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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: aldrums who wrote (17379)	7/20/2005 7:43:48 PM
From: Eric P	Read Replies (1) \| Respond to of 18137

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