tech/a
No Ordinary Duck
- Joined
- 14 October 2004
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1. Trading of any sort, fundamental or technically based is essentially gambling, yes. Anyone that thinks otherwise, no matter how fervently they believe in their pet theory, is only fooling themselves.
If its simply a theory then I'd agree.
However, there are a few differences which make the numbers bias in your favour instead of the house's favour, namely that the game overall is a net winning game unlike other forms of gambling (eg casino) which are net losing games. The best traders are the ones that can manage their gambles most profitably to take advantage of this edge.
True,putting together a methodology which when tested rigourously returns a positive expectancy then trading that method will return a profit provided the method remains within the parameters returned upon testing.
2. What is the expectancy of your trading? If you don't know, you are an amateur gambler and will eventually lose. "I never once met a large loss that wasn't a smaller loss first" sums it up nicely. Personally, I'd rather be a little bit wrong most of the time (and nicely profitable overall) than right most of the time but lose the game.
Further to this with which I agree is that most traders lose at the exit end (By being to eager to exit).The saying "no ones ever gone broke taking a profit" doesnt understand Positive expectancy.
IE
5 30% losses and 20 5% wins = NETT LOSS.
Frequency of wins is just a portion of the equation.