What it Means to "Create Your Own Casino" and Thrive as an Active Trader: One of the best analogies that applies to your edge and overall success as a trader is to create your own personal casino. What this means is that you need to pinpoint opportunities with positive expected value (where the probabilities and risk-reward work out to produce overall profitability) - and keep taking advantage of the numbers being in your favor over-and-over again. In a casino, they do this with … [Read more...]
What is a Statistical Edge in Trading – Expected Value Explained
A Statistical Edge in Trading is a Strategy or System With Positive Expected Value: When people try to find or develop a statistical edge for trading stocks, options, futures, forex, cryptocurrencies, or whatever they prefer, they often latch onto win rates - immediately assuming that a 50%+ win rate automatically equates to a winning system. But what often gets overlooked is the fact that win rate is only part of the equation, and in many cases, doesn't tell the whole story. … [Read more...]
What is Trading Expectancy? The Importance of Having a Statistical Edge
Expectancy & Win Rate Are NOT the Same Thing: Trading expectancy is an equation that tells us how much, on average, we can expect to profit on each trade that we make. In order to make money, we want to find systems that have positive expectancy and avoid systems that have negative expectancy. Along with cultivating the proper mindset, finding a system with a positive expectancy should be one of the first steps in every new trader's journey. Unfortunately, this is a concept that's not … [Read more...]
