LUCK AND RANDOMNESS
There is no doubt that luck or more general speaking randomness plays an important and unpredictable role in trading. Nobody can escape from this, be it in business, science, love or trading.
A computer simulation of a portfolio starting with equal amounts of money and trading the same system (win ratio of .6 and profit/loss factor of 1) reveals the following result. It is by any means a profitable system but while some portfolio's made a nearly 140% return, others suffer from bad drawdowns to only a 60 % return. This cannot be attributed to skillness or whatever, but is just a matter of randomness or luck which alters someones result. See graph below.
KEEP THIS IN MIND when trading, I find this a very disturbing but also a very reassuring thought at the same time, not everything is in our hands.
I traded yesterday very carefully on the FDAX before the FED's announcements. I never trade on news and I try to avoid these to interfer with my decisions but I know all to well that some news can disturb the markets on the short term very heavily and FED news is one of those newsfacts. My entries are given in the next chart arrowed at the upper side of the graph.
I traded the intraday 5670 level (lined). At arrow X, I hesitated to go short. I connected these moves with the FED and I decided not to enter. I was clearly lucky, no skill, just lucky. Later on the evening I entered long.
The DOW JONES for a couple of days now finding resistance at the 200 SMA. Also bouncing off the support at 1245. See S&P 500 today
Looking at the markets today I am wondering if the DOW futue will show us up with a Adam and Eve doubble bottom, like the FDAX last week, see an intrady chart (eg. at yahoo finance), or below:
Daytrading
Dow Jones
FDAX
A computer simulation of a portfolio starting with equal amounts of money and trading the same system (win ratio of .6 and profit/loss factor of 1) reveals the following result. It is by any means a profitable system but while some portfolio's made a nearly 140% return, others suffer from bad drawdowns to only a 60 % return. This cannot be attributed to skillness or whatever, but is just a matter of randomness or luck which alters someones result. See graph below.
KEEP THIS IN MIND when trading, I find this a very disturbing but also a very reassuring thought at the same time, not everything is in our hands.
I traded yesterday very carefully on the FDAX before the FED's announcements. I never trade on news and I try to avoid these to interfer with my decisions but I know all to well that some news can disturb the markets on the short term very heavily and FED news is one of those newsfacts. My entries are given in the next chart arrowed at the upper side of the graph.
I traded the intraday 5670 level (lined). At arrow X, I hesitated to go short. I connected these moves with the FED and I decided not to enter. I was clearly lucky, no skill, just lucky. Later on the evening I entered long.
The DOW JONES for a couple of days now finding resistance at the 200 SMA. Also bouncing off the support at 1245. See S&P 500 today
Looking at the markets today I am wondering if the DOW futue will show us up with a Adam and Eve doubble bottom, like the FDAX last week, see an intrady chart (eg. at yahoo finance), or below:
Daytrading
Dow Jones
FDAX
posted by Carlo Giuntoni at 4:38 PM
2 comments
