Coin Flip Strategy !!

[suri112000]

Since trading off on Saturday and Sunday, I have googled on the topic and found some amazing stuff !!

A simple coin flip gives a hit ratio of 50% on a fairly long trials, say 100 or so.

I have checked on banknifty the following strategy using coin flip strategy. For coin flip i have used this LINK.

The game starts at exactly at 10 AM when the bar closes. Flip the coin. If "Heads" go long with a stop loss of 30 points and a target of 50 points. Wait until either of them hits. Risk to reward is fixed throughout the game.
When one of them hits, now wait for immediate next hour close. Say first trade closed at 12:05 PM. So, the next hour will be 1:00 PM. Now, flip the coin. If "Tails" this time, go short immediately on next bar open. Again wait for target or SL hits. Donot open a new position after 3:00 PM.

The bet on this game is simple. On a fairly large trails(say 100), the hit rate should be around 50% ie 50 times. So, the winners should fetch 2500 points. The loosers should shed 1500 points. Gain of 1000 points minus brokerage, taxes etc.

The probability of loosing streak is also limited. Check yourselves.

Enjoy the game !!!

Insights are welcome.

 

[The Disciplined Trader]

Since trading off on Saturday and Sunday, I have googled on the topic and found some amazing stuff !!

A simple coin flip gives a hit ratio of 50% on a fairly long trials, say 100 or so.

I have checked on banknifty the following strategy using coin flip strategy. For coin flip i have used this LINK.

The game starts at exactly at 10 AM when the bar closes. Flip the coin. If "Heads" go long with a stop loss of 30 points and a target of 50 points. Wait until either of them hits. Risk to reward is fixed throughout the game.
When one of them hits, now wait for immediate next hour close. Say first trade closed at 12:05 PM. So, the next hour will be 1:00 PM. Now, flip the coin. If "Tails" this time, go short immediately on next bar open. Again wait for target or SL hits. Donot open a new position after 3:00 PM.

The bet on this game is simple. On a fairly large trails(say 100), the hit rate should be around 50% ie 50 times. So, the winners should fetch 2500 points. The loosers should shed 1500 points. Gain of 1000 points minus brokerage, taxes etc.

The probability of loosing streak is also limited. Check yourselves.

Enjoy the game !!!

Insights are welcome.

i have this article on coin flip.

Your market entry points are not as important as you might think. The more important thing is your money management. The point here is that you have to let your profits run and cut your losses soon. Or in other words, your win/loss ratio should be above 1. That means, your profits should be higher than losses.

The importance of money management can be shown on random coin-toss trading strategy which is actually in long run profitable. Why? Simply because you are long and short equal number of times, but your profits will be higher than losses.

For example: If your profitable trades are 20 and losing trades 10 you will make profit because thanks to coin flip you will have 50% winners and 50% losers, but with 2:1 ratio you only need 33% win trades to be in profit. If your ratio is 3:1 you need only 25% winning trades.

So here is Random "Coin-Toss" Profitable Trading Strategy system:

Take a coin. One side will mean "BUY", another one "SELL".
Flip the coin and do what it says at the beginning of new candle of 1 hour chart. (you can use 30 min chart too)
Assume you got "BUY signal".
If the candle closes higher than the entry, keep the position open until the next candle closes.
If the candle closes higher than preceding bar, again keep the position. Keep doing this until there is a candle that closes lower than preceding candle and than close your position.
If the first candle closes lower than the entry, cover immediately.

You will make money over time. Why? Because if you are wrong, you will lose 1 candle only, but if you are right you can get profit of 2-3-4 or more candles.

Just be patient, because losing streak occur and you can get 5 or 6 losing trades in a row and than 5 winning trades in a row or similar.

 

[TraderPRO]

Since trading off on Saturday and Sunday, I have googled on the topic and found some amazing stuff !!

A simple coin flip gives a hit ratio of 50% on a fairly long trials, say 100 or so.

I have checked on banknifty the following strategy using coin flip strategy. For coin flip i have used this LINK.

The game starts at exactly at 10 AM when the bar closes. Flip the coin. If "Heads" go long with a stop loss of 30 points and a target of 50 points. Wait until either of them hits. Risk to reward is fixed throughout the game.
When one of them hits, now wait for immediate next hour close. Say first trade closed at 12:05 PM. So, the next hour will be 1:00 PM. Now, flip the coin. If "Tails" this time, go short immediately on next bar open. Again wait for target or SL hits. Donot open a new position after 3:00 PM.

The bet on this game is simple. On a fairly large trails(say 100), the hit rate should be around 50% ie 50 times. So, the winners should fetch 2500 points. The loosers should shed 1500 points. Gain of 1000 points minus brokerage, taxes etc.

The probability of loosing streak is also limited. Check yourselves.

Enjoy the game !!!

Insights are welcome.

Reminds me of a game that i read from oilman5 post. very interesting.. I think this was written by ST and quoted by oiman. Have fun with this game.

..........
.........

