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Greetings --

One more point. Tech/a mentions expectancy and wants his trading systems to have a positive expectancy.

Expectancy is the gain or loss expected from the average trade (or bet, if you are reading about expectancy as related to gambling).

Tech/a is Absolutely correct!

In order for a trading system to have a chance of working profitably, it Must have a positive expectancy. There is no technique for position sizing or money management that will convert a system that has a negative expectancy into a profitable system. But, it is possible to apply inappropriate position sizing or money management to a system that has a positive expectancy and turn it into a losing system.

There are exactly two variables in the equation that will tell you what the final equity of a system will be: the number of trades and the expectancy expressed as a percentage.

final equity = initial equity * ((1+expectancy) ^ number of trades)

If expectancy is negative, the final equity will be less than the initial equity.

Thanks,
Howard

<blockquote data-quote="howardbandy" data-source="post: 200461" data-attributes="member: 9179">Greetings --One more point.&nbsp; Tech/a mentions expectancy and wants his trading systems to have a positive expectancy.&nbsp; Expectancy is the gain or loss expected from the average trade (or bet, if you are reading about expectancy as related to gambling).&nbsp;&nbsp; Tech/a is Absolutely correct!In order for a trading system to have a chance of working profitably, it Must have a positive expectancy.&nbsp; There is no technique for position sizing or money management that will convert a system that has a negative expectancy into a profitable system.&nbsp; But, it is possible to apply inappropriate position sizing or money management to a system that has a positive expectancy and turn it into a losing system.There are exactly two variables in the equation that will tell you what the final equity of a system will be: the number of trades and the expectancy expressed as a percentage.final equity = initial equity * ((1+expectancy) ^ number of trades)If expectancy is negative, the final equity will be less than the initial equity.Thanks,Howard</blockquote>

[QUOTE="howardbandy, post: 200461, member: 9179"] Greetings -- One more point. Tech/a mentions expectancy and wants his trading systems to have a positive expectancy. Expectancy is the gain or loss expected from the average trade (or bet, if you are reading about expectancy as related to gambling). Tech/a is Absolutely correct! In order for a trading system to have a chance of working profitably, it Must have a positive expectancy. There is no technique for position sizing or money management that will convert a system that has a negative expectancy into a profitable system. But, it is possible to apply inappropriate position sizing or money management to a system that has a positive expectancy and turn it into a losing system. There are exactly two variables in the equation that will tell you what the final equity of a system will be: the number of trades and the expectancy expressed as a percentage. final equity = initial equity * ((1+expectancy) ^ number of trades) If expectancy is negative, the final equity will be less than the initial equity. Thanks, Howard [/QUOTE]

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