##### Moderator
I dont mean to disagree with ST Da, but the permutations and combinations in trading are a bit different. In this game, the child is repeating the same action the same way, i.e. pick a piece of paper from a bowl and you read. In trading however, we take a trade time after time, but there are different types of entries at different places and times, in addition the market has a mind of its own and it behaves differently at different times for the same entry, add to this the psychology of the trader and the soup gets thicker and thicker :lol: So I think these are apples and oranges and therefore cannot be compared IMHO.
Concentrate on Risk and Reward part...in trading also if we take constant % of our balance capital as risk, the examples are identical....but even after that if you dont agree, leave it as oranges and apples.

This example has helped me a great deal in understanding core idea of trading so thought of sharing with all.

#### wisp

##### Well-Known Member
Concentrate on Risk and Reward part...in trading also if we take constant % of our balance capital as risk, the examples are identical....but even after that if you dont agree, leave it as oranges and apples.

This example has helped me a great deal in understanding core idea of trading so thought of sharing with all.

Thank you so much for taking the time to explain it to me Da. Of course I agree with you 100% now

##### Moderator
You have made a valid point, wisp. Actually it was not Ralph Vince's original idea. It was built on a mathematical research paper published in 1950s ( I have the whole story along with equations somewhere on my backup disks).

Upshot is, Vince equation is not suitable for short term trading in the long run - and certainly not for day trading high vix scrips where time constraint is obvious. And on top, it doesn't allow to mess up with 25% in arbitrary fashion. It is almost a constant. That means, in order to derive full benefit of it one has to be trading on TF which would be ridiculously long for ordinary traders. The only way to compensate TF problem is to have postion sizing so big that would bring heart attack to many small/medium traders if the trade failed even a couple of times in a row. Not practical for puny mortals like you and I.
I have already mentioned in the original post that I am not recommending to risk 25 % on a trade...25 % was taken because it is the optimal f of this system. In normal trading we cannot risk more than 1-2 % or max 5 % of the balance capital. So concentrate on the basic idea of risk/reward and the sequence of winning /loosing trades.

The most important thing in trading in my limited experience is MM and Reward/Risk and this example illustrates it very well in my view...but no arguments ...each to his own as everyone has his own ways of thinking....

#### wisp

##### Well-Known Member
Concentrate on Risk and Reward part...in trading also if we take constant % of our balance capital as risk, the examples are identical....but even after that if you dont agree, leave it as oranges and apples.

This example has helped me a great deal in understanding core idea of trading so thought of sharing with all.

Da, still wondering...even if it is the risk and reward part, the risked amount is constant, but the danger level of the risk varies in each trade, does it not? Even if I take only a long trade every time I get a pivot above a round number and I risk 10 points on it, it is still not a constant, because each time the factors affecting that pivot above a round number are different unlike the bowl and paper. I apologize, but I still dont see it as Vince or you, perhaps it is my ignorance, but right now it is not making sense to me.

##### Moderator
Da, still wondering...even if it is the risk and reward part, the risked amount is constant, but the danger level of the risk varies in each trade, does it not? Even if I take only a long trade every time I get a pivot above a round number and I risk 10 points on it, it is still not a constant, because each time the factors affecting that pivot above a round number are different unlike the bowl and paper. I apologize, but I still dont see it as Vince or you, perhaps it is my ignorance, but right now it is not making sense to me.
Risk is to be kept constant. Quantity is to be adjusted. If the stop is 10 points away in one trade and the next trade the stop is 20 points away, the quantity on 2nd trade has to be half of the qty on 1st trade so that the risk % is constant.This is possible if one is trading multiple lots but not possible in single lot trading as we cannot reduce qty there.

If the risk is 20 points and the reward we expect is 6-7 points then the environment is not suitable for trading. We dont have to trade in all environments....

