"One such statistic shows that a negative break thru a 5% stop will continue downwards 84% of the time so gambling on the 1:5 is a sure bet to the poor house." Assume this is correct. It still is insufficient information to base a strategy on. For that We need the expectation. Probability without expectation is only half the story.
Let say for an example that 84% continue downwards but that the 16% that do not Produce a gain that is 6 times higher on average than what is lost on the 84% . Negative probability , but a positive expectation. Probabilities alone mean nothing. You can not assume the payoffs are symmetrical they rarely are.
