every trade is completely unique from the last one even if you're using the same setups over and over. Shrike hit the nail on the head, if you have an edge don't skip out on any opportunity to make money.
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@shrike and @RielA are correct, for almost all traders and almost every trade. If there is no serial correlation between trades - meaning the outcome of trade x does not depend on the previous trade x-1 (or any other previous trade) -- then there is no benefit to disregarding the 4th trade. Roulette tables are a good example of this.
When might disregarding a trade makes sense? Let's say you examine waves, and throughout history, you find that waves normally have 4 trades. And let's say you look at history and find 3 consecutive winners in a wave sequence, then the 4th trade is usually a loser. Then, it might make sense to disregard that 4th trade.
So, there are rare times when what you say makes sense. But look at the convoluted example I had to dream up to justify it.
My advice is to drop the notion, and just take every trade...
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Think of it this way, does a business skip every fourth customer?
No, it serves every customer. Over time the individual profit or loss per customer is irrelevant. In trading we call this an edge. It is why casinos will always make money over time. They may win or lose on a given time frame, but with proper cashflow management they will be wildly profitable decade over decade.
Trading is the same. Each individual trade doesn't matter, win or loss. All that matters is if you have an edge and you execute it consistently. Execution is where most people fail. (In trading and in life...)
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The only thing remotely useful that's even in the same ballpark (a stretch at that) would be a Monte Carlo analysis. You'll gain more insight with that, than trying to curve fit historical results by manipulating trades as you described.
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The concern I have is that 'trading part time' and 'college' are red flags.
Trading is a profession. The majority of the people participating in the markets have orders of magnitude more human and capital resources and have spent many years honing their craft. It's akin to any other profession - medicine accounting, law - that takes many years of practice and education.
You shouldn't be able to ask a few anonymous people on a forum, like myself, what to do, have 1 year of part-time practice, and go out there and be successful as a part-time lawyer in college. Similarly, it is not likely that you can be successful as a part-time trader in college. Much worse - people start pizzerias with much more time and monetary commitment and preparation than you're presumably putting into trading right now.
College is a valuable time. At my time, I recall it had cost nearly $200 per day for tuition and boarding (before financial aid, scholarships etc.) to attend. Moreover, the opportunity to meet people, learn and do interesting things is likely much greater in college than the first 3-4 years after you've graduated. Make use of it. If you're spending 50% of your time doing part-time trading in college, you're already missing out significantly. And if you're spending just 49% of your time doing part-time trading in college, you're spending too little time on the problem to be successful.
I would advice you to assess your opportunity costs and invest significantly more time pursuing activities in your immediate reach. And if you're interested in trading, find a summer internship at an actual trading firm. You will find that you can get on a much faster trajectory to successful trading that way.
I know this is annoying advice and it seems counter-intuitive to avoid trading to get good at it, but do keep my advice in mind.
Last edited by artemiso; February 3rd, 2016 at 10:58 PM.
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