PGD, I am happy to do that. Sometimes the vagueness suffices and then there are other times you just have to get down to the mathematical core of it.
I will use my example, as I do not measure any trade I enter based on the stereotypical risk/reward ratios. but I give it a confidence rating based of success based on my observations:
Based on the 95% example, that would mean a 19 out of 20 success rate, so let's take 20 trades, and 19 of them win based on a 50-pip target, and a 150-pip stop loss. I will have one trade that loses 150 pips, and 19 that win 50 pips: 19*50=950 pips, 1*150=150 pips; for a net gain 0f 950-150= 800.
This is not to be confused with any claim I am making that 95 of my trades are winning, or that my trades are based on a 1:3 success ratio. Both would be false statements. This is also based on a personal confidence interval that I assign the trade through my personal observations and experiences.
Also when the trade is initially set up based on, this case, 33% stop--TP and 95% CI and 40-pip net gain per trade, it is rare that it will hit my stop, because if I know beforehand I blew it, the trade is getting taken out manually before it is a chance to further mess my day up ((Little pun.). When I know the momentum is right, and the trade is going right, I might also lift the TP and set it for the next S or R.
One case in point concerning my "motto in granite", and this is the reason I mentioned. Some traders don't like the route the trade is taking, so they take the trade out before it gets to the destination. I guess there was more of a subliminal message I was trying to get across there.
Dear 4xpipcounter,
Your motto in granite is the same for most of the traders following charts.
Your penchant for predicting the market, comes from the idea that your tools are best suited to forecast any market any time... Moreover it also helps you to hone your skills and keeps you sharp... :thumb:
But the one point highlighted by me needs further explanation and this time it will be much appreciated if explained in the mathematical language rather than some vague english words which in any case sounds foreign to me...