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Some thoughts and musings on trading with probabilities.
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Some thoughts and musings on trading with probabilities.

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Some thoughts and musings on trading with probabilities.

-Trading with probabilities is the only way to win long term.

-To not understand how to trade with probabilities means you have already lost.

-Any discretion outside of probabilities is nothing more than a guess and you can only guess the market so long before puts you in the gutter.

-Probabilities can be measured.

-Measuring allows you to scale size.

-Scale allow you to grow your account.

-Probabilities do not lie and have no emotion.

-Probabilities remove fear and greed from your trading.

-Probabilities does not mean you will not have losing trades but you won't care.

-For probabilities to be effective you must do the same thing every time without question.

-The moment you deviate from your system that produced probabilities you have changed the probabilities of that system.

-Trade probabilities and you can do away with things like heart rate monitors and hypnosis.

Feel free to add your thoughts on trading with probabilities to this thread.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; July 1st, 2011 at 10:54 AM.
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I base my trading around statistics and probability.

Probabilities change, though. So it's a little more complex than that...

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Lornz View Post
I base my trading around statistics and probability.

Probabilities change, though. So it's a little more complex than that...

Are you an option trader?

I think if you trade options probabilities are somewhat of a moving target. But in in futures trading even though probabilities of systems do change adjustments should be made slowly and not to often. I am not opposed to changing a system but once change need to know how it affects probabilities of system as they will change.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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liquidcci View Post
Are you an option trader?

I think if you trade options probabilities are somewhat of a moving target. But in in futures trading even though probabilities of systems do change adjustments should be made slowly and not to often. I am not opposed to changing a system but once change need to know how it affects probabilities of system as they will change.

I trade both options and futures.

The markets change slightly over time. If enough traders/funds try to exploit a particular inefficiency, it will gradually diminish. There a lot of examples of that..

What about the stat arb funds? I bet they thought they had figured out the probabilities...

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Lornz View Post
I trade both options and futures.

The markets change slightly over time. If enough traders/funds try to exploit a particular inefficiency, it will gradually diminish. There a lot of examples of that..

What about the stat arb funds? I bet they thought they had figured out the probabilities...


I agree they do often change over time and at times must be tweaked. But need to make sure range is long enough that are not tweaking all the time or will never be able to measure effectively. So I do agree may not be as simple as my original post implied.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."

Last edited by liquidcci; July 6th, 2011 at 05:03 PM.
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Are you referring to probabilities of expectancy, based on various setups?

Or are you speaking more about 'direct statistics' on price movement, and basing your setups on those direct statistics?

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forrestang View Post
Are you referring to probabilities of expectancy, based on various setups?

Or are you speaking more about 'direct statistics' on price movement, and basing your setups on those direct statistics?

I was under the impression he was speaking of "probabilities" relating to back and forward testing of various systems.
If he is referring to using probability theory as a basis for a trading system, I will have to rethink my response.

As for "direct statistics", as you put it, I actually rely heavily on such information in my trading...

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Lornz View Post
I was under the impression he was speaking of "probabilities" relating to back and forward testing of various systems.
If he is referring to using probability theory as a basis for a trading system, I will have to rethink my response.

As for "direct statistics", as you put it, I actually rely heavily on such information in my trading...

Nice. I've attempted to work that out before.

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forrestang View Post
Are you referring to probabilities of expectancy, based on various setups?

Or are you speaking more about 'direct statistics' on price movement, and basing your setups on those direct statistics?


I am referring to probabilities of expectancy. Sorry to confuse when I brought options into the conversation I was speaking more of direct statistics on potential price movement. But my original post and most comments are directed towards expectancy of a system.

"The day I became a winning trader was the day it became boring. Daily losses no longer bother me and daily wins no longer excited me. Took years of pain and busting a few accounts before finally got my mind right. I survived the darkness within and now just chillax and let my black box do the work."
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