disregarding spread, its 50/50
you can calculate a reasonable approximation of win rate from the following:
win rate = stop / (stop + target)
So a 50 pip stop and a 100 pip target will reduce the win rate down to around 33%.
Hoooookay.
After much consideration, the random entry/static s/l t/p of 2:1 is never going to work.
The daily range, and movement of a currency kills that option for it ever working.
Since I’m watching for opportunities anyway, I’m going to apply some of my trading to this.
I won’t ever do anything but what the coin tells me, but after it calls the shots, I will look backwards and look for possible issues with the distance the trade may have in the given direction, and base my s/l and t/p on supports and resistance, and the travel of the last day’s range based on the entry point the coin calls.
This is all about the coin flip. It calls the entry, no matter what, but I think it deserves a fair shake at making a trade work using the same rules I apply in my regular trading.
BTW, both nights were in the black for a little while before tanking.
Codemeister you’re right. It’s not simple math, 2+2 does not equal 4 in this. It can’t, and I really didn’t expect it to.
I really think if one applied the 2:1 ratio, the coin would lose 75% of the time at least. Maybe closer to 100%.
Thanks for the comments. I’m reading them and thinking about how we can make this more functional as learning instead of the gag it started out as.
Talon, that’s what I thought too, but over the weekend, I looked backwards at the charts,and flipped a coin at the given time, and the losses were far more frequent than the wins.
Simba, the problem was where the entry happened.
If the daily range was somewhat at the bottom, and the coin called a sell, it was destined to lose with that high of a t/p point. And conversely at the top. It could be factored in using a smaller limit, and s/l possibly. Both of the trades that have happened reacted that way, and I would expect it would continue in the same direction. The odd win would happen, but it would be at far less frequency than anywhere near 50/50.
I have to say, it’s not surprising so far.
SDC, I don’t know about math making an equation functional here. Too many moving parts to it. We have the 50/50 coin toss, we have the 2:1 ratio trying to travel within a daily range, and we have outside factors of what makes a currency fluctuate to begin with. Unless you are Rene Descartes, good luck!
Over a large enough sample, and ignoring spread a 2:1 ratio would lose 66% of the time. If you cant do the maths, then prove it to yourself by back or forward testing.
The maths is absolutely trivial.
And just in case you think that the coin toss trades won’t get a fair shake with me trying to give it a fair shot, here’s some stats from a silly little account I was honing a new strat on.
While the math there is simple, in reality, it doesn’t work like that.
The problem is price as a moving target. If all was static, and we started at 0 every night, and we had the same rate of travel in price like clockwork, yes. It would be 66%.
But all that goes out the window when applied to a random entry point, and a random direction.
The reality of loss is much higher.
You are wrong, but I’ll leave you to figure this stuff out for yourself.
LOL
Maybe so.
But more likely not.
Chance dealt us a sell tonight.
Looking at recent history, the most likely place to target will be around the 1.3500.
Nice round number, it’s also been the daily low recently, as well as very close to the last 2 days open, and close.
The sell in happened at 1.3532.
The t/p is at 1.3505, and the stop loss at 1.3570.
We’ll see what happens:D
14 pips in the positive.
Stop loss moved to +1, and lowered the t/p to 1.3485.
I’ll squeeze up the stop loss slowly behind it.
Closed trade out manually at 1.3509. +20 pips.
Not a friendly area, I’m looking for a bounce back up, no sense in letting good pips go:D
Maths is not all that matters…not here at forex…
Continue to fight the good fight Master Tang!!!
Heads tonight.
Kinda a challenge here. A bounce may be in the offing.
The buy price was 1.3423, and I put a p/limit at 1.3442.
Not a very big gain, but it’s the most likely one.
1.3447 was the most recent support bounce. It’s a longshot, but we’ll give it a chance. The stop loss is a challenge. Since it’s a 10 month + new low, there’s no real good look at a possible support area to turn to.
I’ll be watching it, so I may go stopless for the time being.
After looking backwards a bit, this seems to have been a busy area in the past. The buy number was at, or very close to several highs, lows, opens, and closes.
The problem is, price action is looking ominously like a flag.
I’m going to set the stop loss at a few pips below the new low. No sense in letting it get too out of hand hoping for a retrace of any size.
I erred here. This edit is to correct it.
We did not have a losing trade last night. I did not see things correctly. We had a gain of 19 pips.
Here is a pic of the trade. One pip higher, and we woulda had a major disaster. After some thought, and after I entered the t/p point, I had a bit of a computer disaster. The stop loss for this trade didn’t get posted. I had it set up, but it didn’t register.
At any rate, we wouldn’t have been stopped out before the win. I had the stop loss to be entered 4 pips below the low to the right.
I’ll post this on the first page as well, but here is the link to watch things develop.
Heads tonight.
Not great, but definitely better outlook than last night though.
Buy in was at 1.3335, set the s/l at 1.3305, and t/p at 1.3362.
The s/l was based just above yesterday’s low, and the t/p was just a tad below a line of support, and resistance, from both yesterday, as it went through it, and last may.
Several times last year it was very close to, or right on a daily open, close, and high as well as low.
Let the waiting begin:D
Here’s a pic of tonight’s trade. You can see last night’s up to the left.
LOL that didn’t take long.
The coin gods hosed us tonight.
Which coin is it best to trade with?
A lucky coin often helps !
Good question. the penny I’ve been using seems to be broken:p