Winning Trade % Confidence vs. Straight Losers Expectation - Psychology and Money Management | futures io social day trading
futures io futures trading


Winning Trade % Confidence vs. Straight Losers Expectation
Updated: Views / Replies:3,271 / 20
Created: by Anagami Attachments:5

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 5  
 
Thread Tools Search this Thread
 

Winning Trade % Confidence vs. Straight Losers Expectation

  #1 (permalink)
Live Your Bliss
Canary Islands, Spain
 
Futures Experience: Advanced
Platform: OA
Favorite Futures: What Moves
 
Anagami's Avatar
 
Posts: 701 since Dec 2010
Thanks: 474 given, 1,398 received

Winning Trade % Confidence vs. Straight Losers Expectation

I won't lie, I slapped this together pretty fast, so please let me know if you find any errors.

I hope the attached image is self-explanatory. Find your trade confidence in the left column (60% to 90% success rate). Then look up %s of having 2 or more losers in a row with that confidence.

Example:
Your trades have a 78% confidence level.
You're likely to get:
3 losers in a row about 1% of the time.
4 losers in a row about 23 times out of 1000 times.
5 losers in a row about 5 times out of 10,000 times.
etc.
Depending on your trading frequency, you can (roughly!!) estimate how many losers in a row you can expect in a year, a decade, or a lifetime of trading (of course, your confidence interval changes with time!!).

For example, assume:

3 trades a day, 22 days a month, 12 month a year.
About 800 trades a year.
8000 trades in a decade.
Therefore, the green color represents a 'decade' threshold under these assumptions (since green outcome is at least 1 in 10,000).
In other words, with 3 trades a day frequency, you might see a green outcome in a decade of trading.
You are not very likely to see a blue one... assuming your trade confidence estimate is accurate.

Anyways, it's a bit simplistic, but gives you a ballpark idea. Enjoy.

Attached Thumbnails
Winning Trade % Confidence vs. Straight Losers Expectation-winning-vs-expectation.pdf  
Reply With Quote
The following 10 users say Thank You to Anagami for this post:
 
  #2 (permalink)
Quick Summary
Quick Summary Post

Quick Summary is created and edited by users like you... Add FAQ's, Links and other Relevant Information by clicking the edit button in the lower right hand corner of this message.

 
  #3 (permalink)
Elite Member
Northern Germany
 
Futures Experience: Intermediate
Platform: NT
Favorite Futures: FDAX, CL
 
vvhg's Avatar
 
Posts: 1,583 since Mar 2011
Thanks: 1,016 given, 2,807 received


Anagami, thank you for this table, would it perhaps be a good idea to express this as the likeliness of an occurrence over a given number of trades?

vvhg

Hic Rhodos, hic salta.
Reply With Quote
 
  #4 (permalink)
Live Your Bliss
Canary Islands, Spain
 
Futures Experience: Advanced
Platform: OA
Favorite Futures: What Moves
 
Anagami's Avatar
 
Posts: 701 since Dec 2010
Thanks: 474 given, 1,398 received


vvhg View Post
Anagami, thank you for this table, would it perhaps be a good idea to express this as the likeliness of an occurrence over a given number of trades?

vvhg

Yes, that's definitely one way to think about it.

It's essentially a psychological tool to help one understand what is likely to be experienced given one's 'batting average'.

Reply With Quote
The following user says Thank You to Anagami for this post:
 
  #5 (permalink)
Elite Member
San Diego, California
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: IB, OEC, Optimus, DDT
Favorite Futures: ES, ZN
 
Posts: 221 since Jun 2010
Thanks: 513 given, 157 received

A similar question is if you start with $2000 and you risk $100 per trade with r:r=1:1, your win rate is say 2 out of 3. What's the probability the account balance would dip below $1000? I think the probability is smaller than 5%.

