Why Is The Obvious Not So Obvious?
- Thread starter nysestocks
- Start date
nysestocks
Guest
To continue:
I am actually getting a bit interested in this author, as he knows what he is talking about, but he does not know the "obvious", nor will he ever know it!
"Expectancy is sometimes recommended as a predictor of profitability. It is the
probable return or profit for the next trade. It applies to a single trade. For a
series of trades expectancy must be extended in ways that are not always obvious.
The way in which expectancy is extended to a series of trades depends on
the risk strategy being used for that series of trades. If fixed risk is being used
then the extension is quite simple and straightforward. However if a percent of
equity is being used as a risk strategy extending expectancy is more difficult.
Expectancy is sometimes considered to be a figure of merit for a trading method.
A high expectancy suggests that one method will be better than one with a
lower expectancy. This is only roughly true. All measures of expectancy have
problems because they forecast only the average expected profit. They say nothing
about drawdown, nor are they predictive of the range of profit that might
occur. Monte Carlo simulation shows the range of profit and drawdown that
can be expected from a series of trades."
I am actually getting a bit interested in this author, as he knows what he is talking about, but he does not know the "obvious", nor will he ever know it!
"Expectancy is sometimes recommended as a predictor of profitability. It is the
probable return or profit for the next trade. It applies to a single trade. For a
series of trades expectancy must be extended in ways that are not always obvious.
The way in which expectancy is extended to a series of trades depends on
the risk strategy being used for that series of trades. If fixed risk is being used
then the extension is quite simple and straightforward. However if a percent of
equity is being used as a risk strategy extending expectancy is more difficult.
Expectancy is sometimes considered to be a figure of merit for a trading method.
A high expectancy suggests that one method will be better than one with a
lower expectancy. This is only roughly true. All measures of expectancy have
problems because they forecast only the average expected profit. They say nothing
about drawdown, nor are they predictive of the range of profit that might
occur. Monte Carlo simulation shows the range of profit and drawdown that
can be expected from a series of trades."
nysestocks
Guest
You can not see the top of a mountain when you are standing on it!
I said I would not post analogies and the such, but in some cases they can explain the meaning in a few words, what otherwise might take a paragraph, or more!
Quote from nysestocks:
It is very obvious that you do not know, or understand, what it is I am talking about.
If a hedge fund had access to the information that I have gained access to, they would make Warren Buffet look like a tidily winks player!
But, they would need to be very clever and not arouse too much interest in their dealings - which would be very hard when one is talking about trading $billions!
So, for the purpose of the ordinary man in the street, which is the one I am interested in helping, I will continue to post as I see fit.
Those who will take the time to work out what it is I post about, will not regret it one little bit.
As for the big hedge funds, they are the ones that I, and my like, take money from each and every day. It is like taking candy off a baby
Nysestocks,
thanks for the thread. I am enojying it! I will be honest and admit that I have no idea what the obvious is that you refer to. That said, I am making money. So I ask myself, perhaps I am doing the 'obvious' unwittingly and if I am then my percentage returns should roughly equal those one a trader who knows what the 'obvious' is and exploits is correctly.
So my question is, what would be an aproximate percentage of growth on the account of such a trader who is knowlingly exploiting the 'obvious'?
Of course one should not sell a swing high.
There is still too much risk. Price is in the process
of establishing or confirming a resistance. Too choppy
and unpredictable here. Waiting for the roll-over to
become relatively 'irresistible' (~5%-10% off the top)
then jumping ahead of the pack right before the break
is the better bet.
This would constitute one SHABL strategy,
and is (to me) 'obvious'. Auto-bots set these up all
over the place these days. (Another 'obvious'?)
So is "The Obvious" then just a collection of littler obviouses?
There is still too much risk. Price is in the process
of establishing or confirming a resistance. Too choppy
and unpredictable here. Waiting for the roll-over to
become relatively 'irresistible' (~5%-10% off the top)
then jumping ahead of the pack right before the break
is the better bet.
This would constitute one SHABL strategy,
and is (to me) 'obvious'. Auto-bots set these up all
over the place these days. (Another 'obvious'?)
So is "The Obvious" then just a collection of littler obviouses?
Not correct. Expectancy is the edge of a trading system - in the traditional gambling sense - assuming a large enough sample of trades has been used to calculate it and profits and losses are normally distributed.
Expectancy is NOT "the probable return or profit for the next trade". It is the expected return calculated from a sample of trades. You should learn the difference.
There is no such thing as "probable return". It is only in the mind of the person who wrote that piece.
In probability theory, there are event spaces and probability of events. In statistics, there is expected value and deviations from it, amongst other things.
Whoever mixes probabilities and statistics is in the best case scenario, a loser.
nysestocks
Guest
Maybe you are right, and maybe you are wrong!
It will become "obvious" to some what it is they need to know, and what it is they do not need to know!
nysestocks
Guest
If you are making money, then you are of course on the right track!
In relation to your % question, and depending on available capital, and depending on the level of opportunity in the market traded, and depending on the mental state of the trader, the % growth compared with what the "experts" teach should be somewhere in the region of say 50% PA return for a good trader using the "experts" way and anywhere from 500% to 1000% for the few that are fully aware of what the "obvious" can, and does, deliver!
Now, before people get all hyped up, one must remember than all people are different, and for one person 1000% might be a reality, while for another it may be very hard to keep even 10% of what they made!
So, even when the "obvious" is known by someone, it still does not guarantee continued success!
