Probably everyone who received a Higher Technical Education studied Probability Theory.
This is a special branch of mathematics that studies randomness and random events.
When We talk about accidents, Murphy's Law immediately comes to mind.
Anything that CAN go wrong will GO Wrong
Can random events be predicted? Good question..
For example, if we just open a position on BUY, will it close in plus or minus?
Many will say that this is 50 to 50. But this is not so, because. there are too few variables for an equation and an identity.
Then let's add the TakeProfit variable, set the value to 10 points, this is already more realistic, but still, there are too few variables for prediction.
I have always said that all we have is historical quotes and we are trying to predict the future from the past.
We no longer have chances and opportunities.
Then we add the past, this is Time.
Time is all we have
Let's add time 10 minutes, TakeProfit 10 points and open a position on BUY
Now we can assume that the position is likely to reach this value, but for which currency pair or instrument?
For gold, this is likely to happen, because. market noise is always around 100 points.
For EURUSD, it is already in question, because. this is a more relaxed currency pair and vice versa for GBPUSD.
What if we set the time to 10 days and StopLoss to 1000 points?
Good idea ! The chances of getting a StopLoss of 1000 points are 100 times less than getting 10 points, in fact, there are even more chances, the probability will increase exponentially if we just add the MA, Bollinger or RSI indicator.
And that's it, the trading system is ready.
But there is one problem.. if the trades are open, we will receive a huge commission for holding positions.
Even if we make a profit, the commission will be so large that it will turn into a loss.
What if we do this for 10 currency pairs that have little market noise.
Good idea !
Because on average, due to the noise, the pairs will have a total profit, so we will spread our profit
And you can also take a broker who does not charge swaps and commissions, and then it's almost a Grail?
No, the Grail does not exist, the market is constantly changing, even the Moon has its Precession
Precession is a phenomenon in which the axis of rotation of a body changes its direction.
Usually such an algorithm works with a Huge StopLoss (more than 800 points) and a small fixed TakeProfit
It simply calls it overexposure.
The system is holding up its position. Such transactions can be opened for weeks and even months.
And the system will do nothing with these drawdown trades.
Right now, there are several such systems in the TOP 10, and earlier it was PerfectSco**e, the brightest representative
In such systems, the probability of hitting a huge StopLoss is very low.
Such systems consider themselves safe, because they also have StopLoss
But the worst thing is that when you get such a StopLoss, the system will already be useless.
Since you will need to have 100 profitable positions in a row just to go to 0
100 profitable positions can take years because this position can be open for a very long time.
Therefore, I recommend always checking StopLoss , it can be large, but the system should minimize losses and correct the trade
Instead of just waiting for SL or TP to be reached, you need to act!
For example, DivoEA has an SL of around 400-600 points, but this is just a defense, because when a drawdown is formed, the system constantly corrects the level of TP and SL, and this is correct, because. the system does its best to reduce the drawdown, or vice versa - to increase profit!
Therefore, the drawdown is so small, but the profit is great!
Be careful with large StopLoss, especially when many currency pairs are opened at once,
You may need 300 profitable positions to cover the costs !
Thank you for reading this to the end!
