Following bad traders as a strategy | Forex Factory

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Following bad traders as a strategy

  • #1
  • First Post: Jul 20, 2017 6:02pm Jul 20, 2017 6:02pm
Has anyone tried to monitor a really bad trader here and do the exact opposite of what they do? Just curious.
  • #2
  • Jul 20, 2017 8:59pm Jul 20, 2017 8:59pm
Quoting Kman
Has anyone tried to monitor a really bad trader here and do the exact opposite of what they do? Just curious.
Haha!! That's exactly what retail brokers do! Except they know what to expect before it happens as they already know what strategy those traders are going to execute using their MT4 Managers.

Good Luck
  • #3
  • Jul 20, 2017 9:59pm Jul 20, 2017 9:59pm
Or study 95% of traders of what they are doing wrong. They usually cut their winners and letting their losers run. They do not have any ideas on risk or probability. Sometimes they overtrade.

I've been studying cognitive biases and why humans in general are not suited for trading. Your money blueprint also plays in.

They tend to overcomplicate strategies as well. One person suggest a very simple and profitable strategy in here... 5months later, the owner of the post left, and 10 other users are still trying to remove their feelings of uncertainty with tweaking indicators and martingale money management.

Study other traders weaknesses here on ForexFactory and other forums is my suggestion :-)
  • #4
  • Jul 21, 2017 8:29am Jul 21, 2017 8:29am
No, not really. With people like this you can never be sure when they'd have a strike of brilliance and do a really great trade that you'll miss.
  • #5
  • Jul 21, 2017 9:41am Jul 21, 2017 9:41am
Money management and risk reward are practically ignored by bad traders, so if you do the opposite you are likely to make money. You take the emotion out by doing the exact opposite of a bad trader.
  • #6
  • Jul 21, 2017 10:04am Jul 21, 2017 10:04am
Quoting tillionaire
{quote} Haha!! That's exactly what retail brokers do! Except they know what to expect before it happens as they already know what strategy those traders are going to execute using their MT4 Managers. Good Luck
Tillionaire,

Could you please elaborate more on,

" as they already know what strategy those traders are going to execute using their MT4 Managers"

How will they know what strategy is being used?

Thanks
  • #7
  • Jul 21, 2017 2:51pm Jul 21, 2017 2:51pm
Interesting topic. We know that 'bad' traders exist, many br0kers intentionally target them and take the opposite side of their positions, as ex-Goldman Sachs trader Anton Kreil explains in the video here. Also some interesting info in this thread.

However, we need to distinguish between a 'bad' trader (one who would be 'skilful' enough to lose money, even if there were no br0ker costs), and an 'ineffectual' trader (one whose strategy is impotent, delivering zero expectancy minus costs). The vast majority of losing retail EAs fall into the latter category -- if you attempt to reverse the signals, they would still lose (explanation here: part 1 and part 2).
  • #8
  • Jul 21, 2017 3:39pm Jul 21, 2017 3:39pm
Quoting hanover
Interesting topic... The vast majority of losing retail EAs fall into the latter category -- if you attempt to reverse the signals, they would still lose (explanation here: part 1 and part 2).
This exactly right! Very good explanation on the topic!

Still, if a broker trades against all clients trades, the broker will be very, very profitable... Following few bad traders might not work as well as following all traders' trades. Surely, if one can do that, one will become very rich, very fast...
Maadik Hugiis. IQ 69.
  • #9
  • Jul 21, 2017 8:16pm Jul 21, 2017 8:16pm
Perhaps you can shadow the bad trader's moves with an opposites portfolio in double the lot sizes.
  • #10
  • Jul 22, 2017 6:24am Jul 22, 2017 6:24am
Quoting Kman
Perhaps you can shadow the bad trader's moves with an opposites portfolio in double the lot sizes.
That sounds too risky to me, to be honest. You'd be hoping that they'll always be a bad trader, but if people learn and evolve.
  • #11
  • Jul 22, 2017 9:45am Jul 22, 2017 9:45am
Quoting mlawson71
{quote} That sounds too risky to me, to be honest. You'd be hoping that they'll always be a bad trader, but if people learn and evolve.

