Trading Lessons/Insights From Coin Flipping

[goodgoing]

Masterjaz, Mike805, tradingjournals, JScott, just a warning to you, you should not trade, although I think you haven't for a long time, because you do not understand what trading is and how it differs from probabilist experiments with two equal likely outcomes.

Especially as JScott demonstrated he does not understand win rate. A win reate of 50% is all you need to become rich trend following like the turtles did.

MIke805 made a reference to the Monty Hall problem. I do not think he understands it. The Monty Hall problem involves a decision that if made increases the winning odds from 1/2 to 2/3. It indicates exactly the opposite, which is the fact that a random process with two equally likely outcomes can be transformed into a sizeable edge if you can properly take advantage new information. In other words, it is a proof trading is not coin flipping.

Try to understand the concepts involved before making statements that expose limited understaning or even misunderstanding. Probability sounds like an easy subject but it takes many years of graduate and even post-graduate study and work to understand its essence.

 

[masterjaz_99]

Quote from goodgoing:

Masterjaz, Mike805, tradingjournals, JScott, just a warning to you, you should not trade, although I think you haven't for a long time, because you do not understand what trading is and how it differs from probabilist experiments with two equal likely outcomes.

Especially as JScott demonstrated he does not understand win rate. A win reate of 50% is all you need to become rich trend following like the turtles did.

MIke805 made a reference to the Monty Hall problem. I do not think he understands it. The Monty Hall problem involves a decision that if made increases the winning odds from 1/2 to 2/3. It indicates exactly the opposite, which is the fact that a random process with two equally likely outcomes can be transformed into a sizeable edge if you can properly take advantage new information. In other words, it is a proof trading is not coin flipping.

Try to understand the concepts involved before making statements that expose limited understaning or even misunderstanding. Probability sounds like an easy subject but it takes many years of graduate and even post-graduate study and work to understand its essence.

Goodgoing,
Care to enlighten me as to how my examples preclude me from trading? Also, instead of just saying JScott is wrong, why not explain it. I know what you are implying, but why not spell it out. Oh, I'll save you the effort (and to prove that I know more than I apparently demonstrate).
Win rate is only one component of the two component system necessary to describe a profit potential. The second component being the profit factor or the avg win/avg loss. That's why my descriptions of system results always include win rate and PF. PF and win rate are related by the formula:

PF = (1-win%)/win%

This formula describes a curve in X-Y (win%-PF) space such that systems that fall on the line are long-term even-money. Systems above the line are profitable, systems below the line are unprofitable. Turtles had low win% but high PF and where, therefore, above the line and profitable. Scalpers and market makers are often high win% but low PF.

Some #'s from the formula that make sense intuitively. 50% win% requires PF = 1, 25% requires 3, 75% requires 1/3.

So please provide some substance to your insinuations rather than just state we shouldn't trade. For those that appreciate the topic, this has been an interesting thread, for those that don't either just state the coin-flipping doesn't work, post un-necessary ramblings, or just go away (ideally).

By the way, you obviously didn't read the thread carefully as I stated numerous times my results are from a year of LIVE trading...

As always, just a few cents tossed your way,
masterjaz

 

[goodgoing]

Quote from masterjaz_99:

Goodgoing,
Care to enlighten me as to how my examples preclude me from trading?

Sure, but it seems you are a clueless individual.

Quote from masterjaz_99:

Win rate is only one component of the two component system necessary to describe a profit potential. The second component being the profit factor or the avg win/avg loss. That's why my descriptions of system results always include win rate and PF. PF and win rate are related by the formula:

PF = (1-win%)/win%

No,you are wrong, flat wrong. This is for R:R equal to unity only. Real trading, not your coin flipping fantasies, is described by a completely different formula

PF = R x (1-win%)/win%

Quote from masterjaz_99:

This formula describes a curve in X-Y (win%-PF) space such that systems that fall on the line are long-term even-money. Systems above the line are profitable, systems below the line are unprofitable. Turtles had low win% but high PF and where, therefore, above the line and profitable. Scalpers and market makers are often high win% but low PF.

You are clueless. It means that with a proper R, the average winner to average loser ratio, the PF can scale above negative performance axis. Turtles had R >> 1. It compensated their low win rate.

Quote from masterjaz_99:

So please provide some substance to your insinuations rather than just state we shouldn't trade.

I just did but you sound so clueless, so helpless, like having no capacity to understand it.

Quote from masterjaz_99:

By the way, you obviously didn't read the thread carefully as I stated numerous times my results are from a year of LIVE trading...

I do not care about your results. You are a loser. You sound like marxists who relentlessly try to prove capitalism wrong. You argued that your random trading proves trading is random. No, it just proves that you trading is random. Obviously...nothing else...

Anything else?

 

[masterjaz_99]

Sure, but it seems you are a clueless individual.

I'll try this once, and only once, hopefully with less personal attacks and increased factual information. Me being clueless has nothing to do with what was said, either correct my cluelessness or move on...

No,you are wrong, flat wrong. This is for R:R equal to unity only. Real trading, not your coin flipping fantasies, is described by a completely different formula

PF = R x (1-win%)/win%

No, not flat wrong, the interpretation is wrong. You are correct that that formula is for unity. It allows the developer to determine either the win% or the PF needed to have a breakeven system, and from there, improve either component to displace the system from the breakeven curve to the profit space.

You are clueless.

Again, let's try attacking my ideas rather than me...but my guess is you likely won't

It means that with a proper R, the average winner to average loser ratio, the PF can scale above negative performance axis. Turtles had R >> 1. It compensated their low win rate.

I think that is exactly what I said: Turtles had low win% but high PF and were, therefore, above the line and profitable.

I just did but you sound so clueless, so helpless, like having no capacity to understand it.

