How can we HAVE MORE WINNERS THAN LOOSERS IN TRADING?
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Hello,
for ur 1) query............its doesn't matter if u have more loosers than winner....only thing u have to look at is...when u win u need to win big.
i know practically there r some issues....bcoz we don't know what we are going to get...but here probability will play essential role...and we need to bet when the odds are in our favour.
for ur 2) query......for this what u have is Past data...and past data doesn't guarantee future results.....hmmmmm.here also probablity comes into picture and u need to select the trades when probabilty of winning big is in your favour.
so dear friend my suggestion is....upto now u spend ur time on entries,selecting stocks(i guess)..from now onwards spend ur time on exits...don't go much deeper just see when ur exiting look for around 1:3,so that if u get averagely 1:1.5 (after deducting losses incurred),then u need a system with 40% to 50% win rate.
i can give u the system like this ...but i guarantee u that u will never trade my system,bocz as individuals we are different.(everybody having unique psychology).
one more thing Position sizing is most important aspect of trading,don't position size ur trades in a traditional way(like fixed lots,fixed qty).see market is dynamic in nature and static rules never work in a long run..for this use Volatility of the market.
i have gone through ur thread(ur biggest problem is stoploss) where people r discussing about Trailing stop-loss,trailing stoploss are good but people don't know how to use it....again using fixed percentage Trailing...every thing that is fixed won't work in Trading,its needs to be dynamic(like implementing ATR in Trailing stoploss so that it will adjust fairly, not to be perfect according to market volatility).
in this phase if u want any help i will clarify ur doubts.
Regards,
for ur 1) query............its doesn't matter if u have more loosers than winner....only thing u have to look at is...when u win u need to win big.
i know practically there r some issues....bcoz we don't know what we are going to get...but here probability will play essential role...and we need to bet when the odds are in our favour.
for ur 2) query......for this what u have is Past data...and past data doesn't guarantee future results.....hmmmmm.here also probablity comes into picture and u need to select the trades when probabilty of winning big is in your favour.
so dear friend my suggestion is....upto now u spend ur time on entries,selecting stocks(i guess)..from now onwards spend ur time on exits...don't go much deeper just see when ur exiting look for around 1:3,so that if u get averagely 1:1.5 (after deducting losses incurred),then u need a system with 40% to 50% win rate.
i can give u the system like this ...but i guarantee u that u will never trade my system,bocz as individuals we are different.(everybody having unique psychology).
one more thing Position sizing is most important aspect of trading,don't position size ur trades in a traditional way(like fixed lots,fixed qty).see market is dynamic in nature and static rules never work in a long run..for this use Volatility of the market.
i have gone through ur thread(ur biggest problem is stoploss) where people r discussing about Trailing stop-loss,trailing stoploss are good but people don't know how to use it....again using fixed percentage Trailing...every thing that is fixed won't work in Trading,its needs to be dynamic(like implementing ATR in Trailing stoploss so that it will adjust fairly, not to be perfect according to market volatility).
in this phase if u want any help i will clarify ur doubts.
Regards,
Hi Friend Jahan
Thanks a lot for the points.
I have to read it many times and think deeper.
One thing I feel is how much risk one takes as he enters a trade-matters a lot.
The effort one places on minimising risk is what helps a trader most,once he sets right position size.
This is what I tried to point in one post showing GMMA based entry.
best regards
ford
POINT B)WHATEVER SYSTEM WE USE,SUCCESS RATE CAN BE UPTO 65% WITH LOT OF TROUBLE.
CHANCE OF MAKING SUCCESS IS 0.33* 0.65 = 0.215 , SAY 21.5%.
That means chance of failure in built in trading is 78.5%
Thanks a lot for the points.
I have to read it many times and think deeper.
One thing I feel is how much risk one takes as he enters a trade-matters a lot.
The effort one places on minimising risk is what helps a trader most,once he sets right position size.
This is what I tried to point in one post showing GMMA based entry.
best regards
ford
POINT A)MARKET TRENDS ONLY 33% OF TIME. MONEY CAN BE MADE EFFICIENTLY DURING TRENDS.POINT B)WHATEVER SYSTEM WE USE,SUCCESS RATE CAN BE UPTO 65% WITH LOT OF TROUBLE.
CHANCE OF MAKING SUCCESS IS 0.33* 0.65 = 0.215 , SAY 21.5%.
