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I wonder - Is it logical ?

Discussion in 'General Forex Talk' started by Alon, Jul 8, 2008.

  1. Alon

    Alon Private, 1st Class

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    You know when you throw a coin there is a 50 percent chance to any side to appear. that mean from 100 times that we will throw the coin it will fall very close to 50 times for any side - simple statistic.
    The coin have two sides.

    The forex also have two sides he can go long or short bull or bear.
    So theoretical if in any time i will throw a coin and open a position according to what the coin will tell me i should be right with the forex direction 50 percent of the time.

    And if any position that i will open will have stop loss 10 pips and take profit 30 pips that mean that from 10 positions i need to be right only in 3 and i will be in profit :
    3 times correct * 30 pips = 90 pips
    7 times wrong * 10 pips = 70 pips
    90 - 70 = 20 pips profit

    With 100 trades i need to be correct in 30 and can be wrong in 70!! and still be in 200 pips profit.

    What do you think is it logical ?


    Alon
     
  2. Pharaoh

    Pharaoh Colonel

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    Although this sounds like a sure-fire system, the odds are that price will wiggle up and down enough to hit a 10 pip stoploss far more often than a 30 pip take profit.

    If you want to simplify the test (DEMO ACCOUNT ONLY!!!), skip the coin toss and open short and long positions at the same time using 10 pip stops and 30 pip take profit number.

    Do 10 sets of trades like this. Pick the pairs with the narrowest spread. Wait a few hours, and check your results. You might come out ahead, but overall, I'll wager than you usually end up in the red.

    Of course, there's only one way to find out for sure. :D
     
  3. Alon

    Alon Private, 1st Class

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    I think you are right about 10 and 30 pips

    But what do you think about 3 and 9 pips
    9 pips its easier to achieve
    I'm happy that you use the word odds because this is exactly what i want play with the odds

    :err:
     
    #3 Alon, Jul 9, 2008
    Last edited: Jul 9, 2008
  4. rpaco

    rpaco Sergeant

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    3 pips is no good as a stop. You will be stopped out in seconds.

    A 30 pip stop is more useful, but it depends upon the volatility of the traded fx pair. What timeframe you are in etc. They all have different characteristics. It also depends upon what has happened so far when you enter a trade. Where are the Bollinger bands? If they have been in a narrow band for more than half a screen's width (as a very rough rule of thumb) then you may expect a breakout at any moment, (but in which direction?) but most likely to be timed around a news item. Read the daily predictions from SirPips and Crazy Cat.

    Are you approaching a support, pivot or resistance level, where the trend may reverse? Do you adjust the stop to take this into account?
    Which part of which wave are you in?

    Read the general scenario descriptions from DailyFX and Askjeffwild.com compare them. Add in the FPA info. The guys who do this for a living may spend hours each day to keep up with likely trends, reactions to events and long term strategies. Some guys on here used to be professional traders maybe they will say how long you need to study each day, that is once you know everything about the market .

    There seem to be a notable number of people who post in the forum with incredible no fail systems, they publish their results for several weeks then they disappear. It's not easy, some people have a lot of lucky trades (or coincidence of their system working) in succession but luck runs out. Some systems work for some people for some of the time but come unstuck when conditions change.

    Going back to your original proposal; Derren Brown, the illusionist/showman/entertainer showed on UK tv how to throw heads 10 times in a row which he demonstrated in one continuous take on tv. He also showed an infallible system for winning a bet every chosen horse race. How did he do it? The answer is entirely logical.

    42 is the number.
     
  5. Pharaoh

    Pharaoh Colonel

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    Rpaco is right - 3 pips will get you stopped out almost every time.

    Still, if you want to test this, you could do demo account and play with different numbers.

    Find stoploss and take profit numbers that have some chance of success, add in a couple of trend indicators, and only trade in the direction of the trend, and you'll have the beginnings of a workable system.
     
  6. Alon

    Alon Private, 1st Class

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    This is not a sure system

    From the start it wasn't supposed to be evident like a sure system it just was an idea and i posted it here to hear from others if it logical - this was the title of the post.
    About the 3 pips i mean with spread so it will be 5 or 6 pips and also for take profit we should consider the spreads so it need to be 15 or 18 (SL * 3).
    I think that if we will take a small pips we don't need to take the all day movement of the pair just natural daily movement.
    Well i don't going to try it manual but i think that some one that know to program in MetaTrader can write a script for it (it should be easy because the system is simple) and try it for a few days.
     
    #6 Alon, Jul 10, 2008
    Last edited: Jul 10, 2008

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