Click me

Luck vs. probabilities in trading

Luck doesn't exist in trading 333 How Winning- & Losing Streaks Work in Trading JACKPOT Randomness Sucks Is it more likely to see tails after 4 heads in a row? No!!! Even after 20 heads in a row, the chances of head over tail are+ still 50/50 on the 21st coin-flip. The same is true in trading. Every trade is completely independent from the one before & the outcome is totally random. (within the scope of one's win & loss-rate) Know Your Stats! Your Winrate Your Lossrate Your Journal Your Journal & your past performance will tell you 60% 40% your Win & Loss-rate Likelihood of Losing Streaks 123 1 losing trade 40.0% 2 losing trades 16.0% 3 losing trades 6.40% 4 losing trades 2.56% 5 losing trades 1.02% 6 losing trades 7 losing trades 0.41% 0.16% 8 losing trades 0.07% 9 losing trades 0.03% 10 losing trades 0.01% This Is What Will Happen If you take 2 trades per day, you'll lose 10% of your account every 10 weeks... Losers in a row Every...trades You will lose this much 6. 3.96% 16 5.88% ...& you will have a drawdown of 13% once per year. 4 40 7.76% 98 9.61% 245 11.42% 600 13.19% Keep in mind that these are conservative meassures. Usually, losses wil even be much, much higher when traders start ignoring risk management and try to make up for lost trades. 1500 14.92% 3850 16.63% 10 9500 18.28% *If you risk 2% per trade Don't Be Surprised As you can see, statistics show that it is not a question if a losing streak is going to happen, but when. Therefore, the best you can do is to be prepared. Don't lose your head when it happens. Making Money Is Planable Successful traders are no lucky 7 losing bastards. And their methods are trades can be easily offset by ... usually not superior either. They just know about statistics. And they know that making money in trading is predictable. 5 Pro Tips No big deal A losing (and a winning) streak is absolutely normal. It's statistics & you can't beat it. But Think BIG Stay calm... Don't trade big 1, 2 or 3 trades don't mean anything. Collect data & analyze your statistics after 80, 90 or 100 trades. .& don't try to tweak your system too early, or try to add another indicator. Keep doing what you're doing. Don't try to win it all back with one big trade. It never works, does it?!? Don't look for shortcuts. They don't exist in trading. every streak will end. Promise! Bonus: Statistics will make you money. Inevitably! The best news is that just as you'll have losing streaks, you'll have winning streaks as well. Statistics work in both ways. tradeciety t y • from traders, for traders' %24 ..3 winners

Luck vs. probabilities in trading

shared by RolfSchlotmann on Nov 28
What most traders mistake for luck, or bad luck in trading is just math and statistics at work. This infographic illustrates how probabilities work in winning and losing streaks and provide a guid...


Did you work on this visual? Claim credit!

Get a Quote

Embed Code

For hosted site:

Click the code to copy


Click the code to copy
Customize size