That sure will work with proper psychology and money management, as probability argues you would won 50% times.
U think!! I don't but I do think it would be a interesting discussion.
There is 50% probability of heads vs tails because of even distribution of probability of outcomes in a long run. 50:50
If I say Buy for every head and Sell for every tail then in say 1000 trades u would get close to 500 buy trades getting triggered and 500 sell trades getting triggered,
doesnot really means 50% win or loss.
Risk management- Risk vs reward ratio if I take 1:3 (assuming a good one).
Risking only .5% of my account balance on each trades as 1% would only allow me 69 loosing trades(without a win) in row before my account losses 50% of its equity and with .5% I can take whopping 139 trades(without a win) in a row before my equity drops 50%.
Even with these sound moneymanagement system I have no idea will this system give me any edge.
Either my stoploss will get hit or my target or it will not hit either side, so for that we need to take a shorter Timeframe & distance b/w SLTP and Target price can be decreased because of low ATR there are more chances of either sides getting hit in day or whatever TF but remember I need to make sure that every position has be squarred off the same day as we cannot afford morning gapup/down movements as stops wont work overnight if we are talking about Indian markets, unless we trade Forex or other markets.
The probability of stops getting hit would be more than getting the targets hit as the odds are not in our favour but with every winner we will win -3 times (brokers fee cant be ignored) our loss. So, still the mystery lies
what is the probability of getting the Stops hit vs getting Profit Targets hit. Although a probability of just
30% wins can turn this startegy into a winning edge. .
I would like to ask any experienced trader to give me some guidance, if there is any way to work out the calculations or other ideas to add a pinch of salt to this so called strategy. A background in quantitaive finance or statistics could defenitely give some heads up.
PS: Apologies if I have posted in a wrong thread.