I’ve been testing out two trading strategies lately, and here are my results.
Strategy 1
Profit to Loss Ratio
1 : 1.5
Chance to Profit
85 percent
Strategy 2
Profit to Loss Ratio
2.5 : 1
Chance of Success
60 percent
If both strategies are applied on the same day in order to hedge Strategy 1 against Strategy 2.
What is the chance of both strategies succeeding?
What is the chance to breakeven?
Thanks
Additional Information - Forex Trading Strategy With Fibonacci Retracement Logon to www.easyforextradingtips.com for free forex trading course offers forex trading tips and strategies for beginners to learn forex trading strategy and understand the trading principles You have the Holy Grail in the market? Knowing when to enter the market and when to exit the market at the right time,......
- How to buy stocks for dummies etc? What is the least amount of money that you can invest in? I would like to learn the basics of buying stocks or learning how to buy stocks that would give me a good return on my investment. The issue is I would like to know if there is any solid advice one should know before investing in as well. More or......
- Monday Lotto AU 1million The last 3 draws have been pretty amazing with the smallest number in each draw being 19 20 21, and most numbers coming from the top of the field (big). The Saliu ANY Filters have been large and point to a drop, ie: all 6 numbers for 1st prize will......
- DOW JONES Index Fibonacci Review This week we look at the chart for The Dow Jones Index as our example of using the Fibonacci series. Most Stock market technical analysts/traders commonly use tools such as Fibonacci & Gann analysis methods as part of their investment strategy, as they prove useful in showing points of high......
2 Comments on “A Difficult Investing/Trading Question! NOT HOMEWORK?”
Box815 9th January 2010
There’s no way to know the chance of both succeeding since you don’t give any idea of their relationship to each other. For example, it’s not a hedge if number 2 loses EVERY time number 1 loses. This might be the case if they’re both equity investments.
I’ll just say that a market with the above relationships isn’t efficient, thus I think it’s unlikely to exist as you describe. I think you’ve screwed up the math someplace.
The Engineer 9th January 2010
ok. i am gonna speak from a statistical point of view. in which i assume that the two strategies are independant of each other. which is not the case in the stock market. usually stocks move with the market. but if you do 100 of each you will get 85 winning from the first and 60 from the second which makes the new average = 145/2 = 72.5% and your new profit loss would be 2.5/1.5. you are kinda averaging the two strategies. plus there are more important parameters to look at when you test a strategy. draw downs are very important.