Number of trades not relevant

...cont'd from yesterday...

In answer to the criticism desceibed yesterday, I’ll demonstrate that, mathematically, the number of trades is not relevant to the outcome on a day-to-day basis.

Given the mathematical formula for Expectancy and that the Daily Profit/Loss is Expectancy multiplied by Number of Trades, then the factor of Number of Trades is neutralized and made irrelevant.

Expecancy per Trade
= [(Average Win x Percentage Win) – (Average Loss x Percentage Loss)]/Number of Trades

Daily Profit/Loss
=Expectancy Per Trade x Number of Trades

The factor of “Number of Trades” appears in both the Numerator and the Demoninator, which has the effect of cancelling each other out, thereby making that factor not relevant.

I'm taking tomorrow (Friday) off, so I'll be back next week.


Website Home has MOVED to:
http://LeisurelyCashFlow.Googlepages.com

Copyright 2008 Raymond T. Lee. All rights reserved.
LeisurelyCashFlow
eMail me Comments