this thread is starting to get very interesting. thanks !
best,
surfer
best,
surfer
Nearly Random Entry vs a High Probability Entry
- Thread starter damir00
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Largely because of the proposition that entries don't really matter as long as the trade is managed well and that they can in fact be random. Hence, random entry. Unfortunately, regardless of what inandlong would like to believe, no one has as yet come up with a generally-accepted definition of "random". So much of the back-and-forth has to do with the fact that not everyone is talking about the same thing. Changing the title of the thread to "nearly random" has not fully addressed this problem.
There is also a back-and-forth regarding theory vs Damir/Nitro. A discussion of random vs non-random invariably drifts back to Damir, as though his method is random, or nearly random. TriPack would have you change the term to "non-directionally biased", though I'm not sure what this would accomplish since Damir's system isn't non-directionally biased, either.
Therefore, the focus is more than a little blurry. I don't know how much light that will generate, but it makes for a nice long thread.
That's really a simplistic view. Using a non-directionally biased method of entry is no different than using any other type of entry. You still face the same challenges. In this case if you get multiple entry signals in the same direction that exceed your account's capital or your risk profile, then you won't be able to take those signals. Also, if the non-directionally biased method happens to kick out 5 signals in a period of 5 second in various directions, then this would make it virtually impossible to capture a profit on any of those positions. So limiting the amount of trading that this non-directionally biased system does is important (just as with any other type of entry method).
I agree with your statement. But it is apparent that damir's method has a significantly higher probability of a win on a given trade, given his posted trades in his journal (more like 90%). The problem comes in that some individuals are equating a non-directionally biased entry system combined with an exit method that looks to maximize % wins as a pure 50/50 bet. Damir's win% tells us otherwise. Any system with a wide stop loss and a small profit target will have a high win percentage.
Like the previous poster said, one man's garbage is another man's gold. With any thread or discussion you only get out of it what you put into it.
Why would I want to do that? I don't trade anything like the method damir described, and if you read my previous posts, I believe that he could achieve much higher overall profitability by using a more selective entry and shooting for larger profits on each trade, rather than attempting to maximize % wins.
For me, the point of this thread isn't to pound your chest (which only serves to inflate the ego), it is to discuss the assertions made by damir and see if there are any insights to be gained. Like marketsurfer, I think some of the recent ideas on this thread are very interesting. If you think this thread is a waste of time then maybe the judgement to move on would be wise.
Anyway - time to trade.
Quote from nitro:
[...]
The basis of this thread lies in the most basic of mathematics, and the fact that people are arguing it's validity shows a real lack of understanding of basic probability theory.
nitro
nitro,
I like to hear you say this.
Quote from nitro:
If your expectancy of a profit from entering at a particular point is 50%, no amount of money management, once you take in slippage and commissions, will turn your expectancy on the trade positive.
[...]
I can't believe I have spent all this time on this thread. [...]
nitro
Here I would say we have to be a little bit careful. In Damir's case I believe he talks about a "randomly chosen point in time - any tick?" but as he has his particular strategy in mind, we do not know about the "Expectancy of profit" in his case. This expectancy depends obviously on the strategy you are going to apply once you entered. As I have pointed out before, such an expectancy could be calculated for a "randomly chosen entry point" provided a rigorous definition of the strategy would be available and the definition of the underlying stochastic process of the market would be known. Especially the last part would be rather illusionary.
As we all are interested in this business of making money, we can deal with this in a more pragmatic or "heuristic" manner. This does not mean, of course, that one should engage in endless exchanges using ill-defined and ill-understood concepts.
Be good,
nononsense
[...]
The basis of this thread lies in the most basic of mathematics, and the fact that people are arguing it's validity shows a real lack of understanding of basic probability theory.
nitro
nitro,
I like to hear you say this.
Quote from nitro:
If your expectancy of a profit from entering at a particular point is 50%, no amount of money management, once you take in slippage and commissions, will turn your expectancy on the trade positive.
[...]
