Video 30 A, B, C, D & E: Trader's Equation and Probability

Question 1

Trader’s Equation is:

Answer 1

(Probability of win) x (Reward) > (Probability of Loss) - (Risk)

Question 2

If a trader has high risk/reward, he cannot have high probability at the same time.

Answer 2

This means, you’ll lose most of the time.

Question 3

Anytime Al sees a breakout, he always looks to the left.

Answer 3

As long as below prior high, still in a bear channel, even if Always in Long.
It could simply be a bull leg in a bear channel, or a bull leg n a trading range.

Question 4

Define Z Score

Answer 4

The number of standard deviations from a mean

Question 5

An example of a strong break out is reversal from a bull trend, and there are 3 or 4 bull bars closing on their low.

Answer 5

You can assume the market is Always in Short

Question 6

You will lose until you can be free of emotion

Answer 6

You cannot win until you are comfortable with constant uncertainty

Question 7

The only time Al is confident of a measured move down is during a strong breakout when the context is good.

Answer 7

When he sees a strong breakout in a bear trend, he is very confident of a measured move down.

Question 8

In a bull trend, a 50% pullback has at least a 60% chance of testing the high before hitting the stop below the leg. See Photo

Answer 8

Bulls will buy with a limit order at a 50% pullback or with stop on reversal up.
Getting filled below the 50%
As long as it doesn’t get too far beyond the 50%, it is a trap.