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The Basics for a successful trading method

by Osikani Leave a Comment

There are as many methods to trade as there are traders. Indeed, probably more methods than traders, as many traders have multiple methods that they use. Ultimately creating or finding a successful trading method boils down to a few very definitive steps. No matter what, even though many are unaware of it, the first stage … [Read more…]

Posted in: Price Action, Strategies, Trading Methods Tagged: EVRatio, Market Replay, NinjaTrader, simulated account, simulation, trading method

What win rate do you require to make you profitable?

by Osikani Leave a Comment

An interesting question. What lies behind it? A belief held by many traders that they must have a win rate where they win 70% or more of their trades and also be able to place their targets using some magic ratio (usually 3:1), the distance from their stop. Of course, the stop must also be … [Read more…]

Posted in: Articles, Price Action, Statistics, Strategies, Trading Methods Tagged: expectancy, expectation, Expected Value, loss, probability, profit, stop loss, target

Trading with Expectation/Expected Value – Part 2c: Using the EVRatio to prequalify a trade.

by Osikani Leave a Comment

I can hear you asking:”What in the blue hell is an EVRatio?” To put it simply, the EVRatio (as we shall choose to refer to the Expected Value Ratio) is the true Reward/Risk ratio of a trading method, after the probabilities of the exits (both target and stop) being hit have been taken into account,. … [Read more…]

Posted in: Price Action, Statistics, Strategies, Trading Methods Tagged: expectancy, expectation, Expected Value, loss, probability, profit, stop loss, target

Trading with Expectation/Expected Value – Part 2b: Calculating the Expectations

by Osikani Leave a Comment

In Part 2a, we showed how despite using the much vaunted 3:1 reward/risk ratio of 3:1, a trader could still end up with a losing trading system. We asserted that the profitability of a trading system depends not only on the relative sizes of the distance to target and stop, but also on the probability … [Read more…]

Posted in: Price Action, Statistics, Strategies, Trading Methods Tagged: expectancy, expectation, Expected Value, loss, probability, profit, stop loss, target

Trading with Expectation/Expected Value – Part 2a: My reward to risk is always 3:1. Why am I still losing?

by Osikani Leave a Comment

So you have obeyed the gurus, who told you that in order to be profitable, you must have your target at 3 times the distance to your stop; and that that should pretty much ensure your success. You have done it, but you equity is still going down. Now you want to know what is … [Read more…]

Posted in: Price Action, Statistics, Strategies, Trading Methods Tagged: expectation, Expected Value, probability, true reward/risk ratio

Trading with Expectation/Expected Value – Part 1c: Calculating probability.

by Osikani 2 Comments

How many instances of the setup to examine. In Part 1a  and Part 1b of this series of posts, we examined how to determine the likelihood that our exits will be hit. In that particular post, we posited looking at 100 setups, and I said that that was because it made the analysis simpler. Heard … [Read more…]

Posted in: Price Action, Statistics, Strategies, Trading Methods Tagged: caution, expectation, Expected Value, probability, true reward/risk ratio

Trading with Expectation/Expected Value – Part 1b: Examining the counts.

by Osikani Leave a Comment

What do the counts mean? In Part 1a, we examined how to determine the likelihood that our exits will be hit. In that particular post, we posited looking at 100 setups, and I said that that was because it made the analysis simpler. Our first order of business is to use our counts to determine … [Read more…]

Posted in: Price Action, Statistics, Strategies, Trading Methods Tagged: expectation, Expected Value, probability, true reward/risk ratio

Trading with Expectation/Expected Value – Part 1a: Will our exits be hit?

by Osikani Leave a Comment

Starting with the basics “Trading with Expectation.” What a strange statement? Do we not always trade with expectations? Of course, but the word I used is expectation, not expectations. There is a difference; and it is not just the “s” at the end of the word. Every trader has expectations, usually of gain, when they … [Read more…]

Posted in: Price Action, Statistics, Strategies, Trading Methods Tagged: expectation, Expected Value, probability, true reward/risk ratio

Trading with Expectation/Expected Value – Summary

by Osikani Leave a Comment

In this coming series of posts we shall examine how to trade with statistics of price movement. For now, our sequence shall be: Part 1: Determining how likely our exits are to be hit. Part 2: Determining the Expected Value of our trade before we make the trade Part 3: Evaluating the trade from the … [Read more…]

Posted in: Articles, Price Action, Statistics, Strategies, Trading Methods
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  • Trading with Expectation/Expected Value – Part 3b: What Price Behavior Shall We Trade?
  • Trading with Expectation/Expected Value – Part 3a: Find the Target before you enter the trade
  • How do you talk to the market? – Do you demand or do you ask?
  • The Basics for a successful trading method
  • What win rate do you require to make you profitable?

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U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This, and all other information on our website, is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

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