Hoodoman, that is the ultimate 'how long is a piece of string' type question. It depends on a number of factors. You could have a 2 tick target and a 100 tick stop and win 90% of the time. But ultimately lose money. Or you could risk 1 tick to make 3 and have a win rate of 40% and make money. Or you could lose with both. Win rate is only relevant when analysing how volatile your equity curve is really and is controlled by your tolerance of risk. Is nothing to do with the profitability of the system
Simple defense of technical analysis
- Thread starter MathAndLogic
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TOMMO:Hoodoman, that is the ultimate 'how long is a piece of string' type question. It depends on a number of factors. You could have a 2 tick target and a 100 tick stop and win 90% of the time. But ultimately lose money. Or you could risk 1 tick to make 3 and have a win rate of 40% and make money. Or you could lose with both. Win rate is only relevant when analysing how volatile your equity curve is really and is controlled by your tolerance of risk. Is nothing to do with the profitability of the system
And would you make the argument If I told you that I had a 95% win rate?
And would you make the argument If I told you that I had a 95% win rate?
Hoodooman. My point is win rate is irrelevant. Even if it 100% I'd just argue your sample size isn't big enough. All strategies eventually fail. A lot of them don't have a statistical edge to begin with. Win rate is largely governed by how wide your stop is. Wider stops equals higher win rate.
tommo:Hoodooman. My point is win rate is irrelevant. Even if it 100% I'd just argue your sample size isn't big enough. All strategies eventually fail. A lot of them don't have a statistical edge to begin with. Win rate is largely governed by how wide your stop is. Wider stops equals higher win rate.
How about shorting on the daily high with the high being the stop.
How about shorting on the daily high with the high being the stop.
This seems to be correct. And this is how most technical analyst make money:
Overall their profits are greater than their losses.
So a 35% win rate isn't necessarily a problem and talks of +90% win rates are usually very unrealistic and not achievable without a supposed "top secret edge". Technical analyst profits are cumulative without large drawdowns.
Please explain to me why this is such a problem for some folks? My first thoughts are that they really don't understand how it works or it doesn't fit their personality or they are greedy and the above is just not good enough.
On one of Covel's recent podcasts the guy he was interviewing, I think it was Schwager?, said he wrote a trading system where the entry buy or sell was arbitrary with a trailing stop and that the system is marginally profitable and that another manager was running the system on 30 markets and it was more successful there. An interesting listen.
I'm saying this respectfully to you, I don't believe you are convinced about your own supposed logic. If you were, you would not continually read and respond to posts railing against TA. Anyone who is truly fully convinced TA is really BS wouldn't bother their ass to respond as they would be happy their opponent is trading on false assumptions. You know deep down that TA CAN work, it's just that you haven't discovered it so in your frustration you continually deny it, or hope that some TA guru will benevolently show you a true TA setup. However, your argument is like an Athiest, claiming something doesn't or cant exist yet lacking any evidence or logic to support the claim.
But it is true Surf, the majority of TA is tea leaf reading, pure BS and wishful hindsight analysis, BUT, some TA does work and any TA expert would be out of his mind to divulge the hidden gold on a message board. The secrets however which are divulged are not spotted by the blind, their mindset prevents them from seeing. I'm sure my message to you today will go in one ear and out the other. Besides, your life style is probably such that you do not have the time or inclination to become reclusive enough to spend the energy really nutting it out. I've mentioned this previously, the road to knowing TA is one for a single person, a life of no distractions and being totally absorbed until you get it. Then, to trade it a solitary life again unless you can automate. TA in rare cases, no, TA can work all the time. That's my last word on the subject, I'm being too benevolent.
