How Understanding Probability Is IMPORTANT For Trading! (With Examples)🎲
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- čas přidán 31. 05. 2024
- In this video, I discuss the importance of probability and understanding sample sizes, when it comes to being a trader!😁
I also answer questions such as..
Why is probability important in trading?
How do sample sizes affect winning percentages?
How often do traders encounter losing streaks?
..and more!
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TIMESTAMPS:
0:00 Intro!
0:21 Probability In The Real World
1:53 Probability In Trading With Example
3:25 Sample Sizes
6:49 Previous Trading Example Expanded
11:03 Probability Of Consecutive Losses Chart
13:47 Outro!
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DISCLAIMER: This video is not financial advice, it’s for educational and entertainment purposes only. The information provided is simply based on my own personal opinion or knowledge. I’m not a licensed financial advisor so be sure to speak with your own financial advisor, and to do your own research. Any links provided help support the channel, where I may receive a commission at no additional cost to you. Also, trading or investing carries a large amount of risks with the real potential of losses. Past performances due not guarantee future results. Be careful.⚠️
For those that might’ve noticed, I started adding timestamps to these longer videos to make it easier to skip to different sections👍🏼Hope it helps!
I'm taking a statistics course now so hopefully it will help lol
Thank you
I can't seem to thank Laytontrades enough for helping me handle my investment and also earning me awesome profits on a weekly basis. Words alone can't express how i feel, May God continue to bless you sir.
He is on instagram
@@normanclay378 I was introduced to Laytontrades through a friend who has received several payouts investing with him so i decided to give him a try and just like he said, i got my payout within 7days of without any delays or extra charges. He is undeniably the best trader. Thanks sir and God bless
lost my confidence after a major losing streak. blew 5 accounts in total but your teachings made me realize i could build it back. Thanks Matt
I have been trading with Laytontrades for 3weeks now and i've not encountered any loss whatsoever. He is very transparent to the core and hardworking. Get in touch with him for financial breakthrough...
He is on instagram
And how are you doing now?
The part with consecutive losses was super interesting, thank you so much for this information !
Amazing video, I loved that probability chart at the end. This video really put things into perspective for me.
One of the best and important trading video I’ve seen on CZcams 🙌
Thanks Matt. I've been a little down with my recent failures. But after much effort and research I came to the conclusion that... My personal strategy is not bad per se. Is probably that I'm not consistent enough, and still fail to see much, but that final table reminded me that, even if I have a super decent 70% win rate I still can have big consecutive loose streaks and that doesn't mean that i shouldn't continue, and that gives me some confidence.
Thanks. Time to get up from bed and go back to the charts I guess.
Psychology is important too! So hopefully you’re in the right attitude when it comes to trading & don’t feel too down. But yeah, it’s interesting isn’t it? How you can have a longterm strategy that’s fine but can still encounter these random losing streaks. It really makes you think.
@@matt_fxs It is very interesting. I like maths but that percentage was higher than one may think instinctively.
Thanks for awnser. I consider myself not very emotional (loosing doesn't hurt), but I'm pretty impatient, and I've spent like... 5-6 months studying this and have been trying too many stuff. Just recently I've started to focus on 100% on each trade applying only what I know I know. For me "less is more" has been the hardest thing to accept jajaja
Btw. Your videos are great. I'll be checking every one.
Also you have very nice voice for YT. Hope you grow as fast as my wallet :p
Solid breakdown. I needed this after having 3 consecutive losses!
This is great. I remember the first time I saw this video, he explains well how probability works in trading.
Thank you for what you do my man
Probability in Trading
this video helped me a lot
Thank you my guy, this video actually helped
Glad to help!
You are a gem. Hugely motivating knowledge. Loved it.
Thank you😊
Just what I needed to hear
Thank you sir!
I want to always make a profit. Now I'm still learning in the nfc community. thanks for the video.
Thank you.... ❤️
very informative video sir.
Thank you.
great stuff!
Hey Matt, great video. One question, where can I find the way you calculated the last table? The one with a prob of getting consecutive loses depending on wining rate??
His table is incorrect google how you calculate
The key is Risk Reward.
After losing 10 10 10 10
4 consecutive losses
You have that setup which cover all 4 or at least 3 on one go..
Choose your setup which gives higher reward when it works
Good day
Please i want to confirm if the probability of consecutive losses chart is very correct 😊
Like if the chart is 💯 accurate
Coz on digit trading i used a 90% win ratio by choosing the selection to be either one of the nine numbers i selected..(from ten possible numbers)
And i had four losses in a row before i decided to stop because the loss was big and i was using martingale 😢😂....5 in a row might be possible i just want to confirm
And whats the formula for calculating the probability of consecutive losses
Very interesting information ❤ but I bet most traders will quit or take a break from trading after those many consecutive losses right before when their winning streak is about to start 😄
After 6 rolls the sum of the die totaled 18, divide that by 6 and you got 3 🤔🤯
great vid
If I buy or sell randomly at 1:1 ratio then there will be 50/50 change to win or lose.
FACTS. So find something that tips the edge slightly in your favour then. I promise you trading is as simple as thst
Maybe using a negative risk to reward? I use negative RR of 1:20 and whenever I lose I recover that trade in 1 trade (you have to trade small) my equity curve just goes up and up 👍🏼
Yes but that's where sample size comes into play. U might even get 5 losses in a row
People have been saying that the probability chart at the end is wrong, but it is just misleading...given a small enough sample size (100 trades, let's say) it would be more accurate. The larger the sample size you look at, the more inaccurate it becomes, specifically for the many 0%s you have at the end...there is NEVER a 0% chance of consecutive losses. As an example, 9 losses in a row is possible for someone with a 90% win ratio because they could easily have 1 loss, 90 wins, 9 losses (or those 9 losses in a row anywhere in the sequence...could even have 10 losses in a row).
