This is an interesting post. Because any particular system may work great one day but not the next, is this why you use multiple systems...to average things out?
I like your 53% example, but my question is this--how do you arrive at your calculation of a 53% chance of success?
Thanks Eric.
The 53% number was just taken out of thin air, as an example. In reality, things are not so simple, as profit distributions vary widely (versus a simple +$x or -$x for each trade). My intended point was any specific probability of profit, but instead to point out how a seemingly small edge (53% win, versus 47% loss) could turn into an extremely consistently profitable system as measured on an end-of-day daily basis, due to the inherent diversification of a large number of trades.
I hope that helps to clarify. In actuality, I'm sure I am profitable on way greater than 53% of my trades (guess... 65%?), but my average loss is also greater than my average profit, and so the net 'edge' on each trade is not amazing.
Best of luck,
-Eric |
