Loosing 9 out of 10 times and still make money.Possible?

[SaravananKS]

Yeah, it's kinda puzzle to confuse people.

But I didn't intend to confuse Saravanan.

I don't know why he multiplies winners with pay off ratio... :?:

Nac,
I did not Calculate any thing new . I Just showed What was in your file...

of course a good trader should not be confused any Puzzle since market is very big Puzzle

 

[nac]

I did not Calculate any thing new . I Just showed What was in your file...

Actually, you did...

Since No of winners 24 Vs No of Losers 216
24*12.4=297

So The Trader Risks Rs 216 to Earn 297 ( In a Pay off Ratio 12.4)

The calculation is not correct.

Nac,
I Just Went Through your file. The Total Profit is 420.7 and Total Loss is 306.4

and Pay off ratio is 12.4

This Does not means one would win Rs 12.4 for 1 rupee Risk

Yeah, it doesn't mean the trader risks 1 to win 12.4. It just means that the trader wins 12.4 for every 1 he loses.

It's just probability. In the file I assumed out of every 10 trades, first 9 are losers and the 10th one is profit. If I assumed the first 216 trade i.e., 90% are losers and the final 24 trades are winners, the payoff ratio will be...

21:1

but the returns is same.

PS: Sorry, if you think I have offended you...

 

[intellibitz]

I heard that great traders can afford to loose 9 out of 10 times and still make money .Infact even at this pathetic strike rate , they still can make 100 % compounded annual returns ,year after year . Difficult to believe isnt it . I guess thats why they are legends ?

guys , pls give some inputs on how this is possible ?

Yes,
Y 0?

 

[SaravananKS]

Actually, you did...



The calculation is not correct.



Yeah, it doesn't mean the trader risks 1 to win 12.4. It just means that the trader wins 12.4 for every 1 he loses.

It's just probability. In the file I assumed out of every 10 trades, first 9 are losers and the 10th one is profit. If I assumed the first 216 trade i.e., 90% are losers and the final 24 trades are winners, the payoff ratio will be...

21:1

but the returns is same.

PS: Sorry, if you think I have offended you...

nac,
May I know the different between risk Reward Ratio and Payoff ratio??

 

[nac]

I have come across this term before... But I am not so sure even after reading the definition. I am not so clear...

Almost all the definition and examples talks about just one single trade/investment where as pay off ratio is simple system's avg profit divided by avg loss. Probably this is the difference.

Someone who knows 'em exactly can help us clear this doubt...

 

[jahan]

I have come across this term before... But I am not so sure even after reading the definition. I am not so clear...

Almost all the definition and examples talks about just one single trade/investment where as pay off ratio is simple system's avg profit divided by avg loss. Probably this is the difference.

Someone who knows 'em exactly can help us clear this doubt...

Hello,

Risk Reward Ratio=R/R calculated for Single Trade.

Average Risk Reward Ratio=Payoff Ratio.(over "n" of Trades).

Risk of Ruin=Max system drawdown when ur equity becomes Zero...at particular % of Risk.(In a sample of at Least 100 trades....over "n" of Simulated Distributions...again depend upon win%....and "n" not less than 100 simulations ...This is Purely my defination on ROR...in books like Nac has read is different,i think its BENNETT Written book).

In my opinion for Calculation of System Performance......There is No Software Available for Public Use.

All backtesting Softwares which are Available Now are waste/no use .....
the only reason is distribution of sample data and uneven R/R for every Trade..we don't no what we are going to get until we close the Trade.

Backtesting only gives performance on a Sample of data for only One Distribution.

Regards,