Quote:
Originally Posted by outspan
To put it simply: a random walk has a Gaussian distribution in which stop losses and take profits are vertical lines cutting the distrubution function, the first on the negative side, the second in the positive side (the X axis is the P/L).
The probability of incurring in a stop loss is the integral in X of the distribution function from -infinity to the stop loss value. The probability of incurring in a TP is the integral from there to infinity. Knowing the stddev of the distribution, you can calculate what are the SL and TP values that guarantees an expected value of profit that is > 0.
It's not actually that easy, but I hope I gave you the idea. Math rocks! |
Well Outspan, I see that you have only 8 posts to your credit.
Havn't been here very long have you?
And already you are displaying a high degree of arrogance by spouting mathematics which is quite irrelevant to trading forex.
Yes, I am a mathematician too, but I find that doing Fourier analysis, binomial distributions, line integrals and Legendre polynomials is a total waste of time.
To do so, one would have to live in "la la" land.
I believe in living on Earth, not on Mars.
Firstly, do you not even know that the random walk theory is a
load of bunk.
Shame on you!
Where have you been?
There is absolutely
nothing random about the price action in forex.
The prices are based on human factors such a greed and fear.
You cannot quantify them, nor can maths predict the outcome of news event.
So you can forget mathematics.
The price patterns of these human factors have been worked out long before you came on the scene. They are called
candlestick patterns. These patterns are very accurate and make any mathematics look quite silly.
But you can live in your fairy tale, philosopy, ivory tower world of nebulosity if you wish.
Please do not talk philosophy to me because I will be happy to take your money off you!
Lets see you talk again when you actually start trading.
Thats when the rubber meets the road!
We will see if you actually become more real after, say, 300 posts on this forum (if you last that long).
Your head will come out of the clouds
real quick after you have lost your account a few times!!
