The below topic is for your thinking only.
Regardless of whatever trading system or method you are using. Do you have a Edge over the markets?
A coin toss will have a 50% chances of it landing head and 50% chance of it landing tail if we assume both sides is equal.
Think about the follow scenario (Commission is excluded for simplicity)
you enter a trade at 6500 with a target profit at 6510 and stop loss at 6490, your chances of hitting either side is 50/50. From a mathetician and statistic point of view, how do we increase the change to greater than 50%
if we cannot we got no edge or advantage.
Another scenario you enter long at 6500 target at 6520 and stop loss at 6490, your chances of hitting 6520 for a 20 ticks gain is only 33% while your chances of hitting 6490 for a 10 ticks loss is 66%
1 more scenario
You buy Microsoft at 65.00 set a stop loss at 63.00 and a profit targe at 69.00. Why do you allow a 2.00 stop loss? Why not set a stop loss at 64.80, isnt a 0.20 stop loss better than a 2.00 stop loss. We know if we set a 0.20 stop loss we will have a 95.238% chances of hitting it first before it hit the profit.
we are taught to belief let profit run and cut losses short
the problem with this is if profit > stop loss, the chances of hitting stop loss will be greater than hitting profit
Regardless of whatever trading system or method you are using. Do you have a Edge over the markets?
A coin toss will have a 50% chances of it landing head and 50% chance of it landing tail if we assume both sides is equal.
Think about the follow scenario (Commission is excluded for simplicity)
you enter a trade at 6500 with a target profit at 6510 and stop loss at 6490, your chances of hitting either side is 50/50. From a mathetician and statistic point of view, how do we increase the change to greater than 50%
if we cannot we got no edge or advantage.
Another scenario you enter long at 6500 target at 6520 and stop loss at 6490, your chances of hitting 6520 for a 20 ticks gain is only 33% while your chances of hitting 6490 for a 10 ticks loss is 66%
1 more scenario
You buy Microsoft at 65.00 set a stop loss at 63.00 and a profit targe at 69.00. Why do you allow a 2.00 stop loss? Why not set a stop loss at 64.80, isnt a 0.20 stop loss better than a 2.00 stop loss. We know if we set a 0.20 stop loss we will have a 95.238% chances of hitting it first before it hit the profit.
we are taught to belief let profit run and cut losses short
the problem with this is if profit > stop loss, the chances of hitting stop loss will be greater than hitting profit
