Is expectancy a useful way of becoming a sustainably profitable forex trader?
"Expectancy" is a metric, a statistical measure. It is not a method or a "way" to trade and to be "profitable".
"Expectancy" is a metric, a statistical measure. It is not a method or a "way" to trade and to be "profitable"
It is a way to know whether your system is profitable over the long term. It is "a way" to become sustainably profitable long term. Once you have positive expectancy and you maintain it, you will become sustainably profitable long term.
No, it is simply a single metric! Alone, even if positive, "expectancy" does not mean that you are will be sustainably or consistently profitable. That is like saying that if you make profits then you are sustainably or consistently profitable.
To understand your "profitability", you will need to look at many metrics in conjunction, where expectancy is only one. There is also, Profit Factor, Recovery Factor, and various Drawdown metrics, average Deposit Load, shape of the equity curve, and several more.
Have you ever looked at MetaTrader's Trading Report? Why do you think it has so much information?
- www.metatrader5.com
No, it is simply a single metric! Alone, even if positive, "expectancy" does not mean that you are will be sustainably or consistently profitable. That is like saying that if you make profits then you are sustainably or consistently profitable.
To understand your "profitability", you will need to look at many metrics in conjunction, where expectancy is only one. There is also, Profit Factor, Recovery Factor, and various Drawdown metrics, average Deposit Load, shape of the equity curve, and several more.
Have you ever looked at the trading report? Why do you think it has so much information?
I am sorry, but mathematically, if you have positive expectancy forever, you will become sustainably profitable.
Don't be discourteous and assume that I don't understand English (my first language), or that I don't understand math (I'm Electrical Engineer and Software developer, and active trader).
Your statement is equivalent to me stating that if "Profit Factor" is above 1.0 then you are sustainably profitable. I could apply the same logic to "Recovery Factor" or state that if your net daily/weekly/monthly profit is positive then you are sustainably profitable.
All of the above statements only demonstrates that you are making profit, but it does not demonstrate that your trading will be sustainably profitable.
For example, a grid strategy or a martingale method, will produce a positive expectancy and a profit factor above 1.0, and by your definition it is sustainably profitable. However, we all know that at some point, that it is going to blow your account.
Don't be discourteous and assume that I don't understand English (my first language), or that I don't understand math (I'm Electrical Engineer and Software developer, and active trader).
Your statement is equivalent to me stating that if "Profit Factor" is above 1.0 then you are sustainably profitable. I could apply the same logic to "Recovery Factor" or state that if your net daily/weekly/monthly profit is positive then you are sustainably profitable.
All of the above statements only demonstrates that you are making profit, but it does not demonstrate that your trading will be sustainably profitable.
For example, a grid strategy or a martingale method, will produce a positive expectancy and a profit factor above 1.0, and by your definition it is sustainably profitable. However, we all know that at some point, that it is going to blow your account.
You asked a question and requested input from others. Yet, if you deny any other opinion and insist that only your "truth" is valid, then there is no meaning to your question and the topic becomes useless.
Feel free to continue as you please with your trading!
You asked a question and requested input from others. Yet, if you deny any other opinion and insist that only your "truth" is valid, then there is no meaning to your question and the topic becomes useless.
Feel free to continue as you please with your trading!
I can not deny other opinions and I did not. I insist that maths is valid and correct. It is very useful to know that when you have positive expectancy forever, you will become a sustainably profitable trader.
It can't exist, not in markets which are designed to destroy retail traders. Institutions and hedge funds aren't naive, they're watching everything. And it's alleged that some brokers even have systems to counter your trade if you use a foolish stop loss.
It can't exist, not in markets which are designed to destroy retail traders. Institutions and hedge funds aren't naive, they're watching everything. And it's alleged that some brokers even have systems to counter your trade if you use a foolish stop loss.
Markets are not designed to destroy retail traders. It is said that retail traders destroy themselves by many self-inflicted means, for example, not following the valid rules they have developed. Brokers, institutions and hedge funds also trade. Positive expectancy does exist and when you have it forever, you will become a sustainably profitable trader. It is best not to tell anyone about it and to trade with more than one broker when you have it.
Why don´t you try it? You have to be absolutely honest and enter all your trades properly on your expectancy sheet. Otherwise you are just wasting your time. It is only statistically valid after you have 100 consecutive trades recorded. Then you have to keep it up forever. You have to standardise your recording method to see your real expectancy. Otherwise your nominal expectancy increases as your capital increases, but you do not know your real expectancy.
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Is expectancy a useful way of becoming a sustainably profitable forex trader? Is it something generally used by forex traders? Or is it a waste of time? Anyone here using it?