What is the probability of heads in a coin toss?
50% (because there is just 2 options - head and tell)
If you were to bet repeatedly on 'head' you will be winning approx. 50% of the time!
If it rains for 70 days in 100 days of monsoon what is the chance of it raining on any day in those 100 days?
70%.
If you were to bet in favour of rain day after day in those days, you will be winning 70% of the time!
If Sachin makes a half-century 8 times in every 10 innings he plays, what is the chance of his hitting a half-century in the next inning?
80%
If you were to bet on his half-century, you will be winning 80% of the time!
If the stock turns down 8 out of 10 times when the rsi on 1 month chart hits 85, what is the chance of the stock turning down next time the rsi hits 85?
80%
If you were to bet on the shorting position every time rsi on 1 month hits 85, you will be winning 80% of the time.
If for the balance 20% trades you have strict stop loss, you don't even lose!!
Trading is a probability game.
Trading is taking high-probability chances!
Nothing is sure!
But chances of certain things at certain times (expecially extremes) are very high.
For good traders, trading is nothing but taking those chances
coolly and boldly
with a smile!
And when they lose, they are happier!
Because they know that the odds of profiting just improved!
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