Coin Flip Strategy !!

#11
Few years back there used to be a a volatile scrip named Digital Equipments. I used to trade a lot in that. I used to go with my screen reading judgement and the Reward to Risk..It used to be Rs 800 stock if I remember right.

Suppose I based on my judgement feel that the prices are going down, I will short and keep a stop loss of 5 points. The stock used to be very volatile. So I used to enter the stoploss order and keep my finger on the enter button....the moment I see a quote 5 points higher, I will cover the short trade....I used to take 2,3 or even 4 stops at a particular point....but when the trade clicks, the stock used to go 60/80 points in one direction giving a great Reward to Risk for this kind of trade. This works well in volatile counters.

Now I feel very amused when I think of those trades .....but this is actual example of Reward/Risk trades.

Smart_trade
 
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#12
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
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#13
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bpr

Well-Known Member
#14
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.:)
There is a simple flaw in the logic here.
Assuming the coin toss algorithm is proper, it has a 50 percent probability of generating tails or head. Correct.
So this will ensure you will make 50 percent buy order and 50 percent sell order. Correct

Once you sell/Buy the game is wide open and is given to the TP and SL and the market will decide how many times it will hit TP and how many times it will hit SL.

So it does not ensure that you will get 50 percent order which will hit TP and 50 percent order which will hit SL.
:fatigue:
 

suri112000

Well-Known Member
#15
There is a simple flaw in the logic here.
Assuming the coin toss algorithm is proper, it has a 50 percent probability of generating tails or head. Correct.
So this will ensure you will make 50 percent buy order and 50 percent sell order. Correct

Once you sell/Buy the game is wide open and is given to the TP and SL and the market will decide how many times it will hit TP and how many times it will hit SL.

So it does not ensure that you will get 50 percent order which will hit TP and 50 percent order which will hit SL.
:fatigue:
Excellent insight. This is what I am looking for.:thumb:
 

amitrandive

Well-Known Member
#16
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.:)
An article and YouTube link of the above.Thanks for bringing it on.
:clap:

http://ezinearticles.com/?Trading-Systems---Understanding-Winning-Percentage&id=125920

http://www.youtube.com/watch?v=mlYMywZRfQA
 

anuragmunjal

Well-Known Member
#17
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.:)

hi

the idea is good and would give very good results with one precondition.
'each time you put a trade, bnf is gauranteed to move in one direction by at least 50 points'. you are not taking into account the times when bnf moves by 25-30-40 points and then reverses. since your sl is 30 points and target 50, there will be more occasions when your sl will get hit and target not achieved.

regards
 
#18
it may not work while as tossing a coin its outcome depends on nature but in markets it is sentiments that works.in coin flip have only two options win or loose but in trading may hit stoploss on both the sides loose only with every stoploss hit u have to carry that burden of lost money u have to increase ur lot size if playing for fixed points that will limit ur ability to remain solvent. this will limit ur no of attempts. even if u have are solvent enough with increasing lot size there is not enough volumes in indian markets ur trades will impact on the price itself others will earn from u even if u do it sucessfully outcome cud be even less than fd rates that will be useless. above all the in coin flip if u loose there is equal probability that u will loose again or win again and if again u loose the same thing will happen. it is pure gamble.it is very scary to trade like this.
 

bunti_k23

Well-Known Member
#19
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
Flipping coin is a pure gamble,10000% satisfied with smart trade s opinion....
 

Vertigo_1985

Well-Known Member
#20
tried this on Banknifty(spot) from 4th march to 10th march for 20 trades, the results are indeed strange..
In first 10 trades there are 5 winners and 5 losers.
In next 10 also there are 5 winners and 5 losers, so in total a 50 % win rate.
So it gives a total of 200 points and if you take 3 points for brokerage,taxes/trade then it gives 140 points in about a week's time.

Surely one's analysis will give a better edge and thus should be used for real trading but this game again proves the importance of risk management and how we waste time looking for a perfect system.
 

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