I can design a trading system in under 10 mins that will give you a 99%+ win rate, the problem is that when it loses it will lose hundreds of times more than the average winning trade. Expectancy is everything, win rate is nothing.
What's your longest winning streak?
- Thread starter Evermore2017
- Start date
To calculate the expectancy you need:
- account size
- winrate
- average reward:risk
- position size
http://www.tradeciety.com/expectancy-calculator/
https://www.tradingview.com/chart/E...ancy-How-Profitable-is-your-Trading-Strategy/
https://www.learningmarkets.com/determining-expectancy-in-your-trading/
This is not realistic. NOBODY will ever accept losing hundreds of times more than the average winning trade. Theoretically it can happen, but in reality I never heard or saw this. Never heard of a stoploss?
Buy. Take profit at 1 pt. 99% of the time you will win. For the 1% of the time the stock goes down don't ever sell until your account is blown up. Easy system. Developed under 1 min.
Long ago I have a personal list of criteria that must be met to be consider a Holy Grail system.
I thought about posting it here. Then I've decided that it's revealing too much.
Short deep OTM options. People do it all the time. It's f'ing insane.
First of all, there are other trading posibilities than just options. You cannot conclude that if this happens in options it happens everywhere.
And second, you say "people" and "f'ing insane". Real and professional REAL traders are not just people and they are surely not doing insane things.
Burt I agree that if you built a "tradingsystem" in 10 minutes anything can happen.
''the problem is that when it loses it will lose hundreds of times more than the average winning trade. Expectancy is everything, win rate is nothing.'' well, if you can design 99% win rate system, you will win a lot of money ；under this system, when win stop, supposed that, you get 2 tickt profits，when loss out, you lose 4 tickt , remember that, your win rate is 99%, you still can win a lot of money under this condition
Karen Bruton comes to mind. The guy's name escapes me, but he took down a pretty big fund shorting SPX puts in 2008.
My point wasn't that options are the only way....my point was that all the consideration I gave to finding such a high risk, high probability strategy.
And perhaps more to the point, there's an entire industry called insurance that takes on very similar exposure (though very differently diversified).
The talk of w:l ratio. A very high ratio, the stoploss needs to occur when price escapes the ATR that is going against you. Meaning the times that you lose. The trade has very large risk of never coming back close to your entry. A way to get around this is to trade at very minimal leverage. And average in price into the new ATR and scratch or take a smaller loss.
They say “losers average in losers.” But I find that the 2nd entry is key to mitigating the loss. If you look at “Trade Sheet” threads in Index Futures. You can go through the list and see where I have done that.
They say “losers average in losers.” But I find that the 2nd entry is key to mitigating the loss. If you look at “Trade Sheet” threads in Index Futures. You can go through the list and see where I have done that.