if one can predict market daily movement 55% correctly, how to profit from it ?

J

jimshaw

Dear All:

If one can predict market daily movement 55% of time correctly, for example, SPY movement, how to profit it ?

Beside trade index directly, what will be other ways to profit from it ?

Other methods I can think of is:
- trade emini
- trade option on SPY

What are other alternatives ?

Thanks,
 
Quote from jimshaw:

Dear All:

If one can predict market daily movement 55% of time correctly, for example, SPY movement, how to profit it ?

Beside trade index directly, what will be other ways to profit from it ?

Other methods I can think of is:
- trade emini
- trade option on SPY

What are other alternatives ?

Thanks,
More...

A 55% "win ratio" is more than enough to be a big-time winner... IF (1) you try to let winners run, and (2) limit losses.
 
impossible,
55% is probably 35% on paper,
-10% spread+commissions.
U down to 25%

u ain't profitbale.
=========

strategies i trade have a 80% win ratio on paper, 50% in reality 1:30 risk reward ratio.
 
Quote from cooolweb:

impossible,
55% is probably 35% on paper,
-10% spread+commissions.
U down to 25%

u ain't profitbale.
=========

strategies i trade have a 80% win ratio on paper, 50% in reality 1:30 risk reward ratio.
More...

If "commissions and spread" have a significant impact on your P/L, you're fishin' in a dry hole.
 
What do you mean "1:30 risk reward ratio" ?

Quote from cooolweb:

impossible,
55% is probably 35% on paper,
-10% spread+commissions.
U down to 25%

u ain't profitbale.
=========

strategies i trade have a 80% win ratio on paper, 50% in reality 1:30 risk reward ratio.
More...
 
51% and you can own the world in a year.

many here have achieved this amazing performance.


keep in mind that the boyz have already predicted YOUR movement.
 
% doesn't matter. Did you get 55% on your Grade 1 spelling test or your License to practice medicine? The context matters ... you need also to know what kind of risk reward is involved in that strategy.

I could buy out of the my options and win 10% of the time, but double my account every year... you see that % doesn't matter?
 
Quote from jimshaw:

Dear All:

If one can predict market daily movement 55% of time correctly, for example, SPY movement, how to profit it ?
More...

Percentage win rate is not enough to make money. You must also have a sufficient avg win to avg loss ratio. The break even is shown in this paper to be equal to:

w = 1/(1 + R), where w is the win rate and R the ratio. Solve for R and you get

R = (1-w)/w

if w = .55 then your R must be at least 0.81. If you factor in commissions, slippage and other unfortunate situations, to break even you will need an R of about 1.3. That is only to break even. If you want to make 1.5 times what you lose in total, a profit factor of 1.5 that is, your R should be equal to 1.3 x 1.5 = 1.95. This means that you should make on average $2 for every $1 you lose. This is becoming hard now. Profit factor 1.5 is minimum. If you raise that to a more reasonable 2.0, R becomes 2.6. This is becoming very difficult now. Your only way out is increasing w. The vicious circle is just beginning.
 
Quote from jimshaw:

Dear All:

If one can predict market daily movement 55% of time correctly, for example, SPY movement, how to profit it ?

Beside trade index directly, what will be other ways to profit from it ?

Other methods I can think of is:
- trade emini
- trade option on SPY

What are other alternatives ?

Thanks,
More...

You need to take into account other variables, and do an analysis of your method. The steps involved, how to do them, and why to do them, are described at:
http://stockmarketoptions.blogspot.com/2010/10/analysis-of-trading-systems-outcomes.html
 
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