I read a book called " Mathematics of Money Management " by Ralph Vince. This is one of the three finest books on MM by the author and some of the concepts in that book opened my eyes to what trading really is... I am giving below a small excercise from this book to stress a point that in final results, which of your trade made money and which lost money makes NO difference at all.....

THE POSITION SIZING AND MM GAME

Make 40 small pieces of paper,on 20 write SUCCESS and on 20 write "FAIL" and fold them and put them in a glass bowl. Then ask a small child in the family to pick up each slip from the bowl and you read whether success or fail.

The sttarting capital is Rs 1,00,000/- and At each trade you will risk 25 % of the capital. If the trade is success,you make double the amount of money risked on a trade and if it is failure,you loose the amount risked on that trade. So for first trade your cum equity balance is Rs 1,00,000/- and the amount risked is 25000/- so if the slip says success,you make 25000*2 =50,000/- and your cum equity is 1,50,000/- now and on next trade you bet 25 % of 1,50,000/-. so go on like this till 40 trades are over.

The final amount you will have is not dependent on the sequence of your winning/loosing trades,consecutuve looses,wins etc and final amount is over Rs 10,50,000/- Dont believe me ? Try it out. I have spent 3 hrs on this game early in my career and tried coin toss,various sequence of alternate win/loss,10 losses and 10 wins in sequence etc…But the final wealth is same not even a rupee more or rupee less.

What does this prove ? Have a competent system,backtest,have a good mm and trade with confidence. Your sequence of losses and gains make no difference in ultimate results of building your wealth as long as your method has a positive expectancy and edge. Hope you enjoyed the game and learnt something from it…..About expectancy, we will discuss later...

I am no way advocating risking 25% on every trade. This is just illustration because optimal f for this system is 25 %. But 25 % is way tooo high. Start with 1-2 % and put your profits to work for you….
..........
...........

Read full wisdom here...
http://www.traderji.com/members-discussion-forums/90879-reflection-trading.html#post916245

 

[suri112000]

A similar game is thought about! May be of some use to the traders who are quick enough to guage the increased volatility and agile to grab a piece of cake!!

First trade goes on break of first 5 min candle. Take profit target 50 points and SL 30 points again. Once we are into trade, there should be a candle on which either profit target or SL should hit. Now take a look at next candle to enter the trade on break of either high or low. If that candle is not broken by chance, the next candle and so on. Again fix the target and SL. The game goes on until EOD. This looks really promising on a volatile day. On numb days, the trades will naturally be less.

Again have the fun and enjoy!!

 

[umeshmandal]

Someone on TJ a few years back was actually trading this ! Dont remember the name.

 

[umeshmandal]

http://www.traderji.com/technical-analysis/20951-breakout-trading-vs-coin-toss.html

 

[TraderPRO]

Friends,

IMO, The one and only secret to the success in traing is really this.

Cut your losses.

If a trader is able to control his losses to zero , (which is next to impossible)/ to the minimum, he ultimately becomes a consistently successful trader.

And, i found this interesting link to suggest this.

Cut your losses.You will anyway have some winning streaks.:thumb::thumb:

http://www.surveygizmo.com/s3/1427165/Error-Reduction-Calculator

 

[OMSAI]

Since trading off on Saturday and Sunday, I have googled on the topic and found some amazing stuff !!

A simple coin flip gives a hit ratio of 50% on a fairly long trials, say 100 or so.

I have checked on banknifty the following strategy using coin flip strategy. For coin flip i have used this LINK.

The game starts at exactly at 10 AM when the bar closes. Flip the coin. If "Heads" go long with a stop loss of 30 points and a target of 50 points. Wait until either of them hits. Risk to reward is fixed throughout the game.
When one of them hits, now wait for immediate next hour close. Say first trade closed at 12:05 PM. So, the next hour will be 1:00 PM. Now, flip the coin. If "Tails" this time, go short immediately on next bar open. Again wait for target or SL hits. Donot open a new position after 3:00 PM.

The bet on this game is simple. On a fairly large trails(say 100), the hit rate should be around 50% ie 50 times. So, the winners should fetch 2500 points. The loosers should shed 1500 points. Gain of 1000 points minus brokerage, taxes etc.

The probability of loosing streak is also limited. Check yourselves.

Enjoy the game !!!

Insights are welcome.

deleted..................

 

[suri112000]

ha ha........Der aaye durast aaye.........Last 7 yrs I never follow single chart.......I am master of such method......I am certified Gambler:lol:......and ex..Casino Player...ajtak aisa Market maker paida nei hua jo rajgreenpaece ka paisa kha sake..........I will show you more simple method if some wise (they are kid to me) people don't laugh......:thumb:

Sure bhai. Waiting for your insights and method.:thumb:

 

[Smart_trade]

Our own market judgement will definately be correct more than 50 % of the time. Use judgement instead of coin flip . I have seen many successful traders trading on their judgement....no chart, no calculations.But in their mind they are very clear that Reward to Risk and the success rate of their judgement will make money for them.

Smart_trade