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Trading with Expectation/Expected Value – Part 3a: Find the Target before you enter the trade

by Osikani Leave a Comment

Do we really have to use fixed Targets and Stop Losses? Up until now, while discussing how to trade by using Expected Value, we have been looking at making our statistical analysis with a trading method that uses a consistent fixed number of ticks for a Stop Loss and a fixed number of ticks for … [Read more…]

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

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
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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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