**If somebody has an experience of copying losing strategy with reverse, please post your opinion in this thread.**

- Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,404 Posts

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- | Commercial Member | Joined May 2017 | 5 Posts

- Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,404 Posts

Reversing a losing strategy won't make it a winning one ... for plenty of obvious reasons.

With a quick search here on FF, you should find dozens, if not hundreds of threads started with the exact same question ...

With a quick search here on FF, you should find dozens, if not hundreds of threads started with the exact same question ...

MT4/MT5 EAs/Indicators/Alerts coder

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DislikedIgnored

I used Zulu4me ratings (they analyze all zulutrade) to search for D strategies, unfortunately in europe we can't copy reverse strategies in Zulutrade anymore. Do you know any other site where it's possible to do so? Now I copy B+ or A strategies from zulu4me, which is in fact better than copying the losers and reverse

- | Additional Username | Joined Mar 2017 | 629 Posts

DislikedReverse trading is very crucial; so new traders should avoid reverse trading opportunity! I have a long time trading experience but till now I am interested in the only trendy trading opportunity, besides I use half trading lots size in reverse trading!Ignored

- Joined Sep 2006 | Status: ... | 8,090 Posts

If a winning strategy can be obtained by reversing any losing strategy, then it stands to reason that every losing strategy must likewise be the reverse of a winning strategy. In other words, it's just as difficult to find a (genuinely) losing strategy as it is to find a winning one. C'mon folks, think about it!

So why do the vast majority of retail strategies lose? Most of them are not actually losing, they are merely**impotent**; in other words, they have a long term expectancy of zero minus costs. Hence if the br0ker was to pay you the spread, your impotent strategy would actually win money over time.

For a more detailed answer, see here and here.

So why do the vast majority of retail strategies lose? Most of them are not actually losing, they are merely

For a more detailed answer, see here and here.

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DislikedIf a winning strategy can be obtained by reversing any losing strategy, then it stands to reason that every losing strategy must likewise be the reverse of a winning strategy. In other words, it's just as difficult to find a (genuinely) losing strategy as it is to find a winning one. C'mon folks, think about it! So why do the vast majority of retail strategies lose? Most of them are not actually losing, they are merely impotent; in other words, they have a long term expectancy of zero minus costs. Hence if the br0ker was to pay you the spread, your...Ignored

This is a solid gold point.

When I was trading prop we used to go out for beers all the time with brokers. This was a great insight into how it all works. The biggest eye opener for me was that they are all running B books on their retail clients. Their view is that if the retail traders will lose then the money may aswell go into their pockets.

Over the whole book the net loss would mostly be the spreads rather than just the entire account. (Some traders would get really lucky and smash it and others would lose everything).

If you think about it this is why a dealing desk broker will still charge spread. In theory, if the trader will lose anyway, then why bother charging a spread if the account is trading against the broker anyway?

All losses will be in the broker's pockets either way. They might as well make a really attractive offer like 'zero spreads' to get traders in the door.

The reason is that adding the spread 'tips' the traders over the edge into overall net losses.

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- Joined Mar 2009 | Status: Trader | 6,418 Posts

DislikedIf a winning strategy can be obtained by reversing any losing strategy, then it stands to reason that every losing strategy must likewise be the reverse of a winning strategy. In other words, it's just as difficult to find a (genuinely) losing strategy as it is to find a winning one. C'mon folks, think about it! So why do the vast majority of retail strategies lose? Most of them are not actually losing, they are merely impotent; in other words, they have a long term expectancy of zero minus costs. Hence if the br0ker was to pay you the spread, your...Ignored

Many traders don't realize how disadvantaged they are by having to pay a broker spread on ALL trades.

- Joined Sep 2006 | Status: ... | 8,090 Posts

The screenshots below represent two different equity curves. The y-axis is the % gain/loss on the starting capital. Both curves are the result of 500 trades, at 2% risk per trade. The blue line represents the gain/loss before br0ker costs, the pink line after costs.

The question is:**If you wanted to create a winning system, which one of the two systems would you reverse?**

The question is:

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- Joined Sep 2006 | Status: ... | 8,090 Posts

DislikedThe question is: If you wanted to create a winning system, which one of the two systems would you reverse?Ignored

Anyway, the correct answer is: neither. Both curves are Excel-generated simulations of imaginary systems that have a 50% win rate and 1:1 RR. In other words, the blue lines will eventually return to zero P/L in both cases, over an infinite number of trades. That is, unless a margin call occurs first.

If you thought the answer was #2, you were being fooled by randomness.

