probability

[Andy_Trade]

What is the proper way to calculate the probability of a trade being profitable in the end?

Thanks

 

[Hansel H]

Quote from Andy_Trade:

What is the proper way to calculate the probability of a trade being profitable in the end?

Thanks

Good luck with this one.

 

[Andy_Trade]

Well why am I seeing people talk about "high probability trades" and such?

What is this all about?

 

[shliang]

66% seems very high to me, esp. when avg winner / avg loser > 2

 

[Andy_Trade]

Quote from shliang:

66% seems very high to me, esp. when avg winner / avg loser > 2

huh?

 

[matador04]

Quote from Andy_Trade:

huh?

Reference to standard deviation? Although it should be 68% within one SD either way...based on a Gaussion distribution

 

[shliang]

if u bet 100 times, u have 66 winners, 33 losers. On average for each winner u win 2 while u lose 1 per loser.

 

[rosy2]

you create a probability distribution using the instruments volatlilty and current price. the use prob density function.

or quick way is to look at the delta

 

[Hook N. Sinker]

Quote from Andy_Trade:

What is the proper way to calculate the probability of a trade being profitable in the end?

Easy. All you have to do is misuse mathematics by predicting the behavior of nonexistent prices in the nonexistent future.

Statistics describes the past. What might happen in the future is an opinion.

 

[Andy_Trade]

Quote from rosy2:

you create a probability distribution using the instruments volatility and current price. the use prob density function.

or quick way is to look at the delta

Can someone please translate this into English?

Thanks