Reply With Quote
 
  #6 (permalink)
Live Your Bliss
Canary Islands, Spain
 
Futures Experience: Advanced
Platform: OA
Favorite Futures: What Moves
 
Anagami's Avatar
 
Posts: 701 since Dec 2010
Thanks: 474 given, 1,398 received


omaha786 View Post
A similar question is if you start with $2000 and you risk $100 per trade with r:r=1:1, your win rate is say 2 out of 3. What's the probability the account balance would dip below $1000? I think the probability is smaller than 5%.

2 out of 3 puts you in the 66% row, meaning you can reasonably expect 8 losers in a row at some point during your trading career. So your account would probably not dip more than $800 at any one time (assuming the constant scenario above). Of course, you may have a string of multiple losers... but that's a different question and a more complex one.

Reply With Quote
The following user says Thank You to Anagami for this post:
 
  #7 (permalink)
Elite Member
San Diego, California
 
Futures Experience: Intermediate
Platform: Sierra Chart
Broker/Data: IB, OEC, Optimus, DDT
Favorite Futures: ES, ZN
 
Posts: 221 since Jun 2010
Thanks: 513 given, 157 received


Anagami View Post
2 out of 3 puts you in the 66% row, meaning you can reasonably expect 8 losers in a row at some point during your trading career. So your account would probably not dip more than $800 at any one time (assuming the constant scenario above). Of course, you may have a string of multiple losers... but that's a different question and a more complex one.

Yes, it's more complex. It's possible to have 6 losers in a row followed by 2 winners, then another 6 losers in a row. I think a Monte Carlo simulation can answer this question better if a precise math formula is too complex.

Reply With Quote
 
  #8 (permalink)
Live Your Bliss
Canary Islands, Spain
 
Futures Experience: Advanced
Platform: OA
Favorite Futures: What Moves
 
Anagami's Avatar
 
Posts: 701 since Dec 2010
Thanks: 474 given, 1,398 received


omaha786 View Post
I think a Monte Carlo simulation can answer this question if a precise math formula is too complex.

Yes, exactly.

Reply With Quote
 
  #9 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,353 given, 83,234 received

Thank you for creating this.

I love this kind of stuff but suck at creating it, I have such a poor understanding of math.

To me, this gets us a part of the picture of risk of ruin, something I would love to see in a color coated index like you prepared if that is somehow possible. I think risk of ruin should be talked about more on the site.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
The following user says Thank You to Big Mike for this post:
 
  #10 (permalink)
Elite Member
Paradise, USA
 
Futures Experience: Beginner
Platform: Big Charts
Favorite Futures: E-mini, Forex, Futures, Equities, Options
 
rtrade's Avatar
 
Posts: 502 since Nov 2010
Thanks: 578 given, 375 received


It's the SUPER FREAK ....Horst Blows it OFF The CHARTS

It's Friday and a beautiful day to start the weekend....let's have some fun.

Ok, I'm only presenting what is FACTUAL based on futures.io (formerly BMT)'s postings, NOT Opinion.

Please review and attachment and sing along with .... Rick James...Baby....

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
Attached Thumbnails
Winning Trade % Confidence vs. Straight Losers Expectation-superfriak4.png   Winning Trade % Confidence vs. Straight Losers Expectation-superfreak5.png  
Reply With Quote

Reply



futures io > > > Winning Trade % Confidence vs. Straight Losers Expectation

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
How to go straight to New Posts CDesai13 Beginners and Introductions 2 November 7th, 2012 02:00 PM
Can the Market Avoid a Sixth Straight Down Week? Quick Summary News and Current Events 0 June 9th, 2011 09:40 PM
How a loosing trade turned into a winning one redratsal NinjaTrader 0 February 25th, 2011 04:16 AM
Winners & Losers of 2010 Poll: You Voted, and Results Are In Quick Summary News and Current Events 0 December 8th, 2010 09:20 PM


All times are GMT -4. The time now is 02:11 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-15 in 0.13 seconds with 20 queries on phoenix via your IP 54.82.56.95