| Joao, Thank you for your input. Yes water ALWAYS boils at 100 Celsius...........but here is what is very very important..........the market is a liquid.........sometimes its 100% water and sometimes it is 70% water and 30% BS. Even the 70-30 mixture is a liquid. But if you expect it to behave like water.......you will notice the smell quickly and have your nose twitch due to the difference.  New bees expect it to act like water. I can tell you I expect it to act like a liquid and this has helped me greatly.The first programmer I had was a Phd in Physics.........and my latest has a physics degree also. (and 800 on his math GRE...the highest you can achieve) The indicators I use can be taught to a 10 year old but to program them is not so easy. My programmer doesn't know anything about currency pairs or indices. .......but as a programmer you do not have to. I totally agree with you that the market is really for someone who understands behavioral science. Here is a video I made about a month ago that shows how I treat risk management and position sizing. I think you will find my approach fairly simple. https://www.youtube.com/watch?v=tTmE9Tga_iQ Regards Ron Jaenisch -------Original Message------- Date: 2/9/2016 5:00:45 AM Subject: Re: [amibroker] Re: Breaking the 70% winners barrier
I will write very briefly, so the text won't be repetitive. I could not agree more with rosenberggregg@yahoo.com: Ron, I think anyone who builds a trading system needs to believe the markets are non-random. The challenge has to be that they seem so nearly random, and anytime a signal seems to be measured there are seemingly random shifts in its character. I do believe there are some non-random and predictable entry points which have more chances of success. The reason of that is because all the market agents (people, banks, funds) observe the same thing in the charts: moving averages, sup and res, Fibonacci... whatever. I do not believe that the market is a system of cause and effect like some biological, mechanical, chemical or physics events. It is moved by humans, humans decisions, humans emotions, humans interactions, human made TS and now, human made electronic orders. Therefore, the market will not follow any rule like "if I give you a present, you will like me for 6 months". Some humans are just like that, most are not. But physics is: pure liquid water will ALWAYS boil (turn to gas) at 100 Celsius degrees, if the room temperature is 0 Celsius degrees and the atmospheric pressure is 1 bar (760 mmHg). ALWAYS. There is this "law", this "rule" that will be "respected" because pure water is always pure water (H2O) and behave the way it does. The market (humans) does not. That is why there won't be a 100% (or even 90%) winning trade systems. 70% winning is REALLY good. As pointed by wavemechanic: http://www.learntotradethemarket.com/forex-articles/why-winning-percentages-are-irrelevant-in-trading ...one can loose using a system that has 90% winning trades and one can profit using a system that has 30% winning trades. The trading system itself is not as important as two simple principles: risk management and money management. I wonder why in all trading books I have read this two chapters are the smallest and the most shallow. A better trading system would make money faster and with less draw down, it should be just it. So, bringing that to real life (or real trading): if your TS is making 20% a year, that is great. Really great. If it does not have positioning restrictions, allowing to trade 1 million or 1 billion dollars that is a keeper. But maybe it could get better. As I mentioned, you could pick the trades with 1:3 risk-reward ratio (or above). That should improve the system. Also, I can not agree with this (as posted on other thread): |
For Futures trading here are some specs that I think are worth considering :
1) Utilize less than 50% of capital for margin
2) Utilize a trading system that does long and short trades well and can be applied to the 20 top liquid futures.
3) Utilize a trading system that has 70% + wining trades and a win/loss ratio of over 8/1 (1:8 risk-reward, that is very good!!!).
4) Determine target and subtract entry point value to get potential win.
5) Determine the risk point and risk value.
6) Double risk value
7) Divide potential win by double risk value.
Example.............Target 743, entry point is 698. Potential win is 45
Risk is 693........five points ........doubled is ........10
This results in 4 or 5 contracts being traded.
So, if you are using 1:3 RR, that would always result in 3/2 = 1.5, 3 (reward) / 2 (double the risk).
A 1:5 RR should be 5/2 = 2.5
A 1:8 RR (man, these trades are really hard to find) should be 8/2 = 4
That would not be the proper way to calculate the position size, in the way I trade.
I always take the loss as a certain, so I could never lose more than 0.5% (or 1%, 2% if the trader is aggressive).
If I do not get a stop loss, it is a profit and that is bonus.
I really believe everyone should take the loss as a certain and prepare for that scenario.
If one wins a trade, he would win at least 1.5% (1:3 RR or more). And if one losses a trade, he would lose 0,5%.
On a 50-50 TS, he would be making money.
On a 70-30 TS, he would be making GOOD money.
There is a game that has 5 in 6 winning chances, it is a little more than 83% winning chances.
It is called Russian roulette.
The problem is, if you lose, if you take the loss, you lose it all: you die.
One can not let that happen when trading.
Therefore, the position size is all about the risk: the amount you will loose if you reach the stop loss.
In addition, there may be possible to improve the results using breaking-even rules to avoid the full loss or partial profits.
2016-02-09 2:49 GMT-02:00 wavemechanic olesmithy@gmail.com [amibroker] <amibroker@yahoogroups.com>:
On 02/08/2016 9:24 PM, pinaki_m77@yahoo.com [amibroker] wrote:
So what is usually the typical percentage of winning trades for most people? and what is it for those with above average and really high returns? Some real numbers from people in this forum will be helpful. All of this is pretty new to me, so knowing this will provide some context and hopefully push me to work harder on my algorithms :)
Agradeço antecipadamente,
----------------------------------------------------------
João Flávio Machado Derzi
+55 (31) 9731-4469
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Posted by: "Ron J" <ronj@san.rr.com>
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