I hear Mike and particularly FT71 frequently cite this - ie that because the market can do anything at any time that the probability of 'the next setup winning" is ALWAYS 50%. But then they will go on to say we only need to know whether one thing is more likely than other to have trading edge. This apparent logical contradiction is pretty glaring. How can one thing ( ie going up) be more likely than another (going down) if every setup has a 50% probability of winning?
Likewise why would Mike or FT bother with Volume profile, advanced multi timeframe analysis etc if 'all trades have the same chance of winning'. Why not toss a coin?
It is even argued that within a data set where I can demonstrate that 80 (or 800 of 1000) out of the last 100 trades have won that the probability of the next trade winning is 50%.
Doesnt it mean then that the odds of all of the trades in the data set was also 50/50? And if so then the historical win percentage should always be 50% ?
I get that this holds true for a 50/50 event like a coin toss. That is..I can throw 10 heads but the probability of the next throw being a head is still 50%. But I argue that if I have a 60% win rate over a large data set in my trading that if I execute consistently then the odds of the next trade being a winner is 60% until the data shows otherwise.
Discuss.
See 52 minute mark here
So further - if we dont know what is going to happen next how do we know it will even be 50/50?