I can't believe I have spent all this time on this thread. [...]
nitro
Here I would say we have to be a little bit careful. In Damir's case I believe he talks about a "randomly chosen point in time - any tick?" but as he has his particular strategy in mind, we do not know about the "Expectancy of profit" in his case. This expectancy depends obviously on the strategy you are going to apply once you entered. As I have pointed out before, such an expectancy could be calculated for a "randomly chosen entry point" provided a rigorous definition of the strategy would be available and the definition of the underlying stochastic process of the market would be known. Especially the last part would be rather illusionary.
As we all are interested in this business of making money, we can deal with this in a more pragmatic or "heuristic" manner. This does not mean, of course, that one should engage in endless exchanges using ill-defined and ill-understood concepts.
Be good,
nononsense
You are right - I was careless.
I should have said. If your entry was not only random, but at the point of entry the market dynamics were such that you had no edge by being in at that point, then no amount of money management will give you a positive expentancy, and assuming you realize that and exit quickly when the egde is contrary to the random direction of your trade, you can minimize the loss.
However, if the entry was random, but at the point of entry you have a positive expentancy, and you ride that for all it's worth, you will make money more often than not on these trades. However, notice that it was the POSITIVE EXPENTENCY of the trade that made it feasible, not the money management by itself.
The question remains though - assuming say 100 random entries and direction during the day, can a good trader overcome the 90/10 ratio of idiotic entries vs the good ones? I doubt it.
nitro
I should have said. If your entry was not only random, but at the point of entry the market dynamics were such that you had no edge by being in at that point, then no amount of money management will give you a positive expentancy, and assuming you realize that and exit quickly when the egde is contrary to the random direction of your trade, you can minimize the loss.
However, if the entry was random, but at the point of entry you have a positive expentancy, and you ride that for all it's worth, you will make money more often than not on these trades. However, notice that it was the POSITIVE EXPENTENCY of the trade that made it feasible, not the money management by itself.
The question remains though - assuming say 100 random entries and direction during the day, can a good trader overcome the 90/10 ratio of idiotic entries vs the good ones? I doubt it.
nitro
Does having money on the line make the truth more valid? No. Posting the trades in the chatroom where everyone who is interested can watch for free is perfectly fine.
If it isn't, then from now on the members posting their trades, profits and losses in the chatroom should be considered to be full of BS because they have not set up an independent reviewer to verify their claims for all to see. Y' know, it's the old "what's good for the goose is good for the gander" thing.
Maybe we should ask Baron for a button to push in the chatroom that would automatically put "Oh yeah... prove it" on the screen. Or we can continue to take people for their word and not presume that anything other than "I am a loser" is a lie.
Funny, in all of the posts and threads where members claim to have lost money, no one ever says "I don't believe you", or "Oh yeah right, I'll bet", or some other similar remark. But let a guy post that he made money or makes money, and the crap responses can't be posted fast enough. Does this phenomenon occur because all have lost money, but not all have made or make money?
I think so.
LOL! I was just thinking.... only those members who post gains in the chatroom should be considered to be full of BS. The ones posting losses are definitely telling the truth.
If it isn't, then from now on the members posting their trades, profits and losses in the chatroom should be considered to be full of BS because they have not set up an independent reviewer to verify their claims for all to see. Y' know, it's the old "what's good for the goose is good for the gander" thing.
Maybe we should ask Baron for a button to push in the chatroom that would automatically put "Oh yeah... prove it" on the screen. Or we can continue to take people for their word and not presume that anything other than "I am a loser" is a lie.
Funny, in all of the posts and threads where members claim to have lost money, no one ever says "I don't believe you", or "Oh yeah right, I'll bet", or some other similar remark. But let a guy post that he made money or makes money, and the crap responses can't be posted fast enough. Does this phenomenon occur because all have lost money, but not all have made or make money?
I think so.
LOL! I was just thinking.... only those members who post gains in the chatroom should be considered to be full of BS. The ones posting losses are definitely telling the truth.
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