Breakeven Stops: At Entry or 1-2 Tic Profit? | Psychology and Money Management


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Breakeven Stops: At Entry or 1-2 Tic Profit?

  #8 (permalink)

south africa
 
 
Posts: 170 since Dec 2018


bbilotta View Post
What is your expectancy?

I would just add I would be very careful with the definition of expectancy when you click on the link. That basically comes from the expected value calculation of an independent and identically distributed random variable(iid).

Are a series of 10 trades independent? Probably not, there is probably at least some slight dependence

Are a series of 10 trades identically distributed? Surely not.

The issue then with trying to have a single average expected value is you would under bet situations that the "true" expected value is higher than average and over bet situations that the "true" expected value is lower than the average. Of course we probably can't know the true expected value of the trade but chances are most the time it is not going to be near the average IMO.

I just don't think moving the stop is even the right question then. At the least this movement would have to scale with volatility. You can't do the same thing like this with the VIX at 10 vs the VIX at 50.

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