I do not care about your results. You are a loser. You sound like marxists who relentlessly try to prove capitalism wrong. You argued that your random trading proves trading is random. No, it just proves that you trading is random. Obviously...nothing else...
Wow, you seem to understand exactly what I am saying, but not what I am trying to convey...I said: I am more than comfortable saying my system was trading noise... with the point of questioning "How do I improve the system?" Got any suggestions or just more ad hominem attacks? The whole point of this thread is understanding what is random, what is not, and how to improve anything that is...

Anything else?
From you, either constructive dialogue or no, please move on, cheers...

Masterjaz

 

[Mike805]

masterjaz_99,

With all due respect, you're being too nice to this guy. I've read through his posts here... no need to validate yourself to him.

My advice: have some fun with em'. Maybe, if we're lucky, we'll see another bwolinsky-esqe reaction here. Those are fun...

Mike

 

[masterjaz_99]

Quote from Mike805:

masterjaz_99,

With all due respect, you're being too nice to this guy. I've read through his posts here... no need to validate yourself to him.

My advice: have some fun with em'. Maybe, if we're lucky, we'll see another bwolinsky-esqe reaction here. Those are fun...

Mike

Mike,
Yeah, just seeing if he can rise above his pubescent attacks but I am doubtful. Maybe, just maybe, he/she/it can add something useful to the thread and my/our understanding.

Cheers,
Masterjaz

 

[Nine_Ender]

Quote from Mike805:

masterjaz_99,

With all due respect, you're being too nice to this guy. I've read through his posts here... no need to validate yourself to him.

My advice: have some fun with em'. Maybe, if we're lucky, we'll see another bwolinsky-esqe reaction here. Those are fun...

Mike

I think a lot if us would give you guys more credit if you abandoned coin flipping and researched more sophisticated strategies. By pursueing this theory a certain amount of ridicule is to be expected.

Regardless of how inexperienced ( or possibly crazy ) some of us think you might be, the bottom line is you can't practically make money from these theories. The original poster talks about trading as a "game", when for many its not a game its a job. To suggest that coin flipping is part of the solution to effective trading trivializes what successful people in the trading profession do.

Even in this thread, it is clear that people are searching for simplicity and ease where only hard work and instincts will suffice.
I doubt in my lifetime I will ever see a study or a book that supports your cause. The burden of proof rests with you.
If randomness in trading was the secret to success then the barriers of entry to do so would be minimal and there would literally be millions of people doing it. Where are these people ?
That in itself suggests where the truth lies.

 

[Mike805]

Quote from Nine_Ender:

I think a lot if us would give you guys more credit if you abandoned coin flipping and researched more sophisticated strategies. By pursueing this theory a certain amount of ridicule is to be expected.

Regardless of how inexperienced ( or possibly crazy ) some of us think you might be, the bottom line is you can't practically make money from these theories. The original poster talks about trading as a "game", when for many its not a game its a job. To suggest that coin flipping is part of the solution to effective trading trivializes what successful people in the trading profession do.

Even in this thread, it is clear that people are searching for simplicity and ease where only hard work and instincts will suffice.
I doubt in my lifetime I will ever see a study or a book that supports your cause. The burden of proof rests with you.
If randomness in trading was the secret to success then the barriers of entry to do so would be minimal and there would literally be millions of people doing it. Where are these people ?
That in itself suggests where the truth lies.

Again, you're misinterpreting my posts. This isn't about finding valid edges, there are 1000's of those. This isn't about proving that a market dynamic is a random distribution just like that of an N-coin flip(of course its not).

This is a thought experiment...

And, what's wrong with thought experiments? That's really all we are doing here. Why are you so closed to new ideas?

If you had done some research about me per my post history, you may have realized that what you think you know about me, or what you think my intentions are, are totally wrong. I've devoted years to research, trading, risk managment and money management. FYI, I eat what I kill. My trading career is something I can really brag about should I choose to, and, I choose not to. Some here know me and exactly what I do.

By no means do I intend to trivialize my profession, and, I think I see where you may be coming from, but, the tone of your post(s) comes(has) across as condescending. Understand that I do not trivialize the role randomness plays in my profession, nor should you or anyone serious about this business.

Jeez, who said anything about practically making money from a coin-flipping theory anyway? That was what you've been saying all along even though I don't think anyone here, myself included, said one can "make money from coin-flipping".

 

[JScott]

Quote from goodgoing:

Masterjaz, Mike805, tradingjournals, JScott, just a warning to you, you should not trade, although I think you haven't for a long time, because you do not understand what trading is and how it differs from probabilist experiments with two equal likely outcomes.

Especially as JScott demonstrated he does not understand win rate. A win reate of 50% is all you need to become rich trend following like the turtles did.

Masterjaz, Mike and TJ may have different points to make in this thread than myself (I haven't read every last post in this thread). But at least they are being constructive which is ideally what this forum should be about. You, on the other hand, are a turd.

My only point was directed at a newer trader such that the very basics of coin flipping distributions show results that the average beginner never conceptualized up until that point.

Your reference to the Turtles is a dead ringer for a book reader not a trader. Join me in the chat room each day to trade and let's see what you've got. I'm there every day, all day. I have positive expectancy which is all that matters. Do you?

J.Scott

 

[JScott]

Quote from Mike805:


Jeez, who said anything about practically making money from a coin-flipping theory anyway? That was what you've been saying all along even though I don't think anyone here, myself included, said one can "make money from coin-flipping".

Mike, I guess you had to say it again nonetheless . . .

Good traders need good discipline . . .

If you don't have the discipline to refrain from making a childish post on a thread where people have no agenda and simply are sharing information, then your discipline is lacking. Trading will be difficult for you.

JS