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What makes successful trading so challenging is that it is possible to develop a positive expectancy trading model and still lose overall even if you are properly capitalized and employ prudent rules of price risk management. The problem is best illustrated by the analogy of the opaque urn.1 An opaque urn containing 100 marbles is placed in the center of the room. Fifty-seven of those marbles are green and 43 are red. Now I ask you to bet on the color of the marble you will pull from the urn, and you pick green. Out comes a red marble. I again ask you to pick the color of the marble, again you choose green, and again you pull a red marble. Third time: You choose green, and out comes a red marble. Fourth time, you again choose green and again pull out a red marble. After the fourth loss, you begin to doubt. Maybe there are more red marbles than green. And so you either stop betting altogether or worse still, you bet on the red marble. . In particular, look at the number next to the heading marked “MaxConsecLosses,” which stands for maximum number of consecutive losses. As you can see, this positive expectancy model experienced four consecutive losses, despite producing an overall profit of $64,420. This means that if you are either unable—because of overleveraging on any particular trade—or unwilling—because of a lack of confidence in the robustness of the model—to take the fifth trade after four consecutive losses, you do not enjoy the profit of $64,420. You lose the maximum drawdown amount of $23,160 instead. Worse yet, if after four consecutive losses and a drawdown of $23,160, you decided not only to abandon the model, but instead to fade2 it (that is, bet on the red marble), your next trade would have resulted in a loss of $6,320 and total psychological demoralization. So it is not enough to have a positive expectancy model; it is not even enough to successfully manage the risk while employing that model; we must also have confidence in its robustness during those inevitable periods when it underperforms. Returning to the casino paradigm, how does the casino handle inevitable periods of player success? Do they become despondent, close the casino, or start betting on the success of the players? Quite the contrary; when players win, the casino goes wild with lights and noises, all emphasizing the point that despite probability favoring the house, it is possible for players to win. The goal is to have the casino’s attitude of unwavering discipline in the face of losses. As long as we truly have probability skewed in our favor while adhering to rules of risk management, there is no reason to abandon the positive expectancy model despite its endurance of losses. We need instead to train ourselves to trade like the casino, adhering to the probabilities and managing the risk 24 hours a day, seven days a week, 365 days a year. That is unwavering discipline, and that level of consistency is the prerequisite for successful speculation. This being the case, there is only one acceptable reason for abandoning a positive expectancy trading model, namely, its replacement with an even more robust model. ❤️ Conclusion: TRADE LIKE CASINO. #MarketsHumor #TradingUniversity
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Reputation: 522 • Aug 18, 2020 12:18 PM • 
 Pinned post

What makes successful trading so challenging is that it is possible to develop a positive expectancy trading model and still lose overall even if you
are properly capitalized and employ prudent rules of price risk management. The problem is best illustrated by the analogy of the ...
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Abhishek Chaudhary replied to own  post

Update
Exited before entry
Price @ Update
₹269.55

Type
Buy
Instrument
BANKNIFTY 08JUL21 35100 PE
Entry Price
₹270
Price@Trade
₹283.1
Target Price
₹380
Stop Price
₹220
Valid Till
Jul 5, 2021 3:20 AM
Margin
₹675,000 approx for 2500 Qty
Status
Exited before entry
Like
Reply (1)
reply
Abhishek Chaudhary replied to own  post

Update
Exited
Exit Price
₹528.15
Net P&L
+₹7,959.3 (+1.64%)
reply
Abhishek Chaudhary replied to own  post

Update
Exited before entry
Price @ Update
₹235.05

Type
Buy
Instrument
BANKNIFTY 08JUL21 34500 PE
Entry Price
₹215
Price@Trade
₹226.65
Target Price
₹350
Stop Price
₹150
Valid Till
Jul 5, 2021 3:20 AM
Margin
₹107,500 approx for 500 Qty
Status
Exited before entry
Like
Reply (1)

