What is a coin flip theory? When You flip a coin You know that there is only two possibilities - heads or tails. You have 50% chance that You will get it right. When You flip the coin 100 times You should get the same ratio or very close to that. You still know that you have 50% chance of being right. What You don't know is the sequence of the results. It won't be necessarily one time heads and one time tails. This is the important part of this theory that can be paralleled to trading. It is especially important for those who start trading by a new system or strategy.
Knowing that You have, for example, 60% winning rate doesn't guarantee You to win from the very beginning. You may hit a losing streak as soon as You start. So it is important to not to give up at this point, because markets need time to give you the edge and kind of play out all those trades. Only after larger amount of trades You will see the results. All trades that match the entry criteria should be taken and shouldn't be modified in order to see the actual performance. It shouldn't be less than 100 trades.
I hope You got my point as it was also a problem for me. As I had come up with a new strategy, I tried it for some time, had few losers and I quit because I thought that something is wrong with it. Only after some time I realized what was wrong.
Translate to English Show original