##### Well-Known Member
Da, still wondering...even if it is the risk and reward part, the risked amount is constant, but the danger level of the risk varies in each trade, does it not? Even if I take only a long trade every time I get a pivot above a round number and I risk 10 points on it, it is still not a constant, because each time the factors affecting that pivot above a round number are different unlike the bowl and paper. I apologize, but I still dont see it as Vince or you, perhaps it is my ignorance, but right now it is not making sense to me.
how is risked amount constant ?

percentage is constant but not the amount .

when you are missing this basic understanding of concept , its unlikely that you will understand the bigger picture for now

as al brooks says , when you trade , you buy or sell .......right?

who is on other side of trade who is buying or selling contra to you ?

is it likely that its a small time trader taking contra trade against you ? ..............most likely its an institution ,an institution will never take a trade against you if you have a probability of 80% winning , it also means that any institution or market will almost stop trading the moment its understood that they are only likely 20% right on their trade , because institution trade and make market throughout the day non stop ..............its not about only your trade , its about probability on either side being high at any given point in time .

so the logical answer is that at any given point in time , even if your trades are based on a monkey throwing dart on bullseye ..............or whenever monkey misses dart on bullseye , the maxiumum probabilty of our win is no more than 60% , and no less then 40% , whenever this equation changes , you will see highest type of volatility in the market , or big jump or breakdown , until markets reach a point where again the probabilities are , 60-40% band .

i am no expert on this but its logical to me as written in some an albrooks book also , had read on net , i think recently we had an example on 24 august when ITM calls and puts didnt trade for 15-30 minutes early in trade due to probability mismatch ..................i couldnt believe that trades were not happening inspite of price differences of bid and ask as low was .05 tick in nifty calls and puts for minimum of 15 minutes .

check out the charts on 24 august for ITM/ATM calls and puts and when it started trading that day

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#### jagankris

##### Well-Known Member
how is risked amount constant ?

percentage is constant but not the amount .

when you are missing this basic understanding of concept , its unlikely that you will understand the bigger picture for now

as al brooks says , when you trade , you buy or sell .......right?

who is on other side of trade who is buying or selling contra to you ?

is it likely that its a small time trader taking contra trade against you ? ..............most likely its an institution ,an institution will never take a trade against you if you have a probability of 80% winning , it also means that any institution or market will almost stop trading the moment its understood that they are only likely 20% right on their trade , because institution trade and make market throughout the day non stop ..............its not about only your trade , its about probability on either side being high at any given point in time .

so the logical answer is that at any given point in time , even if your trades are based on a monkey throwing dart on bullseye ..............or whenever monkey misses dart on bullseye , the maxiumum probabilty of our win is no more than 60% , and no less then 40% , whenever this equation changes , you will see highest type of volatility in the market , or big jump or breakdown , until markets reach a point where again the probabilities are , 60-40% band .

i am no expert on this but its logical to me as written in some an albrooks book also , had read on net , i think recently we had an example on 24 august when ITM calls and puts didnt trade for 15-30 minutes early in trade due to probability mismatch ..................i couldnt believe that trades were not happening inspite of price differences of as low as .05 tick in nifty calls and puts for minimum of 15 minutes .

check out the charts on 24 august for ITM/ATM calls and puts and when it started trading that day
I am keeping this reserved.
The probability - works only if large sample of trades is taken.
The probability of 60% band random dart trades again works only if taken in the direction of trend.
To keep it simple - the probability of head or toss is 50/50 only if large sample taken.
But when just 20 the probability of heads may vary as 14:6.
But in 100 tosses it will be 50:50.
I am going out in a hurry.More later.
I am going out will try to share more on this when I return.

#### princy01

##### Well-Known Member
Rules of Intraday Flow method: (IDF)

I have learned it from Saint sir, Kapil Sir, Pratap Sir & ST Sir,

IDF trades the minor trend in the direction of visual trend in 5 min chart.

5 min chart used for all index & scripts.

To understand the visual Pivot at 5 min TF, I look at PHs and PLs in 15 min chart. Every pivot in 15 min chart is a visual pivot in 5 min TF. From experience you can do it in 5 min chart itself.

