The indulgence of probability

Probability in day trading is an extremely flexible and equally subjective authority. It is one such aspect that provides for a comprehensive room in terms of making decisions and analysing the potential effects of the decision as well. It can be envisioned as a semi-mechanical process which is based on an automated system comprising of various probabilities that depict two possible results at the end of it all.

Application of the laws of probability to determine market curve

The laws of probability are majorly applied to the stock market arena in speculating the growth curve. One of the most common examples is the influence of present growth on a stock. For instance the laws of probability in stock market confers to the fact that a stock is expected to underperform following an adverse growth session since major players tend to reap in the benefits without further risk involvement.

The substantial loss is incurred since major proportions of the people seemingly think alike and want to either cash out with the profits they have made or simply by virtue of the fear of losing money. Either way the scenario is completely structured owing to the presumptuous thinking of the common people and the misguiding statistical analysis with probability at its core.

It is therefore easily understandable that probability plays a comprehensive role at the crux of shaping the stock market manoeuvres. Probability in day trading is completely speculative yet self-induced as well. In an easier and subtle language it can be envisioned as a pseudo element that helps to shape the movements. It is significantly a common entity that is extensively present at the back of the mind in each trader.  

Probability based trading

Over the years probability based trading has been progressive and heavily sought after, though initially it had been a much neglected process altogether. With the progressive days marking their way every now and then, the use of spread-sheets for an intrinsic insight into a more reliable form of data and assets allows the traders to avoid major loopholes and challenges which come across the methodology of modern day trading.

Probability based trading has a series of advantages above the discretionary method. It is owing to the series of prolific advantages that often probability based trading is envisioned as a safer hybrid approach that allows the trading to reap in significant benefits.  

Probability based trading allows the trader to make a series of decisions by virtue of calculated manoeuvres. It is an ethical combination of techniques and fundamental aspects that contribute to the probable stock movement pattern. The decisions are mostly made on the basis of possible interpretations with the growth of the stock using statistical analysis.

This approach has been considered to be more ethical than the conventional methodology owing to the fact that this approach provides for a detailed and comprehensive control on the aspect of safer trading.

• Probability based trading is an easy to learn process that can be executed within a very short span of time.
• It ensures that the trader is able to manoeuvre their moves with flexibility as par their requisites. In easier terms it ensures better control and freedom for the trader.
• It is the best option for those traders that are in favour of independent day trading. The procedure is calculative and free from liabilities or extensive risk involvement as well.

The prolific chances of success with this type of probability based trading are significantly on the higher side when compared to the discretionary technique counterpart. According to the verses of the stock market experts, discretionary method users can face challenges and lowered percentage of success. The money management scheme and protocol under the banner of the discretion process is badly moulded when compared to probability based trading. This form of money management which is evidently on the poorer side of the turf interjects the users from making any form of significant advances. This hinders the progress of traders and does not allow them to make benefits and profits to the substantial extents.  

Probability based trading is crafted to meet the expectations of conventional people. The methodology is not crafted to make these traders envision unrealistic outcomes from their endeavours; rather it helps to bring about easier benefits and more profits with substantially lower risk involvement. 

Limitations of probability based trading

Similar to the benefits of probability based trading, there are also a number of disadvantages and limitations associated with probability based trading. Most of these limitations arise owing to the fact that a speculative picture is born by virtue of probability based trading.

Often this scenario can be misleading, especially if the trader has limited exposure to the elements of the market trading strategy. It also hinders the natural progress of the person and limits the ability to predict a scenario using the common experience. As the probabilities are speculative, miscalculations of any kind can lead to the arousal of a completely different scenario.

The laws of probability applying to the stock market may make the trading option a safer one, but surely it does not make it completely ethical since getting a hold of a proficient trader with better statistical insight can be a major hassle. Either way it is a strategy which is highly adored by the common man over the years in the stock market arena.