Need link to a Game
- Thread starter krist
- Start date
Unable to find the exact link but here it is to understand the concept :
If you take continuous trade making sure that each time you win you win 2 point and when you loose, you loose only 1 point. Over period of time, you will always come out as winner (preferably having at least40-50% of the chance of winning)
Do this activity :
Take a coin and mark Head and Tail. Pick your side and toss the coin.. lets say you win 2 points if itz Head (winning trade) and loose 1 poin if itz tail (loosing trade). Repeat this for 20, 30 or 50 times.. and write down the win/loss and points on a piece of paper. Probability is that no matter how many times you repeat this activity, you will always be a winner and overall points will never be in minus (assuming dt you will at least win 40-50% of the time this is where the expectancy in trading comes into picture). Remember the key is to have a fair amount of repetition. Here min 20 roughly represents taking 1 trade on each calender day of the month.
You can create something like this in excel too with function called RANDBETWEEN. I had done this long ago but I guess it got lost somewhere. Anways.. Hope this clears the concept.. Enjoy.. ! :thumb:
If you take continuous trade making sure that each time you win you win 2 point and when you loose, you loose only 1 point. Over period of time, you will always come out as winner (preferably having at least40-50% of the chance of winning)
Do this activity :
Take a coin and mark Head and Tail. Pick your side and toss the coin.. lets say you win 2 points if itz Head (winning trade) and loose 1 poin if itz tail (loosing trade). Repeat this for 20, 30 or 50 times.. and write down the win/loss and points on a piece of paper. Probability is that no matter how many times you repeat this activity, you will always be a winner and overall points will never be in minus (assuming dt you will at least win 40-50% of the time this is where the expectancy in trading comes into picture). Remember the key is to have a fair amount of repetition. Here min 20 roughly represents taking 1 trade on each calender day of the month.
You can create something like this in excel too with function called RANDBETWEEN. I had done this long ago but I guess it got lost somewhere. Anways.. Hope this clears the concept.. Enjoy.. ! :thumb:
Last edited:
Head - tail works only when your RR is 1:1, lets say whatever the market is at 9:30 am, one follows the Coin for 25 point of nifty
lets assume market is at 8425, invariably market will touch either 8400 or 8450 (except in some cases when market doesn't move much at all), so either your Target or SL will hit with equal probability
but in case of 1:2 RR, probablity for your loss (owing to less point i.e. 25) increases and probability for win (owing to more point) decreases substantially
If there was no Brokerage and Taxes at all, Coin Flipping with 1:1 would have been viable, but broke and tax wont' let you survive considering the equal probability
The MM game is like this :
1) Starting capital Rs 1,00,000
2) Total 40 trades, out of which 20 will be winners, 20 will be loosers.
3) On every trade we risk 25 % of the cumulative equity balance. ( risking 25 % is too high but taken as illustration )
4) Wins and loosers can come in any sequence but we must have 20 winners and 20 loosers.
5) Suppose our cum. equity is say Rs 1 L at any point,( or at start) we risk 25,000 on the next trade. If the next trade is a winner, we make profit of 2R ie 50,000 and our cum.equity becomes 150000 and if it is a looser then cum equity becomes 1,00,000-25000=Rs 75000 so on next trade we risk 25 % of Rs 75000....
The ending balance will be constant irrespective of the sequence of wins/loss.It will be over Rs 14 L . Try this out on paper or in Excel sheet.
Smart_trade
1) Starting capital Rs 1,00,000
2) Total 40 trades, out of which 20 will be winners, 20 will be loosers.
3) On every trade we risk 25 % of the cumulative equity balance. ( risking 25 % is too high but taken as illustration )
4) Wins and loosers can come in any sequence but we must have 20 winners and 20 loosers.
5) Suppose our cum. equity is say Rs 1 L at any point,( or at start) we risk 25,000 on the next trade. If the next trade is a winner, we make profit of 2R ie 50,000 and our cum.equity becomes 150000 and if it is a looser then cum equity becomes 1,00,000-25000=Rs 75000 so on next trade we risk 25 % of Rs 75000....
The ending balance will be constant irrespective of the sequence of wins/loss.It will be over Rs 14 L . Try this out on paper or in Excel sheet.
Smart_trade
I guess you got me wrong... I'm not suggesting him to trade based on coin flilp. 
It was just an example to understand how having RR of 1:2 helps. nd dtz what I was trying to explain through the coin flip example. Also,, how will the probability of loss will increase in 1:2 ??... loss will always be the same wether itz 1:1 or 1:2 (1 risk and 2 rewards). Slippage/brokerage etc are parts of the game and it doesn't affect much if you are profitably trading. See above the ST Da's example.. dtz exactly what I meant..!
It was just an example to understand how having RR of 1:2 helps. nd dtz what I was trying to explain through the coin flip example. Also,, how will the probability of loss will increase in 1:2 ??... loss will always be the same wether itz 1:1 or 1:2 (1 risk and 2 rewards). Slippage/brokerage etc are parts of the game and it doesn't affect much if you are profitably trading. See above the ST Da's example.. dtz exactly what I meant..!| Thread starter | Similar threads | Forum | Replies | Date |
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