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For any given trade, how do you determine the probability of various
returns? R Slupsky's post implies past experience, but I was wondering if
anyone's published rigorous estimates of probability distributions
associated with various technical indicators, events, and markets.
Thanks in advance,
-- Jeff
-----Original Message-----
From: Ira <ist@xxxxxx>
To: zzorro@xxxxxxxxxxxxx <zzorro@xxxxxxxxxxxxx>
Cc: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Wednesday, February 03, 1999 6:56 PM
Subject: Re: Futrs: Trading Stops/Risk/reward
>I have found over the years you need a probability of 80% to utilize a 1:1
return, 70% for
>a 2:1 return and 60% should yield a 3:1 return. The one thing that can not
be dealt with
>in any method is the 3% factor. The only way to handle that is to hedge
with options. It
>reduces profits to a small degree but takes away that 3% factor which leads
to poverty.
>As for options, the returns can not be gauged in the same manner. Each
strategy has a
>different degree of risk and probability of success. Unlike stocks, futures
and options
>are time sensitive therefore are much more conducive to strategies which
include a timing
>tool for entry and exit. Have a good week, Ira.
>
>r slupsky wrote:
>
>> Jonathan Stewart Dempster wrote:
>>
>> > group, does anyone have any comments regarding stops and risk reward
>> > ratios,
>>
>> Tom Joseph of Trading Techniques in their video describes a 1:1.6 with
a 60% win
>> percentage as a minimum. An easy rule of thumb is risk 1 to make 2.
For me on
>> options that increases to risk 1 to make 3-4. I figure it at a 1:2 but
only risk 1/2
>> of the premium so the net is 1 to 4 or so. This does not preclude
the fact that
>> I would take profits at any time. Things change but I am committed to
not letting a
>> winner become a loser no matter how small the profit.
>>
>> r
>
>
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