Go long/short at Visual Pivots. Exit at minor pivot break. If 60 min clsoing at known support/ resistance also exit.

If open in yesterday's range:- in Direction of Flow 30 enter on break of Yesterday's pivot. Against Direction of Flow 30 wait for a 5 min pivot above it or go long/ short above/ below the bar that gives a 15 min close above or below it.

Sideways: Nothing to do. Close outside bodies of sideways and then go long/ short above high/ below low of that bar.

Flags: nothing to do. Trade the Break out & Break down.

Profit booking: Support & Resistance.

Now yesterday Visual UP Condition:
1. Gap up above VPH; go long over mPH over 1st Bar.
2.Open/ Gaps down into range but above Visual ERL: Go long over mPH (When minor trend alligned MPH).
3. Opens/ Gaps down into range but below visual ERL: Go long above VPH; go short below VPL
4: Gaps down below VPL: short on a pivot below 1st Bar.

Now yesterday Visual Down:
1.Gaps down below VPL: Short below minor pivot below 1st Bar.
2.Opens/ gap up into range but below visual ERL: short after minor trend alligned to it.
3.Opens / Gaps up into range but above visual ERL:Go long above VPH: Go short below VPL
4. Gaps up above VPH: Long on a pivot; Short below pivot if 1st Bar moves into range

Visual Sideways Days:
1. open in range- go long avove VPH; go short below VPL
2. Gaps above VPH: long over minor pivot;
3. Gaps below VPL: Short below minor pivot.
sir

there are some confusions .

1st what is PH and PL in 15 minute time frame? isit mph and mpl of 15 minutes ?

2nd till these rules you didnt say anything about FLOW 30 , and now flow30 comes in picture , there is no explaination of FLOW 30 till now .

3rd -you say " If open in yesterday's range:- in Direction of Flow 30 enter on break of Yesterday's pivot. Against Direction of Flow 30 wait for a 5 min pivot above it or go long/ short above/ below the bar that gives a 15 min close above or below it."..................please clear that by pivot what you mean , mph , mpl pivot or VPH , VPL pivot .

If open in yesterday's range:- in Direction of Flow 30 enter on break of Yesterday's pivot. Against Direction of Flow 30 wait for a 5 min pivot above it or go long/ short above/ below the bar that gives a 15 min close above or below it.

Sideways: Nothing to do. Close outside bodies of sideways and then go long/ short above high/ below low of that bar.

Flags: nothing to do. Trade the Break out & Break down.

Profit booking: Support & Resistance.

Now yesterday Visual UP Condition:
1. Gap up above VPH; go long over mPH over 1st Bar.
2.Open/ Gaps down into range but above Visual ERL: Go long over mPH (When minor trend alligned MPH).
3. Opens/ Gaps down into range but below visual ERL: Go long above VPH; go short below VPL
4: Gaps down below VPL: short on a pivot below 1st Bar.

Now yesterday Visual Down:
1.Gaps down below VPL: Short below minor pivot below 1st Bar.
2.Opens/ gap up into range but below visual ERL: short after minor trend alligned to it.
3.Opens / Gaps up into range but above visual ERL:Go long above VPH: Go short below VPL
4. Gaps up above VPH: Long on a pivot; Short below pivot if 1st Bar moves into range

Visual Sideways Days:
1. open in range- go long avove VPH; go short below VPL
2. Gaps above VPH: long over minor pivot;
3. Gaps below VPL: Short below minor pivot.
please give examples of all conditions by charts .

thanks a lot:clap::clap:

#### wisp

##### Well-Known Member
Please correct markings when you have some time

#### eku

##### Well-Known Member
Thank you so much for taking the time to explain it to me Da. Of course I agree with you 100% now
You agreed on Oranges and Apples?

This could be the possibilities then-
1)You agreed 50% on Oranges and 50% on Apples
2)You agreed 100% on Oranges so you skipped Apples
3)You agreed 100% on Apples and still doubtful abt the Oranges

4)You agreed 100% But Oranges and Apples are now doubful..

:lol: