Thinking about probabilities is important –#AnirudhSethi

Data-Driven Decision Making: The Value of Probabilistic Thinking l NaveI think of trading as a game of probability, which has several advantages. You are getting more and more expert with your knowledge and experience, always bearing in mind that you will never be able to be always right.For example, a company’s stock is more likely to rise in price in the future (by attracting more investors, who will create more buying pressure) if the stock is at a new high (almost no oneis in loss on shares).if the stock has just broken out of a very long narrow range, if the company is profitable and growing, the growth is solid, the company is relatively undervalued on several valuation methods, the company has little debt, insightBuyers buy stocks… And even if a stock has all of these ingredients, we still can’t be 100% sure that it will rise in the future. Being More Realistic
Thinking about possibilities allows us to be less subject to the available inferential bias that sometimes causes us to place so much importance on a negative event that rarely happens in reality. например If one bad trade results in us never trading breakouts again, even though the probabilities were in our favor, then that’s what we’ll do. Don’t get too emotional
If you think in terms of probability, you will be less susceptible to losing trades. Your chances were good. One trade losing does not define your success rate. If you have an advantage, you will succeed thanks to the law of large numbers. You are also less affected by a good deal. You have an advantage. It is normal for you to win sometimes, it doesn’t have to make you feel cocky.Thinking in probabilities will help you stay away from violating your stop loss rule and becoming “married” to a stock until death do us part. If a trade becomes unfavorable and loses its edge, simply consider the long-term potential of the strategy and move on to the next trade. Focus on operation
Since the odds are stacked in your favor (assuming your strategy has an edge), you need to be more process oriented rather than results focused, allowing you to be less emotional and make better trading decisions. It is a great reduction of stress to use this technique.By thinking in probabilities, you realize that sometimes, a good trade can actually cost you money and sometimes, a bad trade can make you money. The danger of making money from a bad trade is that it can reinforce or create the wrong belief that will cost you more in the future.Because you know you have an advantage in the long run, you just stick with your strategy and don’t stick with it.deviate from it by all means, so that the law of large numbers will work. That’s how casinos make money. Do you want to be the casino or the sucker? When you truly believe that trading is nothing more than a probability game, concepts like “risk” and “reward” lose their meaning.

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