Consider These Two Trading Strategies...

[wrbtrader]

It really doesn't matter because most traders will not be profitable with A, B, C, D or whatever math theory (strategy) you can design. That's what happens in real trading...any advantage you see in backtest or on paper via some math formula...its no longer applicable when your real dollars are on the line.

Why?

The human mind is a very mysterious thing when under economic and financial pressure to perform / apply. A few journals here in the past where traders have attempted to prove things like if A outperforms B or vice versa. Results in real money trading...B outperform A in one journal and A outperform B in another journal involving real money trading.

Yet, if those strategies are automated strategies...whole different ball game.

 

[romik]

Strategy A will compound your account much faster than strategy B.

Not in real life. Randomness will prevent this from happening on a regular basis. You may know your historical win rate, etc., but it is taken over a sample of trades, you never know whether next trade or indeed a series of trades will be positive or negative.

 

[newwurldmn]

Not in real life. Randomness will prevent this from happening on a regular basis. You may know your historical win rate, etc., but it is taken over a sample of trades, you never know whether next trade or indeed a series of trades will be positive or negative.

True but this a straw man argument.

He's just offering a conceptual exercise. He didn't say that it's real life.

 

[romik]

True but this a straw man argument.

He's just offering a conceptual exercise. He didn't say that it's real life.

If it has no relevance in real life, then it's a waste of time discussing it. Better time spent discussing girl's asses

 

[wrbtrader]

True but this a straw man argument.

He's just offering a conceptual exercise. He didn't say that it's real life.

Yes but you'll be surprise at how many people believe the theory or conceptual exercise is true in real life.

Therefore, such should be stated like a disclaimer statement with such types of math exercise for those that may misunderstand. Its what some do in publish academic works.

 

[romik]

Here is a third strategy