Expected Value
In roulette, the expected value is determined by the probability of winning when betting on either red or black. The probability of hitting your bet is 18/38, or a win rate of 47.3%. When you win, you get twice your stake back, so the expected value is:
2×18/38≈94.7%
On average, you lose about 5.3% of your stake per bet.
Currently, my strategy’s win rate varies slightly depending on the month, ranging from 52.37% to 54.23%. When expressed in roulette terms, the expected value comparison looks like this:
| Win Rate | Expected Value Formula | Expected Value per Trade |
|---|---|---|
| 47.3% | 2×18/38≈94.7% | -5.3% |
| 50.0% | 2×19/38≈100.0% | 0% |
| 52.6% | 2×20/38≈105.2% | +5.2% |
| 55.2% | 2×21/38≈110.5% | +10.5% |
Even a slight shift—just one or two “red” or “black” slots—can cause significant changes in outcomes. In reality, spreads also exist in trading, so the actual expected value per trade is closer to +3% to +7%.
Combining with Other Strategies
Currently, I’m not combining this strategy with others. However, pairing it with another existing strategy for entry signals could be effective. For example, it might pair well with a higher timeframe trend-following strategy, where the direction is clearer.
****How I Use the Strategy/Expected Value
Ideally, I’d prefer a higher win rate, but I haven’t made significant changes to the RSI Strategy (USDJPY 5min) Final. Instead, I focus on trading consistently without obsessing over each individual win or loss.
With a 53% win rate and 100 trades per year, statistically speaking, one out of every three years could result in a negative year. The key is to manage lot sizes properly during losing periods to mitigate risk.
Short-Term Use
This strategy isn’t designed to deliver results in one or two trades, but it outperforms roulette statistically, making it suitable for single-shot trades under specific conditions:
- Trend-Following Entries: After confirming one win, enter on alerts in the same direction.
- Pre-News Entries: Enter based on alerts before economic indicators are released, but disable the take-profit limit and let it run freely.
Mid-Term Use
Currently, my strategy doesn’t include plans for multi-month trading strategies.
Long-Term Use
The most important principle for long-term use is to trade without overthinking each decision. There are two possible approaches, but never execute both simultaneously:
- Increase Lot Sizes After 8–10 Consecutive Losses: This can help recover from a drawdown more quickly.
- Increase Lot Sizes During Clear Trends: Since this strategy has a trend-following characteristic, increasing lot sizes during strong trends can maximize gains.
The key is to remain consistent and disciplined, avoiding emotional trading and sticking to the plan even during drawdowns.