Type
Buy
Instrument
BHARTIARTL JUL21 FUT
Entry Price
₹526
Price@Trade
₹527.55
Target Price
₹551
Stop Price
₹505
Valid Till
Jul 29, 2021 3:20 AM
Margin
₹485,190.3 approx for 3702 Qty
Status
Exited
Exit Price
₹528.15
Net P&L
+₹7,959.3 (+1.64%)
Like
Reply (2)
reply
Abhishek Chaudhary replied to own  post

Update
Exited
Exit Price
₹6.65
Net P&L
-₹10,125 (-16.88%)

Type
Buy
Instrument
NIFTY 01JUL21 15800 CE
Entry Price
₹8
Price@Trade
₹8.2
Target Price
₹11
Stop Price
₹5.5
Valid Till
Jul 1, 2021 3:20 AM
Margin
₹60,000 approx for 7500 Qty
Status
Exited
Exit Price
₹6.65
Net P&L
-₹10,125 (-16.88%)
Like
Reply (2)

Type
Buy
Instrument
NIFTY 01JUL21 15750 CE
Entry Price
₹20
Price@Trade
₹20.95
Target Price
₹24
Stop Price
₹18
Valid Till
Jul 1, 2021 3:20 AM
Margin
₹150,000 approx for 7500 Qty
Status
Stoploss Hit
Exit Price
₹18
Net P&L
-₹15,000 (-10%)
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Reply (2)
reply
Abhishek Chaudhary replied to own  post

Update
Exited
Exit Price
₹295.45
Net P&L
-₹86,375 (-10.47%)

Type
Buy
Instrument
BANKNIFTY 01JUL21 35100 PE
Entry Price
₹330
Price@Trade
₹344.55
Target Price
₹450
Stop Price
₹265
Valid Till
Jul 1, 2021 3:20 AM
Margin
₹825,000 approx for 2500 Qty
Status
Exited
Exit Price
₹295.45
Net P&L
-₹86,375 (-10.47%)
Like
Reply (2)
reply
Abhishek Chaudhary replied to own  post

Update
Exited before entry
Price @ Update
₹15,862.2
reply
Abhishek Chaudhary replied to own  post

Update
Exited
Exit Price
₹2,121.3
Net P&L
-₹14,350 (-6.01%)

Type
Sell
Instrument
NIFTY 29JUL21 FUT
Entry Price
₹15,920
Price@Trade
₹15,903.3
Target Price
₹15,650
Stop Price
₹16,080
Valid Till
Jul 29, 2021 3:20 AM
Margin
₹433,640.6 approx for 200 Qty
Status
Exited before entry
Like
Reply (1)
reply
Abhishek Chaudhary replied to own  post

Update
Exited
Exit Price
₹58.45
Net P&L
+₹600 (+1.04%)
reply
Abhishek Chaudhary replied to own  post

Update
Exited
Exit Price
₹536.65
Net P&L
+₹12,309.15 (+5.03%)

Type
Buy
Instrument
RELIANCE JUL21 FUT
Entry Price
₹2,150
Price@Trade
₹2,165.9
Target Price
₹2,250
Stop Price
₹2,090
Valid Till
Jul 23, 2021 3:20 AM
Margin
₹238,893.75 approx for 500 Qty
Status
Exited
Exit Price
₹2,121.3
Net P&L
-₹14,350 (-6.01%)
Like
Reply (2)

Type
Buy
Instrument
BHARTIARTL JUL21 FUT
Entry Price
₹530
Price@Trade
₹539.45
Target Price
₹570
Stop Price
₹510
Valid Till
Jul 23, 2021 3:20 AM
Margin
₹244,826.01 approx for 1851 Qty
Status
Exited
Exit Price
₹536.65
Net P&L
+₹12,309.15 (+5.03%)
Like
Reply (2)

Type
Buy
Instrument
IDFCFIRSTB
Entry Price
₹57.85
Price@Trade
₹57.85
Target Price
₹61
Stop Price
₹56.2
Valid Till
Jul 20, 2021 3:20 AM
Margin
₹57,850 approx for 1000 Qty
Status
Exited
Exit Price
₹58.45
Net P&L
+₹600 (+1.04%)
Like
Reply (1)
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