Discussion of article "Moral expectation in trading" - page 4

New comment
 
Serqey Nikitin #:

Any way you look at it, but "moral expectation" is a purely theoretical thing that has nothing to do with practice.....

It is possible to write a PhD thesis, but it is impossible to earn money on all this nonsense.....

The logic here is elementary! Any "expectations" - is looking into the FUTURE, and this chip has never worked ..., unless you - a psychic, like VANGA ....

This statement does not agree with the presented reports, where the depo swings evenly up and down and grows to a huge size. In normal trading the depo does not behave like that. Thus, moral expectation has something in common with practice

 

Many thanks to the author for an interesting article!

One point, however, struck me as controversial. You write:

When opening a position, the trader knows exactly the balance of the trading account. Also, he can estimate the probability of winning (we will discuss this a bit below). But all other parameters of the position we will represent as variables:

  • SL - the difference between the opening price of a position and its stop-loss in points (a positive integer);
  • TP - the difference between the opening price of a position and its Take Profit in points;
  • PV - cost of one point expressed in the deposit currency.
  • Lot - volume of the position.

Then the moral expectation for this position will be as follows:

The first way of applying the moral expectation is possible only when the values of any two variables out of three - SL, TP and Lot- are set in advance.

For example, when opening a position, we set the volume of the position and its Take Profit. Then we can estimate the Stop Loss level for this trade. Its value should be such that the moral expectation becomes positive. That is, we will find the maximum possible value of stop loss.


So, if I understand you correctly, you mean that we will change only one variable in this expression, and all the others will remain unchanged. However, this is not true, because if we change the SL (or TP) variable, the p variable will inevitably change as well, because the closer the order is placed, the higher the probability of its triggering (and vice versa).

 
Verner999 deposit currency.
  • Lot - position volume.

    • Then the moral expectation for this position will be as follows:

    The first way of applying moral expectation is possible only when the values of any two variables out of three - SL, TP and Lot- are predetermined.

    For example, when opening a position, we set the volume of the position and its Take Profit. Then we can estimate the Stop Loss level for this trade. Its value should be such that the moral expectation becomes positive. That is, we will find the maximum possible value of stop loss.


    So, if I understood you correctly, you mean that we will change only one variable in this expression, and all the others will remain unchanged. However, this is not true, because if we change the SL (or TP) variable, the p variable will inevitably change as well, because the closer the order is placed, the higher the probability of its triggering (and vice versa).

    You have understood correctly. But, we are looking for boundary conditions. Now I will talk about take profit. Let's assume that we have found the minimum TP so that the moral expectation becomes positive. It would seem that let's make the TP even bigger. But then the probability of reaching the TP decreases. (This is where the theory of optimal foraging - taking as many points as possible in the least amount of time - could be useful.) That is, we need to select and link together all the variables. For example, a large stoploss will have a low probability of triggering, but the lot in this case will be small.

     
    And what do we call "maximum possible stop loss and minimum possible take profit ", it is complex to define these parameters.....
     
    Jose Ramon Rosaenz take profit ", it is complex to define these parameters.....

    In this case, we are talking about levels at which the moral expectation remains positive. For example, we can set a very large stop loss and the moral expectation will be negative; this is unacceptable. It is the same with take profit: it cannot be too small.

     
    Thank you, which fixed SL and TP values have been considered for the blue graph (lines 0)? What loss / profit ratio has a positive moral expectation. For example, if I consider a TP = 2*SL my moral expectation is positive, but curiously the ECs that work best are the ones with a large SL vs TP (SL = 20*TP, for example...).
     
    Jose Ramon Rosaenz blue graph (lines 0)? What loss / profit ratio has a positive moral expectation. For example, if I consider a TP = 2*SL my moral expectation is positive, but curiously the EAs that work best are the ones with a large SL vs TP (SL = 20*TP, for example...).

    It depends on the probability of a profitable trade and deposit. The use of a large stop loss is due to the fact that a small price movement is more likely. That is, with a ratio of TP = 20 * SL, we are more likely to close the position by taking profit. But this already applies to the theory of optimal foraging.

     
    MetaQuotes:

    New Article Moral Expectations in Trading has been published:

    By Aleksej Poljakov

    Very original theory of trading, kudos!

     
    No, really interesting article) But moral expectation.... There is no such term not in higher, and just in maths) What about indikitars, economic news then? Don't care about them?))))
     
    Mikhail Kozhemyako #:
    No, really interesting article) But moral expectation.... There is no such term not in higher, and just in maths) What about indikitars, economic news then? Don't give a damn about them?))))

    You are a hostage of textbooks.

    Nothing prevents you from describing a phenomenon and giving it a term.

    Especially in such a narrow environment

    12345
    New comment