After 6 months of serious trading, I'm doing a review of my own.
Here's a snapshot of my performance from Dec2007 - May2008.
By using the wonderful applet provided by this site, we can therefore project what will be the outcome if I were to keep on trading like this.
1st, I need to check out some details that i need to plug it in to the applet.
Win/Lost ratio. Let's use the percentage as the Win and Lost numbers.
Win = 14.1
Lost = 22.8
Win/Lost = 14.1/22.8 = 0.61
Win Probability. Win count / Lost count.
Win count = 10
Lost count = 9
Win Prob = 10/19 = 0.52
Let's plug in.
and There you go. The result......
With all the random 10 probabilities, if I am lucky, I might survive till next year, the most.
If I were to trade the way i am trading right now, there's no doubt that I'm doomed.
With the current probability that I'm having (0.52, which means out of 100 trades, i win 52 times), even with a win/lost ratio of 1(meaning everytime i win , I win $100, everytime i lose, i also lose $100), I ain't gonna achieve nothing still ......
Now ..... This looks better. (win/lose = 1.5)
So ..... Let's mark down the stuff that I really need to improve in order to get a positive return.
1. I need to maintain a 0.50 Win Probability (for every lose, I must get a win)
2. I need to achieve a 1.5 Win/Lose Ratio (in order to achieve that, for every 1 point of risk taken, I need to make back a 1.5 point reward. In other words, only enter a trade with at least a Risk/Reward of 1.5)
3. Never risk more than 2% of total portfolio on any one trade.
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That will be the ultimate goal for me for the coming 6 months.
No waramashit 100% yearly returns.
No whatsoever bullshit of earning $3M in 3 years.
Just Focus on NOT LOSING MONEY,
and FOCUS on
- 0.50 Win Probability
- 1.5 Risk/Reward.
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lingshao: Glad that it helps :)
which part of the chart u dun understand?
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Hi Lionel, tks 4 sharing the analysis abt your trade result. Although I haven't yet understand the generated charts, but the WIN/LOSE RATIO concept provides a CLEAR guideline for me to manage my own trading as well!
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Hi Lionel, tks 4 sharing the analysis abt your trade result. Although I haven't yet understand the generated charts, but the WIN/LOSE RATIO concept provides a CLEAR guideline for me to manage my own trading as well!
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lion @ Tue 20-05-08 09:25AM
ddcat: Agree. 2 ways u can achieve an edge. That is, either like what u said, make your 'Win Probability' Higher, OR ....... or ....... make your 'Win/Lose ratio' higher.
Theoretically, if your Win Prob=0.5, and your Risk/Reward=1.0, it's gonna lead u no where. You need to improve on getting either side higher in order to achieve a positive edge.
:)
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输少当赢 - that's my principle of gambling.
HAHAHAA.
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