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Jeff Fried wrote:
> For any given trade, how do you determine the probability of various
> returns? R Slupsky's post implies past experience
Jeff,
My experience of trading futures is about 6 months. So let's leave my
experience or more accurately lack there of out of this. If I understand you
correctly if one had the probability of a given return then they also would have
the probability of a winning trade, no? I think anyone that has that formula
is Mum on the subject.
Anyway what I probably should have said is "What's the potential profit
available on this trade before I take it and how much do I have to risk for
that minimum available profit?" One would figure that available profit however
they do be it retracement or EWave or whatever. As far as estimates on
probabilities I think there are way too many variables to accurately predict or
assess the infinite amount of combinations that could exist at any moment.
r
> , 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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