Old Posts Tagged with "expectancy"

These are Blog Archives
Here you can find links to old content I had on the blog, prior to switching to our group pages. Have fun looking around... some of it is pretty good! If you are looking for the best of the best posts from both the old and new eras, then go to the Articles Page. If you want the newest material, browse the public group (and the google waves associated with it).

RWT-008: Forever is a Long Time

Posted on January 28th, 2010
Written by Richard

I’ve posted RWT-008, which goes over some basic game theory as it applies to a common trading decision: taking profits vs. letting the trade ride. In a canned example, I show how you can mathematically decide which option is best, and also give a way to model the imperfection of the common trader when [...]

How To Be Consistently Profitable in the Markets

Posted on January 28th, 2007
Written by Richard

If you are trading with a goal of maximizing your long term profits, you should be concerned with maximizing your expectancy. But, if you are like me, and you want to keep your electricity on via trading stocks, expectancy isn’t the right measurement to use. In this article, I’ll explain how to gauge [...]

What Risk:Reward Ratio is Right for You?

Posted on August 4th, 2006
Written by Richard

Ever wonder why a 1:3 Risk:Reward ratio is so prevalent as a rule of thumb? Ever since I’ve been reading about trading, I’ve heard people say that they ideally look for at least a 1:3 ratio, even if they’ll settle for 1:2. In this article, I’ll talk about how you can derive this [...]

Expectancy and the lottery

Posted on June 21st, 2006
Written by Richard

I was listening to this excellent audio presentation that ugly posted about, and it got me thinking yet again about expectancy. The audio was about how people have trouble with probability. One example characterizes lotteries as a stupidity tax, because the odds of winning are so remote. But, what is the expectancy [...]

We are all at risk!

Posted on May 20th, 2006
Written by Richard

We are all, theoretically, at risk of total financial ruin. Imagine you find a system with a 99.9% success rate, an average per-trade gain of 50% equity, and an average loss of only 0.01% of equity. You would use it, right? So would I! After all, the expectancy would be: [...]