#2 looks like a 'losing' system, but it is not. It is merely impotent, and reversing it would create another impotent system. See post #7 above.

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- | Commercial Member | Joined Aug 2014 | 3,824 Posts

Disliked{quote} Anybody? Anyway, the correct answer is: neither. Both curves are Excel-based simulations of imaginary systems that have a 50% win rate and 1:1 RR. In other words, the blue lines will eventually return to zero P/L in both cases, over an infinite number of trades. That is, unless a margin call occurs first. If you thought the answer was #2, you were being fooled by randomness. #2 looks like a 'losing' system, but it is not. It is merely impotent, and reversing it would create another impotent system. See post #7 above.Ignored

but say that you trade weekly chart, the 500 trades resulted 1 trade/month, 500 trades will be a trading carrier, 40 years.

maybe it is all random in 300 years time span but might be looked at very real as here and now as successful trader at the end of his carrier.

is there infinite number of trades exist?

is it good enough to capture a part of that infinite number when the odds seem to favour you?

there is always, always another trade!!

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- | Additional Username | Joined Dec 2015 | 3,529 Posts

If you ask me, copying such a strategy in reverse would cause too much stress. You'd always wonder whether this time it may actually be right, second-guess your decisions, etc. I'd rather copy a winning strategy to begin with.

- Joined Sep 2006 | Status: ... | 8,090 Posts

Dislikedthat implies that there is simply no winning strategy, on infinite trade number all shows randomness results.......Ignored

An impotent system will, over a very large number (in theory, infinite) of trades, deliver an expectancy of zero minus costs, i.e. it will lose. The Excel-based simulation I used generated two different equity curves, both with a 50% win rate at 1:1, which is an expectancy of 0 (or a profit factor of 1, if you prefer)**. In other words, it simulated an impotent system. My point was to show that 500 trades is nowhere near a large enough sample to gauge whether a system is long term profitable or not. #1 might appear to be a much better system than #2, but in fact it is not; #2 might appear to be potentially reversible into a winning system, but in fact it is not.

Not all systems are necessarily impotent. If a system has an edge that is large enough to overcome costs, then over a very large number of trades it will eventually win (provided that the bet/position sizes are kept small and consistent enough to avoid ruin, and allow the edge to ultimately prevail). Obviously such systems are not easy to come by, as we know that the vast majority of retail EAs eventually lose.

** Expectancy = (win rate x avg win size) - (loss rate x avg loss size) = (50 x 1) - (50 x 1) = 0.

Profit factor = (win rate x avg win size) / (loss rate x avg loss size) = (50 x 1) / (50 x 1) = 1.

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- | Commercial Member | Joined Aug 2014 | 3,824 Posts

and my point was to tell that sometimes 500 trades can be achieved/placed on such a long period of time, that going beyond not always feasible to find out weather the system has either an edge, or not, and even if it does, due to random distribution of the outcome during 10.000 trades might mean a loss in a trading carrier period.

even if one place 2 trades a day, 200 days a year, 10.000 trades will take 25 full years.

a 5% edge ( just as much as casino has) can be distributed random enough that within most 5 years period can be a loss...

paper math wont include average joe trader's life expectancy as a trader, or as a human being.

sure average joe can place more than 2 trades a day, but some days might as well place none...

the paper math translate however lot better to HFT robots where 10.000 trades might be actually a too tiny sample to consider.

ps. dont take me too seriously. you asked for some thoughts, got some. that is all.

even if one place 2 trades a day, 200 days a year, 10.000 trades will take 25 full years.

a 5% edge ( just as much as casino has) can be distributed random enough that within most 5 years period can be a loss...

paper math wont include average joe trader's life expectancy as a trader, or as a human being.

sure average joe can place more than 2 trades a day, but some days might as well place none...

the paper math translate however lot better to HFT robots where 10.000 trades might be actually a too tiny sample to consider.

ps. dont take me too seriously. you asked for some thoughts, got some. that is all.

there is always, always another trade!!

1

- | Additional Username | Joined Dec 2015 | 3,529 Posts

DislikedDon’t bother reversing losing strategies Better find your own path to success.Ignored

- | Additional Username | Joined Dec 2015 | 3,529 Posts

DislikedOne side of it, is that losing strategy is losing because it is not based on incorrect analysis which makes it unpredictable, it is losing now, but could be winning tomorrow, then losing after tomorrow, it is an untamed horse, you can't trust it in either directions.Ignored

- | Additional Username | Joined Mar 2016 | 578 Posts

Making a strategy from Losing strategy?? Reverse Losing strategy? How it can be correct and give you profitable result?

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