand what happens in an IB when a M&A deal comes through? I just feel that it's just 2 different worlds but non-finance people think they are the same group of people.Great advice sir. I did exactly that. Went back to school to study economics 101, Introduction to Finance, read up on McMillan and Hull, studied VBA to at least understand what the professionals are talking about and do some modeling on my own.
I hope @metatrader54 takes your comments to heart (unless he/she is already a finance professional) and starts reading up on the fundamentals of finance, forex...
Playing blackjack is gambling unless you understand the probability.
Regards,
It's not that good, you lose 2 trade and 2R is gone, every 10 trades you are only left with 6-7R, minus comissions thats even less.
6-7R profit every 10 trades isnt enough? I still don't get it.
I worked for a hybrid hedgefund/p.e. previously and I have to agree, I don't think anyone really cares about CAPM and these academic stuff. Maybe some mutual funds might care. Same goes for TA. That being said, their returns aren't phenomenal either.
Nope, with say a 1:3 ratio, you’d get around 18 R per 10 trades for a 70% win rate. 60% and you get 14R etc.. so 6-7R really isn’t much IMO.6-7R profit every 10 trades isnt enough? I still don't get it.
I worked for a hybrid hedgefund/p.e. previously and I have to agree, I don't think anyone really cares about CAPM and these academic stuff. Maybe some mutual funds might care. Same goes for TA. That being said, their returns aren't phenomenal either.