That means chance of failure in built in trading is 78.5%
Last edited:
Win Expectancy = frequency X size of win
(Net expectancy of trade = win expectancy + loss expectancy)
so blindly optimizing win count while having small size of win you end up scalping.
even if frequency is low but win size is BIG, you can end up making HUGE profits
(usually several weeks of scalper profits in few days!).
What finally matters: having net expectancy high for your trading system.
More winners:
Go higher time frame (less noise) spot a trend
enter at supp/resistance/pullbacks in the direction of Macro trend and exit quickly with scalpers profit, Never try counter trend! If trade went wrong dont exit quickly wait for a while since you are on the side of Macro trend.
Big Wins:
just like 'More winners' case, but ride the trend and trail instead of having fixed targets.
Dont be afraid to give away some profits in small reactions trail with decent distance
and exit at supp/resis/trend channel boundaries.
smaller losses:
Position sizing.
Don't put all your money in one trade. First probe your position with small size.
If it works then add on, else cut the loss with small position size.
----
I have said the easy parts...
The tough part is deciding when to scalp, when to ride the trend!
Deciding on position size dynamically taking into account of market nature (i.e if you are sure for a big move you can double down!) and your risk tolerance (how much draw downs can you with stand? will your account open to lightening bolt loss wiping it fully?)
(Net expectancy of trade = win expectancy + loss expectancy)
so blindly optimizing win count while having small size of win you end up scalping.
even if frequency is low but win size is BIG, you can end up making HUGE profits
(usually several weeks of scalper profits in few days!).
What finally matters: having net expectancy high for your trading system.
More winners:
Go higher time frame (less noise) spot a trend
enter at supp/resistance/pullbacks in the direction of Macro trend and exit quickly with scalpers profit, Never try counter trend! If trade went wrong dont exit quickly wait for a while since you are on the side of Macro trend.
Big Wins:
just like 'More winners' case, but ride the trend and trail instead of having fixed targets.
Dont be afraid to give away some profits in small reactions trail with decent distance
and exit at supp/resis/trend channel boundaries.
smaller losses:
Position sizing.
Don't put all your money in one trade. First probe your position with small size.
If it works then add on, else cut the loss with small position size.
----
I have said the easy parts...
The tough part is deciding when to scalp, when to ride the trend!
Deciding on position size dynamically taking into account of market nature (i.e if you are sure for a big move you can double down!) and your risk tolerance (how much draw downs can you with stand? will your account open to lightening bolt loss wiping it fully?)
Last edited:
Hello,
exactly...That is what..iam telling u position sizing is the whole game .if u understand that means....how much...then success is yours.
before deciding how much....(position sizing)..you need to consider these things....
1).approximate win% of ur trades(min.100 trades sample).
2) Maximum consecutive losses in that sample.
3)ur biggest loss.
4)Maximum consective losses based on win%.(based on probability calculations)
5)Avg losing trade in that 100 sample trades.
6)Avg win.... and Avg win>Avg.loss(this is must)
7)Maximum drawdown(peak to trough).
if u able to get this information then u can easily decide on ur position sizing.
yes...GMMA system is also good one....but his latest work didn't come out yet.
again...entries are not important as much as exits and position sizing.
Regards,
exactly...That is what..iam telling u position sizing is the whole game .if u understand that means....how much...then success is yours.
before deciding how much....(position sizing)..you need to consider these things....
1).approximate win% of ur trades(min.100 trades sample).
2) Maximum consecutive losses in that sample.
3)ur biggest loss.
4)Maximum consective losses based on win%.(based on probability calculations)
5)Avg losing trade in that 100 sample trades.
6)Avg win.... and Avg win>Avg.loss(this is must)
7)Maximum drawdown(peak to trough).
if u able to get this information then u can easily decide on ur position sizing.
yes...GMMA system is also good one....but his latest work didn't come out yet.
again...entries are not important as much as exits and position sizing.
Regards,
Hi friends
position sizing.
2 years ago Religare pms and sharepms used position sizing less than 3% and for biggr profitable shares about 6-7%.
Good position sizing-i thought they will win big profits.
Later after 12 months,religare lost 70% of main capital,sharekhan lost 40%.
what people invested at 10lkaks became 3 laks in Religare pms,and 6 laks in sharekhan pms.
I told myself excellent position sizing. wow.now profits are sure.
But mkt has its own surprises.
