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> Getting in is the easy part - a coin toss works. Getting out is
> the hard part although it should not be. It's all about risk - how
> much of your account do you want to lose/give back on a trade?
I realize this is a philosophical difference, but I don't see how you
can ignore the difference in risk between a well-chosen entry and a
coin toss. Maybe you'll define the per-TRADE risk to be the same for
both entries, but the risk over MANY trades will be very different.
If you limit the risk to, say, $1000 per trade, but the coin flip
loses more often because it enters at bad times, then your TOTAL risk
will be much greater with the coin.
I'm much more interested in TOTAL DRAWDOWN than I am in risk per
trade. I accept fairly painful bail-out stops on my systems because
I know that creates the best results in the long term.
I haven't gone to the trouble of constructing a random-entry system
to test it, but I would be pretty confident that a well-chosen entry
will win more & more often than a random entry. If so, then the
equity curve will be much better for the good entry, and the TOTAL
risk will be much less.
Gary
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