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Jeff,
I agree with you that the information you suggest would be valuable.
Unfortunately there are no standards in this industry to apply to the
methodology.
In my work I have attemted to define in detail the conditions and
assumptions behind my conclussions regarding trading methods. For example,
the entry and exit conditions as well as what one accepts as a failure of
the method. I then test the indicator or technique in real time as if
actual trades were occuring, record the results in terms of reliability (
percentage of time the indicator or technique resulted in a profitable
outcome) and accuracy (how close to the change in trend was my signal)and
draw my conclussions. Examples of this can be seen at
http://www.realtraders.com/geometricforecasting. This has been beneficial
for me and profitable since the methods I have developed are consistently
profitable with returns over 60%.
Jim
I believe it is possible to develop standards of performance which all
reputable sellers of trading techniques should adhear.
----------
> From: Jeff Fried <dragontoes@xxxxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Re: Futrs: Trading Stops/Risk/reward
> Date: Thursday, February 04, 1999 10:46 PM
>
> 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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