is this practically applicable ?

[bapan123]

seniors , experts and all the members - i want to know that this idea practically applicable in trading or not ?

let i have 1,00,000 rs in my trading a/c.
let i trade in nf and silver mini.

for nf i need 12000rs per lot.
for silver mini i need 13000 rs per lot.

so, i can trade with 8 lot of both nf and silver mini.

let, i have worst trading system + my worst trading.
my system has 25% winning percentage - out of 4 trade i win 1 trade and loss 3 trade.
my system's r:r = 1 : 1.

let, for simplicity, for nifty my sl 10 point and target 10 point
for silver mini sl 100 point and target 100 point.

now,calculating on silver mini --
1st trade - 1 lot - loss 100 point
2nd trade - 2 lot - loss 200 point ( total loss 100+200=300 point)
3rd trade - 4 lot - loss 400 point ( total loss 300+400=700 point)
4th trade - 8 lot - profit 800 point ( total profit 800-700= 100 point)

if my system give 4 trade opportunity per day i can warn 100*5= 500 rs per day by this worst system.
( brokerage not considered here because i don't know this is practically possible or not.)

now, most exciting part --

1. if system has 50% win percentage then - 1st trade with 4 lot and next trade with 8 lot
and r:r=1:1 --( daily 4 trading opportunity)
profit - 400+400=800 point per day( 800*5=4000rs per day)

2. if system has 25% winning percentage -1st trade with 1 lot and 4th trade with 8 lot
and r:r= 2:1 --(daily 4 trading opportunity)
profit- (1600-700=1100 point per day(1100*5=5500rs per day)

3. if system has 40%-50% winning percentage and r:r=2:1 then
profit ...............

 

[onlinegtrash]

1st trade - 1 lot - loss 100 point
2nd trade - 2 lot - loss 200 point ( total loss 100+200=300 point)
3rd trade - 4 lot - loss 400 point ( total loss 300+400=700 point)
4th trade - 8 lot - profit 800 point ( total profit 800-700= 100 point)
...

Brilliant but there are few huge flaws:

* UN-ordered outcomes.
-----------------------
Even if you get the probability right (i.e you can win 1 out 4 times on average for 400 trades, then you will have 100 winning trades), you have no guarantee of ordering of events as in your example. What if the 100 winning trades happen to come later in the trades...?

All your arguments will fail... if the order of winning got jumbled... what if your winning trade happened on 1st trade with 1 lot... and 4th trade after doubling down /
Technical name for this type of betting is: Martingale Betting.

* Streaks
----------
Streaks are common... Martingale betting is disastrous, if you happen to get stuck in losing streak where 10-12 trades all hit your SL. Whipsaws and drawdowns are facts of trading life... you just can't escape them but only manage.

*Asymmetry of winning and losing
---------------------------------
In this system you are doubling down on losses, which guarantees you are going to lose a huge chunk of money at some point in your trading... wiping out all your previous hardwork and accumulated profits. Remember if you lose 50% of stake you need 100% in profits to just break even. The account is inescapably going to self detonate.

 

[bapan123]

Brilliant but there are few huge flaws:

* UN-ordered outcomes.
-----------------------
Even if you get the probability right (i.e you can win 1 out 4 times on average for 400 trades, then you will have 100 winning trades), you have no guarantee of ordering of events as in your example. What if the 100 winning trades happen to come later in the trades...?

All your arguments will fail... if the order of winning got jumbled... what if your winning trade happened on 1st trade with 1 lot... and 4th trade after doubling down /
Technical name for this type of betting is: Martingale Betting.

* Streaks
----------
Streaks are common... Martingale betting is disastrous, if you happen to get stuck in losing streak where 10-12 trades all hit your SL. Whipsaws and drawdowns are facts of trading life... you just can't escape them but only manage.

*Asymmetry of winning and losing
---------------------------------
In this system you are doubling down on losses, which guarantees you are going to lose a huge chunk of money at some point in your trading... wiping out all your previous hardwork and accumulated profits. Remember if you lose 50% of stake you need 100% in profits to just break even. The account is inescapably going to self detonate.

thanks for your valuable comment.

i know that this type of idea has huge drawbacks but i am not thinking to apply exactly same on my trading.
this is a basic idea and i calculated everything on average .

but i have been seriously working to find a strategy on silver mini which has minimum 33.33% winning percentage
and r:r=3:1. here my target is 200 points and stoploss 65 points.

i want to apply this type of idea with some moderation and intelligence keeping the flaws mentioned by you in my mind.