Do you earn 300 pips in 1 month?

[TheSundanceKid]

Originally posted by comenow


But most simple systems will win you 50% of the time. Making money trading is easy if you have the emotional control not to overtrade, cut your losses, let your profits run and don't panick when things are not working out. You can use simple MA xovers and win half the time. So, if you have the discipline, why is it hard?

Well, I think defining what a "win" is largely open to interpretation. Just because the market goes in your predicted direction, does not mean it necessarily is/is going to be a win. An equally important factor is the extent to which the trade goes in your direction - and also what the likelihood of that event is.
I think trading has everything to do with probabilities. Will the trade go in your favor? How much? How often? Will it move against you before it goes in your direction? How much? How often? What is the optimum amound to risk per trade? How much should I expect to win on each trade? The list goes on...
Once you know the answers to these questions (maybe not exact, but approximate), you can build a trading system around the results - and work out the specifics/semantics according to what you find, for the best chance of success.
I think there are many barriers to trading which make it very difficult for most people. No/not enough planning, poor money management, lack of discipline, inability to control emotions, making simple mistakes, etc., can all lead/contribute to failure.
If most "simple systems" have an average win rate of 50%, like you say, then why aren't we all millionaires? All we would have to do is consistently win 50% of the time with a risk:reward ratio greater than 1:1 to be profitable.
Furthermore, how do you really *know* your system has an average win rate of 50%? And how do you know it will continue to have an average win rate of 50%?

Good Trading,

Sundance

[comenow]

Hi Sundance,

Obviously trading is a probability game. There is no 'knowing' involved? I think you complicate things too much. Why are we not all millioniares? That is the sort of question the average Joe asks when you tell them that there is something (anything) they can do to earn money. I have no idea why we are not all millionaires. It doesn't really matter. Are you saying that we can't consinstetly win 50% of the time? Of course we can. Most people can't do it. That is neither here nor there.

[TheSundanceKid]

Hi Comenow,

Originally posted by comenow
Hi Sundance,

Obviously trading is a probability game.

It is obvious to me too, but it wasn't always. Also, I don't feel enough emphasis/importance is placed on probability, and how greatly it affects the outcome of your trades and thus overall profitability.

Originally posted by comenow
There is no 'knowing' involved? I think you complicate things too much.

The is no "knowing" involved with what? You weren't specific, so I'll make the assumption that you're referring to the probablility of the outcome of your trades.
If you don't know the probability of the outcome of your trades, I would say that you do not stand a good chance of being profitable. How would you even know how much to risk per trade if you did not know, or at least have an idea of what the expectancy of your system is? That's just gambling, IMO.

Originally posted by comenow
Why are we not all millioniares? That is the sort of question the average Joe asks when you tell them that there is something (anything) they can do to earn money. I have no idea why we are not all millionaires. It doesn't really matter.

It does matter, because if most "simple systems" have an average win rate of 50% like you claim, then making money trading would be a piece of cake, for anyone. I disagree with this.
We are not all millionaires because trading is not as easy as you make it out to be.

Originally posted by comenow
Are you saying that we can't consinstetly win 50% of the time? Of course we can. Most people can't do it. That is neither here nor there.

I never said nor implied that it was impossible, just that it is not easy for the average person/trader to do.
How can you say "that is neither here nor there"? That makes no sense, as that's what this discussion is all about.

Good Trading,

Sundance

[comenow]

Sundance,

This is a pretty pointless discussion. I am gonna cut my losses.

[TheSundanceKid]

Wow, we actually agree!

Good Trading,

Sundance

[nzbryant]

We are not all millionaires because of the spread.

Go to Excel and COMPOUND the effect of spread (first MULTIPLY the percentage spread by your average LEVERAGE) over the number of trades you do in a week, and 52 weeks in a year, and you will be astounded as to what percent of your account gets removed by the spread.

[autofx]

TheSundanceKid,

Trading is hard because of emotion. Trading is not intellectually
hard.

Finding or constructing a strategy that'll give you 50% winners
is not hard at all. I'm not sure why you think it's hard.

But you're right if your point is that executing the system is the
hard part. It is. Most traders don't understand how much their
emotions impact their trading decisions and actions. It's this
that really trips them up.

[autofx]

Originally posted by TheSundanceKid


I think trading has everything to do with probabilities. Will the trade go in your favor? How much? How often? Will it move against you before it goes in your direction? How much? How often? What is the optimum amound to risk per trade? How much should I expect to win on each trade? The list goes on...
Once you know the answers to these questions (maybe not exact, but approximate), you can build a trading system around the results - and work out the specifics/semantics according to what you find, for the best chance of success.


On each individual trade, you can never know the answers to
most of the above questions. How much you should risk is an
exception.

I don't think you mean to imply you can put on a trade and know
how much it will go in your favor.


I think there are many barriers to trading which make it very difficult for most people. No/not enough planning, poor money management, lack of discipline, inability to control emotions, making simple mistakes, etc., can all lead/contribute to failure.


All true.


If most "simple systems" have an average win rate of 50%, like you say, then why aren't we all millionaires?


One's lack of millions isn't related to whether there are simple
systems with 50% win rates. Such systems abound. What's
rare is people who can consistently execute the systems, day
after day, week after week, etc.

If you have the ability to execute such a system with iron
discipline, and live long enough, trading that way all the while,
the money will come.


All we would have to do is consistently win 50% of the time with a risk:reward ratio greater than 1:1 to be profitable.
Furthermore, how do you really *know* your system has an average win rate of 50%? And how do you know it will continue to have an average win rate of 50%?

You don't know! Heck, a huge comet could strike the earth in
three years and it's all over. You could have a stroke and not
be able to trade any more.

If you need such assurances, trading isn't for you!

However, IF you practice rules and tactics that mathematically
keep the odds in your favor, and IF a market keeps behaving
the way markets have tended to behave for centuries, and IF
you can render mostly mistake-free execution for a long stretch
of time, you WILL make money.

And if you don't, it's very likley not because you selected a bad
strategy, but far more likely because you never learned to keep
your emotions from controlling your trading actions.