Tag Archives: expectancy

Trading And Probabilities [Premium Articles]

We posed a problem about a fair coin toss game that resulted in a relatively high number of engagements in Twitter and interesting discussion about trading and probabilities. The conclusion is that many traders do not understand probability. For access … Continue reading

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Never Pull the Trigger Unless You Know the RIsk and Reward

Everyone can use a fancy stock screener with dozens of technical and/or fundamental criteria and find a few charts that look good. It is quite possible that one will find charts that satisfy specific criteria every day due to the large number of … Continue reading

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Consistent Losers in the Markets Are as Rare as Consistent Winners – The Paradox

I will name this the “Trading System Inversion Paradox”. The paradox says that being a consistent loser in the markets is as hard as being a consistent winner. The proof of this apparent paradox is very easy and requires high school level math. … Continue reading

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The Secret to Profitable Trading

Regardless of your market and timeframe, profitable trading requires that the profit expectation is greater than zero. However, this is a requirement of profitable trading and not the secret as some book authors and academic types argue. The secret is finding … Continue reading

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The Many Faces of Trading Expectation [Premium Articles]

Some authors define trading profitability using the expected value or expectation, a.k.a expectancy. However, it would only suffice for them to say that a trading system, trading method, or even investment program, is profitable if the net profit/loss is positive, i.e. if it … Continue reading

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