Probability of Loss
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Member since: 21/04/2011
I am talking about the probability which is given in the image attached. Do not misunderstand this probability with the another probability of winning or loosing a trade.
This Probability of Loss tells us about risk of trading with that strategy. In other words it tells us about money and risk management strategy of a trader. Risk and money management are two of most important factors in trading. For example if a trader is having 10% probability of loss = 30%. It means that there is a 10% chance of loosing ur 30% investment. If ur total investment is $1000 and u r using proportionate lot size then there is a 10% chance that u will loose $300. But 10% probability means very low probability.
You will see some accounts here on fxstat, earning very high amount of profit. Look at probability of Loss table and u will see that they r having 100% probability of loosing 100% investment. It means that even a single mis-managed trade can blow whole account.
So checking profit or drawdown alone doesnt tell the whole story. Probability of loss is an important factor too. A lower probability of loss indicates better money and risk management.
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Member since: 06/06/2011
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Member since: 21/04/2011
Originally posted by JogiVery important factor indeed. Usually it is ignored while reviewing performances. It should be seen when u r choosing signal providers.
Thx for this important article, illiterate.
Usually fxstat doesnt accept high risk strategies. I wrote this article because of demo scammers having some accounts here on fxstat. It is an "Alert" article for beginners to watch performances carefully. Those scammers r trying to sell "EAs" by showing scam performances.
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Member since: 21/04/2011
Originally posted by illiterateI am talking about the probability which is given in the image attached. Do not misunderstand this probability with the another probability of winning or loosing a trade.
This Probability of Loss tells us about risk of trading with that strategy. In other words it tells us about money and risk management strategy of a trader. Risk and money management are two of most important factors in trading. For example if a trader is having 10% probability of loss = 30%. It means that there is a 10% chance of loosing ur 30% investment. If ur total investment is $1000 and u r using proportionate lot size then there is a 10% chance that u will loose $300. But 10% probability means very low probability.
You will see some accounts here on fxstat, earning very high amount of profit. Look at probability of Loss table and u will see that they r having 100% probability of loosing 100% investment. It means that even a single mis-managed trade can blow whole account.
So checking profit or drawdown alone doesnt tell the whole story. Probability of loss is an important factor too. A lower probability of loss indicates better money and risk management.
This really is an important section when trader hides other information.
Stick to your rules
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Member since: 13/04/2013
It show out the expected ratio of performance but not be sure.
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Member since: 24/04/2013
Very essential aspect indeed. Usually it is ignored while examining activities. It should be seen when u r selecting indication suppliers.
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Member since: 29/07/2013
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Member since: 21/04/2011
Originally posted by irfanVery essential aspect indeed. Usually it is ignored while examining activities. It should be seen when u r selecting indication suppliers.
Yes exactly. Most of the traders look at profit, drawdown and consistency. But probability of loss is an important factor which is usually ignored. I have seen a few traders here with good profit but high probability of loss which means they r not using good money and risk management techniques.
Stick to your rules