Long Term Coin Tossing

You have a coin. You win every time it turns up heads. You lose when it is tails. You play 10 rounds. Maybe you get 7 heads, 3 tails. Win rate 70%. You play another 10 rounds. You get 4 heads, 6 tails. Win rate 40%. Even though the odds are 50/50, you will get such results.

Suppose you play 100 rounds, probability becomes high that your win rate will be close to 50%, not exactly but close. You play 1000 rounds, your win rate becomes very close to 50%.

Now suppose you welded the coin such that heads turns up about 55% over time. Then you have an edge in the system that over time will produce about 55% win rate.

I see the long term probabilities in my favour when I backtest my jforex program over a period of 3 years. That is why forex is so appealing, you do not need to wait years in the stock market to discover that your edge is real. 'Long term' in forex is much shorter than the stock market.

We are dealing with the uncertain future, so it is not 100%, follow the trend and mind your risk.

See where the queue is and go serve them

Yea, serve and be rewarded.

Heads or tails?

It came to me like a relevation while in the shower: Betting on the heads or tails of a coin is very much like betting on whether the market you are trading is ranging or trending. 


You have strategies for ranging markets and you have strategies for trending markets. Problem is these strategies inevitably falls into either of these 2 categories: ranging or trending.

So is it possible to make a good guess whether it will be ranging or trending next? When I start seeing a sine curve in the forex market, probability is good the range will maintain and I will go in at the bottom or top of the range, especially if it looks really well-behaved. On the other hand, if I see increased activity, and a likely breakout from a cup and handle or a nice pennant, chances are good for at least a 3 pip scalp.

BTW, now seems a good time to buy some stocks. Do practice risk management.

Bought Wilmar at 6.42

Bought on capitulation. Wilmar ended at a high of 6.6 at close.

Post-entry emotions

I felt I was not adhering to my wait at 15.48 level for DBS. My fear on that day on entry is the fear of missing out. Well there is no clear cut right or wrong. But it shows a discipline issue. If I stuck to my discipline I could get in at 15.48 today easily. If it ran away today to greener pastures, I would probably be cursing inwardly over that 'few cents'. But really I think I will be quite zen about it and just BE.

So what? Miss, miss. A bit no discipline, so? Relac la...

BTW, my stop loss level for DBS is 15.21, probably 15.18 I will do some chopping.

Bought DBS at 15.54

Stalking DBS

I have filtered out Golden Agri and DBS as potential stocks to buy.I am going to give Golden Agri a miss because the reward:risk ratio is now less than 3:1.

DBS is forming a cup and handle formation, one of my favourite patterns in trading forex EURUSD.I will wait till the handle forms nicely before I go in at the bottom of the handle.

15.74 is the breakout of this pattern. 15.21 is a major support that goes back to 2009 Feb and May. 15.21 should also be the bottom of the handle. If DBS leaves the station from 15.48 tomorrow, I am not chasing, as the handle is too short. And such a move is liable to break down as it is to break further up.

Observation mode for now

If the bullishness continues, I will wait for a correction in the STI before trading further. Till then I am just observing.

I am currently reading this fabulous book: "Techniques of Tape Reading" by Vadym Graifer and Christopher Schumacher. It tells it like it is. Reality trading. How risk should always be on your mind. Risk and emotional management. Rewards must always come later.

Why am I reading this book? I am training to trade the forex market.

Shorting mode

Most market indices and stocks are below the 50-day MA. I will not buy in this period and I have kept out of it since the last time I posted.

Now I am preparing to change to a short bias. Meaning sell first, buy back later, using instruments like the CFD.

Accept losses, move on to the next trade.

DBS cut at 14.24, CityDev cut at 10.72

Boohoo, I am giving away my profits. Okay, I messed things up. I am not in the right frame of mind. Things should sometimes be as simple as just cutting your defined losses right away.

Learn from my mistake. When you are bleeding, just stop it and walk away.

Still holding on

Eeeks never cut my loss. But anyway I like to think intuitively at times. So another excuse not to cut. But really I check myself, and I do not feel much about the loss. So since CityDev is at the major support now, I will see what happens. If it looks bad, I really should cut it.

Anyway, a review of all my trades should be in place. Just cannot find the time to do it. Maybe I should change my strategy, maybe I should tweak a little. Maybe just maybe...

Got to have a life you know! Man so busy these days...

Bought DBS at 15.26, CityDev at 11.72

I have decided to enter both as I am pretty undecided between these 2. Anyhow I am thinking of exercising more muscle into my trading and getting used to a bigger R amount. Hence I went in both.

Sold Capitaland at 4.21

Made a small profit on Capitaland. Will be stalking the market for favourable setups.

Monthly Review of Trades (MRT Dec)

7/12 DBS long at 14.78
10/12 sold at 14.58

P/L: -1.4R

Happy New Year, folks!