Does position sizing help? My answer is it is only part A of the equation.
In a falling,crashing mkt,part A has only 30% importance like.
PART B- having a risk limit and exiting exactly as per limited risk,is 70% important thing.
since Religare & sharekhan were unaware of this fact they lost principal capital, not part of profits.
Later Religare changed its pms name and no customer was willing to park funds.
PMS maNAgaers were paid lacs as salary but they did not KNOW abc of investing and failed in protecting capital.
position sizing.
2 years ago Religare pms and sharepms used position sizing less than 3% and for biggr profitable shares about 6-7%.
Good position sizing-i thought they will win big profits.
Later after 12 months,religare lost 70% of main capital,sharekhan lost 40%.
what people invested at 10lkaks became 3 laks in Religare pms,and 6 laks in sharekhan pms.
I told myself excellent position sizing. wow.now profits are sure.
But mkt has its own surprises.
Does position sizing help? My answer is it is only part A of the equation.
In a falling,crashing mkt,part A has only 30% importance like.
PART B- having a risk limit and exiting exactly as per limited risk,is 70% important thing.
since Religare & sharekhan were unaware of this fact they lost principal capital, not part of profits.
Later Religare changed its pms name and no customer was willing to park funds.
PMS maNAgaers were paid lacs as salary but they did not KNOW abc of investing and failed in protecting capital.
Hello,
Forget about.....what other's do or did...try to know what exactly u want from markets...market doesn't care who is trading.....everybody in trading has to go from loosing streaks in a row...and we need to know approximately
what is our worst case scenario (loosing streaks) and Max.drawdown,so that if something is happening beyond this means it will provide a clear clue and we need to rethink on our Strategy.....i will give u a example....
previously...i had a system with Max.drawdown 30 to 35 % and expected no.of loosers in a row are 18(1% probability) , 12 loosers(10% probability) and 5 loosers(average)...at that time what happened suddenly i get a loosing streaks of 19 then immediately i stopped trading and looking at it,it given 23 loosing streaks(i stooped at on 19th one).
what should i consider....see its not fault of the system...its simply means market has changed its behavior and we need to implement...some changes to the system...b'coz these series of changes are not distributed in that system.
later...onwards i made changes to that system and reduced my position sizing,by doing that iam still unable to meet My goals/returns so i simply put aside that system and built a another one.
In case of Religare and Sharekhan..., they did a severe mistake, when they don't know the system distribution(probability of losses),......
they need to increase the Capital Rather than just increasing position size/risk.
if they implemented this simple thing they don't had to face that much loss.
Regards,
Forget about.....what other's do or did...try to know what exactly u want from markets...market doesn't care who is trading.....everybody in trading has to go from loosing streaks in a row...and we need to know approximately
what is our worst case scenario (loosing streaks) and Max.drawdown,so that if something is happening beyond this means it will provide a clear clue and we need to rethink on our Strategy.....i will give u a example....
previously...i had a system with Max.drawdown 30 to 35 % and expected no.of loosers in a row are 18(1% probability) , 12 loosers(10% probability) and 5 loosers(average)...at that time what happened suddenly i get a loosing streaks of 19 then immediately i stopped trading and looking at it,it given 23 loosing streaks(i stooped at on 19th one).
what should i consider....see its not fault of the system...its simply means market has changed its behavior and we need to implement...some changes to the system...b'coz these series of changes are not distributed in that system.
later...onwards i made changes to that system and reduced my position sizing,by doing that iam still unable to meet My goals/returns so i simply put aside that system and built a another one.
In case of Religare and Sharekhan..., they did a severe mistake, when they don't know the system distribution(probability of losses),......
they need to increase the Capital Rather than just increasing position size/risk.
if they implemented this simple thing they don't had to face that much loss.
Regards,
Hi Jahaan Thanks for explaining in detail I am new to markets have learned technicals some time back, but I am not able to make my system,
I know people dont reveal their systems as they may worth millions to them but can you give me the basic info like how can I proceed to make my own system that I may work around and trade according to that system profitably
P.S. I am not asking for your system just the Idea/example how can I make one to trade successfully.
Thanks:clap:
Hi jahan
Thanks for explanation.
I could not follow your above point.
What I understood is
Both the PMS people followed position sizing very religiously but they had No RiskControl definitions/MECHANISMS in place-so they continued in increasing loss scenario just like any other stupid investor-hoping that market would eventually recover over time-but they never knew that mkt may need couple of years to complete that recovery.
