Is expectancy a useful way of becoming a sustainably profitable forex trader? - page 2

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AnAcc9 #:

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. 

As long as the system is profitable in a live setting (without only relying on expectancy) then it is trustworthy. Hedge funds and bankers do manipulate prices in order to provoke fear and benefit themselves, because influencing the direction of the market is extremely profitable, and they have enough capital to do so. Liquidation of a million retail trades is fantastic news for them, because with the power to influence market direction - they know when to exit and know where to place limit orders. If your system is successfully beating their tactics, it might be profitable, but it's difficult to prove things with only expectancy. For that matter you can't really trust anyone's system until they have a profitable live signal, but you can have conviction and hope.

 
Conor Mcnamara #:

As long as the system is profitable in a live setting (without only relying on expectancy) then it is trustworthy. Hedge funds and bankers do manipulate prices in order to provoke fear and benefit themselves, because influencing the direction of the market is extremely profitable, and they have enough capital to do so. Liquidation of a million retail trades is fantastic news for them, because with the power to influence market direction - they know when to exit and know where to place limit orders. If your system is successfully beating their tactics, it might be profitable, but it's difficult to prove things with only expectancy. For that matter you can't really trust anyone's system until they have a profitable live signal, but you can have conviction and hope.

I now understand that positive expectancy does not tell anyone what to do in the market. It only tells you whether you have a profitable system, after the fact. So, no-one is actually interested in it, per se. I can see why I think that positive expectancy will lead you to become a sustainably profitable trader: it is simply because I have a profitable system. It is not because of everlasting positive expectancy. I make the mistake of putting the cart before the horses. So, end of story. Thank you. In the end it did help me to start this topic. Now I understand that positive expectancy alone will not lead you to becoming a sustainably profitable trader and that the moderator is right. 

 
I look for an expectancy of at least 10 pips in a system by testing with 1 or 10 micro lots.  You can approximate the expectant pips from that amount of lots easier and from testing, and only if the spread is according to reality. Otherwise trading costs will impact those systems by expected and unexpected events including slippage.  
Next is Profit Factor:  Win$ / Loss$.   I prefer systems to have a PF of at least 1.3 though that's entirely up to the trader.
Next is making sure the testing of the edge is on reliable data, preferably on the broker you wish to trade with over several years or more.
An honest broker is something we all find out, and they are often regulated, popular with a significant and satisfied client base.
These are most things that have helped me stay positive over the long run, but not all.

 
Fernando Carreiro has already cleared everything up in Post #1--if we read the links therein:

"The difference between expected value and arithmetic mean is that the former involves a distribution of probability and the latter involves a distribution of occurrence" (emphasis added, link reposted, Expected Value: Definition, Formula, and Examples).

One can infer whatever they like from expectancy, but redefining the word in doing so would be erroneous.

 
maximo #:
I look for an expectancy of at least 10 pips in a system by testing with 1 or 10 micro lots.  You can approximate the expectant pips from that amount of lots easier and from testing, and only if the spread is according to reality. Otherwise trading costs will impact those systems by expected and unexpected events including slippage.  
Next is Profit Factor:  Win$ / Loss$.   I prefer systems to have a PF of at least 1.3 though that's entirely up to the trader.
Next is making sure the testing of the edge is on reliable data, preferably on the broker you wish to trade with over several years or more.
An honest broker is something we all find out, and they are often regulated, popular with a significant and satisfied client base.
These are most things that have helped me stay positive over the long run, but not all.

Thank you for your comment. I have a  weak 1.1 Profit factor at the moment. It is absolutely not up to me to decide that: it is what I can manage to do in the market right now.  I am improving it at the moment. I will keep your 1.3 Profit Factor in mind, thank you. 1.3 PF is very healthy.

Do you keep track of your expectancy trade by trade all the time and for how long have you been tracking it consistently?

 
AnAcc9 #:

Thank you for your comment. I have a  weak 1.1 Profit factor at the moment. It is absolutely not up to me to decide that: it is what I can manage to do in the market right now.  I am improving it at the moment. I will keep your 1.3 Profit Factor in mind, thank you. 1.3 PF is very healthy.

Do you keep track of your expectancy trade by trade all the time and for how long have you been tracking it consistently?

Tracking the real versus tested results is important to verify over time from a retesting comparison.

I don't monitor Expectancy after testing for it, and instead prefer to use Profit Factor to determine an EA's success or failure.  

I see the .1 in 1.1 Profit Factor as 'the trading costs', so i simply would not trade that system as i consider the edge too weak.  It costs you nothing to keep searching and testing.


 It is entirely up to you to decide if a system is worth your time, effort and money.   


 
maximo #:

Tracking the real versus tested results is important to verify over time from a retesting comparison.

I don't monitor Expectancy after testing for it, and instead prefer to use Profit Factor to determine an EA's success or failure.  

I see the .1 in 1.1 Profit Factor as 'the trading costs', so i simply would not trade that system as i consider the edge too weak.  It costs you nothing to keep searching and testing.


i disagree with:

"It is absolutely not up to me to decide"


 It is entirely up to you to decide if a system is worth your time, effort and money.   


Thank you. I do not trade EAs. I only trade the EuroDollar forex pair. I only have one system, my trading method. You operate in another way. But what you said is very helpful. I can see the logic in your way of trading. It is good. Thank you. 

 
AnAcc9 #:  Thank you. I do not trade EAs. I only trade the EuroDollar forex pair.
One does not trade EAs. "EA" means "Expert Advisor", a MQL program that runs on MetaTrader to carry out automated or algorithmic trading.
 
AnAcc9 #:
I only trade the EuroDollar forex pair.

And the Eurodollar is a wholesale level swap contract (Eurodollar: Definition, Why It's Important, and Example).

Don't confuse it with the EUR/USD currency pair (Currency Pair: EUR/USD (Euro/U.S. Dollar) Definition and History).

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