One or two out of thousand become good traders, it's a sure thing for me. Most of them make their money by getting people to deposit more money and increase their volume until they run out of cash tho.
  • #12
  • Jul 22, 2017 5:37pm Jul 22, 2017 5:37pm
Quoting Kman
Has anyone tried to monitor a really bad trader here and do the exact opposite of what they do?

They'd really have to be very bad, and fairly consistently so, for you to be able to fade them and make steady profits, after allowing for spreads/commissions.

The conventional wisdom is that it can't successfully be done, largely for that reason.

I'm not sure it's true, though: I've seen reports of really long backtests of some "systems" posted in forums which are so bad that fading them appears to be slightly profitable over the long term, even allowing for all costs. Which surprised me a bit.
  • #13
  • Edited 7:31pm Jul 22, 2017 6:27pm | Edited 7:31pm
It's safe to mirror the new guys. They get destroyed. Some profiles here are losing double pips consistently. If you have the time to mirror them, you can get a big percentage on the other side.
  • #14
  • Jul 22, 2017 11:49pm Jul 22, 2017 11:49pm
Ha ha ha! No way dear, Forex trading is my main source of income! So, I can’t make fun with my profession! But, I see there have so many traders who are seeking shortcut way of money making! Maybe they have this kind of experience.
  • #15
  • Jul 25, 2017 4:05pm Jul 25, 2017 4:05pm
Since supposedly everyone loses more money than they make, then consider taking the opposite of your trades.
You cannot be extraordinary by being normal
  • #16
  • Jul 25, 2017 4:19pm Jul 25, 2017 4:19pm
Quoting Kman
Money management and risk reward are practically ignored by bad traders, so if you do the opposite you are likely to make money. You take the emotion out by doing the exact opposite of a bad trader.
Yes, it is. In spite of having good trading knowledge some traders cannot maximal result by trading , because they have not money and risk management which is key to success in Forex. I always try to manage money for avoiding unfortunate risk which causes a great loss.
  • #17
  • Jul 25, 2017 4:26pm Jul 25, 2017 4:26pm
traders lose money cause they let their loss>gain.

i'm willing to bet any random trader i pick on here can forecast direction 50% or better...but i'll take that signal and be profitable and the trader will lose...
  • #18
  • Jul 25, 2017 10:39pm Jul 25, 2017 10:39pm
Quoting hilmy83
traders lose money cause they let their loss>gain. i'm willing to bet any random trader i pick on here can forecast direction 50% or better...but i'll take that signal and be profitable and the trader will lose...
Hilmy,

What characteristic of your trading enables you to beat the crowd using their own signals?

Thanks
  • #19
  • Jul 25, 2017 10:57pm Jul 25, 2017 10:57pm
your brain fears the pain of losing a trade. When you make money on a trade, the pleasure your brain feels isn't as great as the pain your brain feels when you lose a trade.

That's why most take smaller profits, trying to lock in the profit before it turns around and into a loss. And that's why they hold on to losing positions longer, hoping they will turn around, trying to avoid the pain of taking the loss.
  • #20
  • Edited 6:25am Jul 26, 2017 5:32am | Edited 6:25am
'Has anyone tried to monitor a really bad trader here and do the exact opposite of what they do? Just curious.'

You don't seem to understand a lot about trading.

Common habits of bad traders...
1. Letting losing positions run into big losses and end up taking them
2. Taking profits too quick/small

The opposite
1. Taking losses (with stop losses) too frequently
2. Letting winners run (into nothing or losses)
are just as bad.

Why not just keep things between them, in the middle. Make trading decisions with judgement based on experience.
'For the market to work, it needs people who think that they can beat it.'
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