trading is a probability game

Even if you are wrong and got whipsawed by the market, at least you will be preserving your capital. If you have a good trading plan, with a strategy to enter and exit trades, then a successful trade is one for which you followed your plan, not necessarily a winning trade. You must accept the fact that the stock market can do anything at anytime. So how do you make money not knowing what will happen next? All Readers are advised to conduct their own independent research into individual stocks before making a purchase decision. When enough time and bets are wagered,  there is no such thing as luck. As long as the trader can continue to execute his plan over and over again,  he will deliver consistent positive results. And remember, you will never know if your strategy works if you don’t follow it. This is an extremely important mind-set concept that's valid primarily in the areas of investing and trading. You must remember that no system is perfect, and prepare for losses along the way. The first edge I have is to have the underlying fundamentals of the company. Treating trading as a probability game can help accept these losses. The website is provided on an “as is” and “as available” basis, without any representations, warranties or conditions of any kind. He has nothing to prove whether he is right or wrong about the trade. 1. One day, I will write in details on how I record my trades. You treat trading as a probability game. Many technical systems will be correct >60% correct of the time if you apply it consistently. The market can move any directions and many times against all logic and fundamentals for a period of time.An edge in trading is the ability to have winning probabilities on your side. Thanks & regards A big part of trading is a probability game. Once you deviated, the technical system with all its winning probabilities is no longer valid. Scale-up gradually and understand the difference between Probability and Certainty. Copyright © 2020 : Your only expectation is that something will happen. 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At the best, I am right 50% on the timing of the trade but I am making money on >80% of the trades. What does it take to make it in stock trading? Accuracy is the second aspect of probability.Accuracy depends on the knowledge you have accuired about the stocks you want to invest in and the market trends. In mathematical terms, your expected win each time you play is, (4/6) X $2 = $1.33 meaning $0.33 profit (you pay $1 to play), Another version of this game could be that you win $3 if you roll a 4, a 5, or a 6, and nothing if you roll a 1, a 2, or a 3. 2. If I roll a 1 or a 2 then I don’t win anything. You treat trading as a probability game. Therefore casinos do not care if a player is going through a winning streak, as long as he is not cheating. No because with a dice you accept the fact that you cannot know the outcome. Learn to prepare well and respect the risk. Technical system does not need to be too complicated. I do not accept any liability/loss/profit occurring from the use of any content from this site. If I roll a 1 or a 2 then I don’t win anything. Allow critical information like reasons for entering the trade, profit /loss %, number of days held, reasons for adjustments and getting out. Thanks for sharing very useful informations and articals. I know that over the long run, I’ll be alright. Trading in Stocks like JP with long bias can be injurious to trading account, so its always good to trade in fundamentally sound stocks which will not fall 20-30% in single trading session. Once you deviated, the technical system with all its winning probabilities is no longer valid. Pattern, Price and Time: Using Gann Theory in Technical Analysis. No because with a dice you accept the fact that you cannot know the outcome. Fact: Trading is not about guessing the future because it cannot be done. I have been following since few years before that made a huge loss with wrong advices. That’s a great improvement and my trading results have proven the power of this concept. Madhav Desai If I roll a 1 or a 2 then I don’t win anything. Accept from the start that you might see losses. So how do we translate this into trading? You need to follow your rules for getting out. You treat trading as a probability game. You need to follow your rules for getting out. Clearly, every time I roll the dice I have no idea what the outcome will be. You treat trading as a probability game. It does not know whether the next hand will be a winner or a loser against the player, but the casino is certain that they always win given enough bets. It is tedious work but it will be a great help. Many people use options to leverage to enhance the performance. Clearly, every time I roll the dice I have no idea what the outcome will be. Apply the same idea to your trades and save your self-esteem. If you accept this fact, then it is much easier to take losses without destroying your self-esteem. To go back to the dice example: will you get mad or feel stupid when you don’t roll a winning number? In a losing trade, many traders are like a deer in a highway facing a crash. Apply the same idea to your trades and save your self-esteem. Finally keep a journal. Trader must start with a trading plan with positive expected value that has been proven by back testing and long period of time of practice. So how do you make money not knowing what will happen next? If I roll a 1 or a 2 then I don't win anything. Every trader knows trading is a probability game. Clearly, every time I roll the dice I have no idea what the outcome will be. When it turns out to be a loser, let it be. All readers of this site must rely on their own discretion and consult their own investment adviser. And remember, you will never know if your strategy works if you don't follow it. And remember, you will never know if your strategy works if you don’t follow it. Technical system does not need to be too complicated. As you can see in the second example, it does not mean that you have to win more often that you lose. No one can exactly predict the price movement. Normally, I use leading indicators ( price actions, patterns, and candlesticks ) and it is confirmed by the lagging indicators which are stochastic and MACD. Here is an example of a probability game: Let's say I roll a dice: - I pay $1 each time I play - If I roll a 3, a 4, a 5, or a 6 then I win $2. You have no expectations that this trade will turn into a winner. It will help you to know whether you are following the trading plan. Even if you are wrong and got whipsawed by the market, at least you will be preserving your capital. This concept has done wonders to my own trading. Clearly, every time I roll the dice I have no idea what the outcome will be. You have no expectation. You treat trading as a probability game. After 2 years thinking to restart. If the system is too complicated, you will not be able to apply it consistently. A big part of trading is a probability game. | Each time you roll the dice, you don't know the outcome, the same as for each individual trade. If you have a good trading plan, with a strategy to enter and exit trades, then a successful trade is one for which you followed your plan, not necessarily a winning trade. But I know that for every roll the odds are in my favor. You take a trade, you accept that you don’t know what will happen next. I strongly recommend this book. You have no expectations that this trade will turn into a winner. I strongly recommend this book. Trading is a Probability Game. It also depends on how much you win when you win and how much you lose when you lose. Trading is Probability Game. Most people cannot distinguish between luck and skill when it comes to forecasting the market. That’s exactly how traders need to think about his trades. Instead of stopping loss or readjust positions according to the system, they hope that this time it will be different. But I know that for every roll the odds are in my favor. The market can move any directions and many times against all logic and fundamentals for a period of time.An edge in trading is the ability to have winning probabilities on your side.

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