To me only thing that is of superior importance is as market starts crashing,
Limit of risk and controlling risk in the limit defined well in advance is the only thing that matters,of course as loss begins a shrewd investor may cut position size to pull down the quantum of total loss amount.
I still wonder how in a crashing market by increasing capital can anybody benefit except at the fag end of crash or after reversal began making higher highs.
POSITION SIZE has to be increased in a profitable scenario and is to be reduced in a loosing scenario
regards
ford
Quote
William ONeal, saw at one booming mkt time new trading companies started forming and soon there were 23 companies of that sort. After few years,mkt started crashing and ONeal found only 5 of the companies were around,while 18 were found disappeared. He studied the reasons why such a thing happened.The sole reason he found was those companies did not know or did not have a limit of risk or they did not control risk at all. Hoping that market would recover is a latecomers dilemma.
Thanks for explanation.
HTML:
In case of Religare and Sharekhan..., they did a severe mistake, when they don't know the system distribution(probability of losses),......
they need to increase the Capital Rather than just increasing position size/risk.What I understood is
Both the PMS people followed position sizing very religiously but they had No RiskControl definitions/MECHANISMS in place-so they continued in increasing loss scenario just like any other stupid investor-hoping that market would eventually recover over time-but they never knew that mkt may need couple of years to complete that recovery.
To me only thing that is of superior importance is as market starts crashing,
Limit of risk and controlling risk in the limit defined well in advance is the only thing that matters,of course as loss begins a shrewd investor may cut position size to pull down the quantum of total loss amount.
I still wonder how in a crashing market by increasing capital can anybody benefit except at the fag end of crash or after reversal began making higher highs.
POSITION SIZE has to be increased in a profitable scenario and is to be reduced in a loosing scenario
regards
ford
Quote
William ONeal, saw at one booming mkt time new trading companies started forming and soon there were 23 companies of that sort. After few years,mkt started crashing and ONeal found only 5 of the companies were around,while 18 were found disappeared. He studied the reasons why such a thing happened.The sole reason he found was those companies did not know or did not have a limit of risk or they did not control risk at all. Hoping that market would recover is a latecomers dilemma.
Hello,
My system is not Million dollar worth,if u want i will give u...it's simply based on moving Averages,Macd,and a Trend filter.....my stoploss is based on volatality.
Million Dollar worth is Controlling our own Mind/Pshycology.
For Building a trading system u have to know/do these things...
1)Decide what Markets ur comfortable with(stocks,futures,forex,options,commodities..etc)
2)Decide ur Trading style(i.e swing,short term,intraday swing,only intraday)
3)based on ur style of trading choose method of Trading i.e..Trend following or trend Fading or breakout.
4)Take 100 samples of ur Trading method....calculate..win%,Avgwin,Avglose,MAxdrawdown,no of continious loosing trades.
5)based on point 4 decide ur risk parameters...how much to risk.
6)choose one of Position sizing method depending on ur mentality...
a)percentage method.(using supp and resis)
b)percentile volatality method(using ATR periods)
or u can create ur own method...there r as many as, position sizing methods as there r traders.(but don't go for fixed lot or fixed qty).
if have these information and u have a positive expectancy system .then u can Trade with confidence...
Regards,
My system is not Million dollar worth,if u want i will give u...it's simply based on moving Averages,Macd,and a Trend filter.....my stoploss is based on volatality.
Million Dollar worth is Controlling our own Mind/Pshycology.
For Building a trading system u have to know/do these things...
1)Decide what Markets ur comfortable with(stocks,futures,forex,options,commodities..etc)
2)Decide ur Trading style(i.e swing,short term,intraday swing,only intraday)
3)based on ur style of trading choose method of Trading i.e..Trend following or trend Fading or breakout.
4)Take 100 samples of ur Trading method....calculate..win%,Avgwin,Avglose,MAxdrawdown,no of continious loosing trades.
5)based on point 4 decide ur risk parameters...how much to risk.
6)choose one of Position sizing method depending on ur mentality...
a)percentage method.(using supp and resis)
b)percentile volatality method(using ATR periods)
or u can create ur own method...there r as many as, position sizing methods as there r traders.(but don't go for fixed lot or fixed qty).
if have these information and u have a positive expectancy system .then u can Trade with confidence...
Regards,
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