I want to focus your attention for a while on this paper entitled: “Are random trading strategies more successful than technical ones?”
Well, I encourage you to read it whole.
However, I bow myself pardon to the authors if I take just two significant pictures and explain them briefly.
This is the DAX. I won’t explain as much as it is all very clear. Focus your attention onto the histo charts at the bottom.
The first one is “Average % of wins” by trading the DAX with five different methods:
– random strategy
As you may notice, they are pretty all the same. You get approximately the same trading results playing with this strategies at “infinitum” (50% wins).
But the second one is much more important. The second one is the standard deviation of wins. It means the average distance of each win from the mean of the winning trades. The greater, the worse.