The chances of consecutive losses in a row will also change based on the sample size, though only marginally (and you're dealing with whole numbers for simplicity's sake...which, to be honest, is probably the biggest mistake when dealing with probabilities and statistical chance...in which case you should round up, not down)
🌱
Ok, so you're saying that we need a larger sample (meaning a large amount of trades) and let the probabilities take their course. The problem with that is that the more trades you make, the more money (larger account) you need. And, if you have a strategy with a lower winning rate, then you will be losing a lot of money and may blow up your account before you start hitting winning streaks. So, I don't see the benefit of letting probabilities rules determine whether I trade or not. The key is to have a strategy with a higher winning rate, do money management, etc.
In order to increase the number of sample size,you have to risk very small,not only to have large account,you may have large account but once you will have poor money management, you blow after 3 trades only
@@evodiuspetro-cp7ye : it's not about the size of the lot that you're trading, because you can trade mini-lots forever, but if you don't have a winning strategy, then, all you're doing is prolonging how long it will take you to run out of trading money. The key is to have a good strategy that produces results.
@@curiousmal Well I don't know the truth but I see no reason why having no stragety but selling into the market will not work like QYLD and RYLD have been doing for almost 10 years....
5:55 no, just no. That's not how probability works. A 50/50 chance on an individual roll / flip does not result in an [roughly] even total of outcomes over a large sample size. The 50% chance is only applicable to that one single roll, 2 outcomes, one or the other. The sample size will smooth the resulting outcome, but it will, without a doubt, be skewed to either heads or tails. Once the sample has been taken, that's when you can apply an overall probability to the system: This coin, in this setting, flipped in this particular way, has a probability of x% to land on heads / tails. Basically what you're saying is, if you hit 5 heads in a row, you *could* reasonably expect to hit 5 trails in a row after, which is not right. In the same way the argument about the 30% win rate in the short term VS the 70% win rate over the long term is also out of context. In the short term, the trader is at a loss. Noting "oh but he's a 70% winner" after the fact doesn't change the short term loss rate. If we know before seeing the short term loss, that the trader has a 70% win rate, similar to the coin flip system noted above, where we've taken the larger sample, and therefor can say x % probability, it is a requirement to know the sample size and outcome of the trader over the long term, before stating the short term loss, for it to be correctly considered in context.
Just to be clear, i like your channel, and I have watched a fair amount of your shorts, but this one is just not right.
That’s not what I meant. Obviously, you never read a complete % because your sample size can grow indefinitely. I’m just implying that in the beginning, it can be extremely random & skewed away from 50% but it gradually averages it way closer. Even after 1 million flips, it could be 49.99% heads 50.01% tails, but it’s much closer to 50% now than starting off with 10 random flips that land 10 heads in a row. So that’s what I meant.
Also, in regards to sample sizes, I agree. I made a recent video about that last week & it all depends on the context of your trading strategy, in regards to winning % or sample sizes too.
If my take profit was $25 and my losee was $100 doesnt that mean i wouldnt that mean i have a %75 winning chance?
your win rate would be higher but your losses would probably end up being more than your profits. plus with the spread and commissions it's not really worth it
@@apealeal3973I use a negative RR of -50:1 and very profitable, The key is to recover thet big loss! I recover in 2 trades
Key note, my TP are very small 10USD on a 200K funded account and whenever i lose its 500USD ( I scalp and use my own EA) (make around 500USD-1000USD every day with different pairs opened.
My normal trades TP is 10USD and 500USD SL
My recovery trades are 250 TP and -5,000 SL
I use probabilities in my favor 😊 😊
@@Algoo-X how are you recovering losses with 2 trades when you're risking 50 to win 1.. you'll have you win 50 in a row to break even
That’s if I don’t use recovery trades, I recover in 2 trades
I up the lot sizes so that my TP of each trade (2 in total) equals the amount I had lost
@@Algoo-X very interesting, how recover the big loss? ty very much
Love your videos, but the music on this one was as loud as you were and was quiet distracting.
Yeah, I’ve toned down the audio a lot over the past couple of weeks👍🏼
I agree. Music is distracting. Otherwise great.
Has anybody tested this... can somebody confirm this in real time scenario?
GOD bless you man!
Jesus loves you all!
Shalom❤
I'm not sure but I think the probability table is not correct.
This is a very annoying topic for me cause I trade with great risk, and enter my strategy each time same way and I’m a breakeven trader for the longest , . Nothing random about being a losing trader or breakeven trader for years, obviously winners are doing something that the losers aren’t ! . Nothing random about that. ! Great video by the way bro just a very annoying topic for me
do u minimize risk
@@tshepomotau3510 hi minimize risk how so ?
This table is wrong
Very scientific by using some random win losses........not. 🤦♂️
What's your age Matt ??
I’m 24😎
@@matt_fxs when did you stated trading ??
@@siddaartsinghtv couple of years ago, started with fx & some stocks, then added crypto
@@matt_fxs man I really love your content 💯
Love from India ❤️
@@siddaartsinghtv thank you & much love from the US😁
This was a great recap of historical events. So much in the movie BAT 21 covers what Hambleton went through and very little exposure was given to the people who rescued him. I learned a lot today - thanks. 1
Great video! Jesus Christ saves! John 3:16!!!
wooooooooooooow
Useless