Subscribe Feed (RSS)MEDI, AVCI, SWFT
April 20th, 2006 by eyal | Filed under Day Trading. |
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I took several trades today. Just as the market became choppy and all over the place. The trades, in order, were:
MEDI - Short, got stopped out for -1R
AVCI - Long, got stopped out for -1R. This presented another entry point for a profitable trade later in the day but I don’t normally do that.
SWFT - Long, closed end of day for +1.3R
So the end result -0.7R.
I noticed that as I saw my second position get stopped out I was thinking: “OK, this isn’t very nice, but I’ve checked my candidates, they all fit my system, the system works, so no dumb trades there. 2 have stopped out but I have 2 more candidates here, one of them must work and get me back to a decent P&L”. And just as I thought this I also reminded myself that this is of course a fallacy. That 3rd or 4th trade don’t have to work at all. If you roll a dice looking for the numbers 4, 5 or 6, and you’ve just rolled it twice and got 1 on the first one and 3 on the second one then what are the chances you’ll get another 1, 2 or 3? Well the chances are obviously exactly the same as they were before, i.e. you still only have 50%, and my system has about 40% win rate.
So anyways, I evaluted the candidates I was still watching SFWT and RFMD and went long SWFT, not expecting anything and instead just letting probabilities do its thing. SWFT hesitated for a while but turned out ok-ish at the end.
