The point that is missing is that you MUST have and edge for the trade you are taking other wise you are just gambling. NOTE- if you do not have a high probability setup for every trade you take -- you are a gambler. You must find your edge.
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I think an example of a 1 point edge would be this. Picture a 3 bar reversal pattern, which is a HH, HL then HH,HL, followed by LH,LL. If bar 4 takes out the low, some traders get in immediately. Others are conservative and wait for a retrace back towards that highest high. If it truely is a reversal getting in 1 point from the top with a stop above that high, should give you a 1:1 higher than normal probability. To me if it goes back below that low 1:3, 1:4.
PS Holding for that 1:3 is what I need to work on...especially on the ES. You are correct on the up/down 1 then 2 point movement.
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If u talk about 1:1 and consider the market is random, without commission, on a long series, 20 are statistical insignificant, u have the 50% of probabilities to be right. Said that if u risk/reward is 1:2 the probailities are reduced by another 50%, so u can be right 25% of times. Said that I think market is not random, otherwise u can't develop an edge and on the long run trading would be a losing game, cos there are commission and tax etc.
Then if u go in the market with a random strategy, considering u haven't the capital to 'flip the coin' many time to reach 50% to be right, in a short term u have the same probabilities to win or loose, but then anyway u will loose due to the commission and tax etc.
Take your Pips, go out and Live.
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Who said we need to go against them? With their size, they cannot go in and out we small traders do. They have to buy/sell in a incremental basis. That's it, once they started their buying/selling, they cannot stop until they are filled with their order as the best possible price. We, as a small trader, we will buy/sell after they started their buying/sell. This usually present a few opportunities and this is our edge.
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