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Expectancy

  
  Education
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If you perform an internet search on how to calculate expectancy as it relates to trading systems, you will most often see the following:

Expectancy = (probability of win x average win) + (probability of loss x average loss)

The average win and average loss can be either percent gain or loss or it can be dollar values. For example, following are the performance statistics for one of my trading strategies:

  • Probability of win = 71.7%
  • Average win = 2.72%
  • Probability of loss = 28.3%
  • Average loss = -3.59%

I can calculate the expectancy in percentage terms as follows:
Expectancy = (0.717 x 0.0272) + (0.283 x -0.0359) = 0.93% (more…)

5 Great Quotes From Jesse Livermore

  
Analysis, Education
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1. The only leading indicator that matters

Watch the market leaders, the stocks that have led the charge upward in a bull market. That is where the action is and where the money is to be made. As the leaders go, so goes the entire market. If you cannot make money in the leaders, you are not going to make money in the stock market. Watching the leaders keeps your universe of stocks limited, focused, and more easily controlled.

2. Patterns repeat because human nature hasn’t changed for thousand of years

There is nothing new on Wall Street or in stock speculation. What has happened in the past will happen again, and again, and again. This is because human nature does not change, and it is human emotion, solidly build into human nature, that always gets in the way of human intelligence. Of this I am sure.
All through time, people have basically acted the same way in the market as a result of greed, fear, ignorance, and hope. This is why the numerical formations and patterns recur on a constant basis.
I absolutely believe that price movement patterns are being repeated. They are recurring patterns that appear over and over, with slight variations. This is because markets are driven by humans — and human nature never changes.

3. Your first loss is your best loss. (more…)

Beer ad has solution to pestering girlfriends

  
Analysis, Education, Life, Video
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This Andes beer spot, from Del Campo Nazca Saatchi & Saatchi in Argentina, shows guys at a bar using a high-tech contraption—a sound-proof “Teletransporter” with all manner of sound effects piped in—to convince their annoying girlfriends when they call that they’re not, in fact, at the bar. But it raises more questions than it answers. For starters, wouldn’t the girlfriends know about these machines already? Seems like something that would be all over the news! Also, what kind of person uses the hospital as an alibi for anything? That’s the easiest bluff in the world to call. And when she does call it, he’ll be in the hospital for sure. UPDATE: Here’s the Web site of the Teletransporter. And yes, the agency apparently installed these things around the city of Mendoza. Presumably the grainy footage of the guys is real footage, too.

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