Important points to note on our ideas/trading signals.
We’ll link these in all posts so we’re not repeating it over and over again.
All signals are generated from set rules strategies. We follow specific rules we’ve tested for overall profitable edges. We understand people have different ideas of how to trade and different trading systems. We do not debate which is better than which, we just use the ones that work for us.
All signals are subject to risk:reward affecting expected win rates. We target a win rate of around 40% on 1:3 or above risk:reward. This is a positive overall winning outcome, and it has 60% of the trade hitting stop losses. A high win rate is not something we’re targeting. An overall profitable edge is.
Win rates on lower risk:reward can be high, but is not proven to be most efficient in our testing. When we post trades with 1:5 risk:reward we expect these trades to have a low win rate. A high percentage of the time (Over 70%) we’ll typically see the market move 1:1 risk:reward in favour even when a stop hits. High risk:reward trades make better returns, over a large sample.
Losses come in steaks. This is a strategy known. Especially when trading high risk:reward. Let’s take an example of a trade risking $1 to make $10. We’re happy enough losing this trade five times in a row to hit it once. It’s a loss of $5 and a win of $10. A net profit overall, even on a low 20% win rate.
Wins come in streaks, and losing streaks can come after. This is one of the main things needing addressed. When you lose in streaks people just laugh at you, there’s no problem. But when you win in streaks sometimes people think this implies predictable winning streaks, act as such, make losses and this causes problems. After winning streaks, losers are statistically likely.
We do not take markets personally. If we’re short something you’re long – we’re not intending it as a bet against you. We bet on a chart pattern which we’ve assessed the expected edge of. When it works it works, when it doesn’t we change plans accordingly. We’ve been in the market too long to bicker over trading ideologies and the position is not the person.
We look at trading as a mathematical process. Assigning expected probabilities to moves, the risk:reward of the move and deriving from this an expectation value. If these are positive expectation values (+EV) overall, we take all the trades – it’s non-subjective. External variables do not affect this (News, alternative forms of analysis and name-calling online).Most Related Links :
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