I had made a few posts regarding this topic in the buy/sell line system thread which can be found here. However I began to realize that it is really a very broad and complex topic that really deserves it's own thread. I also couldn't find such a thread on FF.
It started with a theory of mine that when a system or trader is successful, higher risk will pay off better in the long run. I wrote a small program which more or less proved this to be true however there is a psychological issue that is not factored in which probably is out of the scope of what we are looking at. The logic is explained below for those interested. For some it will be boring.
Anyways by accident I happened upon something very interesting that I think we all know but don't accept. Even a winning system can lose for a while and a losing system can win for a while. How long is a while? Well first I need to define some terms so it will be easier to explain. A test is a certain amount of trades and a series is a certain number of tests. As it turns out about 13% of the tests (each consisting of 100 trades) of a losing system of (45% win ratio-1:1 r/r losing lol) turn up as profitable. That's right you have a 13% chance of being profitable after 100 trades while trading a losing system. After 250 trades the number is less than 1%. This has extreme ramifications since most people will deem a system successful after just 50 trades and surely after 100 trades if the system is profitable then that's enough. I would interested in what people think about this topic and if they have done similar things.
The program which is attached will pick a random number (it's not truly random but about as random as is possible) between 0 and 99. It uses the dot net cryptography class. If the number is below your predetermined win loss percentage then it's a win and if the number is above or equal then it's a win. It's a good way to derive randomness for a given chance. Each time it chooses a random number this is like a simulated trade. It uses this information to determine the rest. I will attach the source code. It's quite simple for an experienced programmer I think.
I would love to hear any feedback good or bad on this. Also if you don't understand what I am talking about or whatever just tell me. I would love to help. For me I don't that bothered by losses now that I really understand what's going on.
It started with a theory of mine that when a system or trader is successful, higher risk will pay off better in the long run. I wrote a small program which more or less proved this to be true however there is a psychological issue that is not factored in which probably is out of the scope of what we are looking at. The logic is explained below for those interested. For some it will be boring.
Anyways by accident I happened upon something very interesting that I think we all know but don't accept. Even a winning system can lose for a while and a losing system can win for a while. How long is a while? Well first I need to define some terms so it will be easier to explain. A test is a certain amount of trades and a series is a certain number of tests. As it turns out about 13% of the tests (each consisting of 100 trades) of a losing system of (45% win ratio-1:1 r/r losing lol) turn up as profitable. That's right you have a 13% chance of being profitable after 100 trades while trading a losing system. After 250 trades the number is less than 1%. This has extreme ramifications since most people will deem a system successful after just 50 trades and surely after 100 trades if the system is profitable then that's enough. I would interested in what people think about this topic and if they have done similar things.
The program which is attached will pick a random number (it's not truly random but about as random as is possible) between 0 and 99. It uses the dot net cryptography class. If the number is below your predetermined win loss percentage then it's a win and if the number is above or equal then it's a win. It's a good way to derive randomness for a given chance. Each time it chooses a random number this is like a simulated trade. It uses this information to determine the rest. I will attach the source code. It's quite simple for an experienced programmer I think.
I would love to hear any feedback good or bad on this. Also if you don't understand what I am talking about or whatever just tell me. I would love to help. For me I don't that bothered by losses now that I really understand what's going on.
Attached File(s)
source code.rar
56 KB
|
334 downloads
percentGainWithWinLossPercent.rar
6 KB
|
346 downloads