Can anyone give me a logical/mathematical explanation for this? | Forex Factory

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Can anyone give me a logical/mathematical explanation for this?

  • #1
  • First Post: Jun 26, 2024 8:11am Jun 26, 2024 8:11am
An EA is making loss and backtest graph shows clear down the hill.. lets call it DownHill EA,

Now I reprogram the EA to reverse the trading instead of BUY trades as previouse DownHill EA, now this reprogrammed version takes opposite orders = SELL,

Logically this should make profit, instead of ...lets say 10k loss on original EA, reverse trading should make at least 5k or 8k profit (even after.. spread taken into consideration). Even this reprogrammed EA also makes loss in backtest..

Can anyone please give me clear explanation please?
  • #2
  • Jun 26, 2024 1:07pm Jun 26, 2024 1:07pm
Quoting aranneera
ALogically this should make profit,

No, that’s not necessarily so. Trading is not a zero-sum game. Dealing costs, commission, spreads, slippage have a negative effect, which adds up!
  • #3
  • Jun 27, 2024 3:46am Jun 27, 2024 3:46am
Post up the EA
ForexOrderFlow.com Return This Year: 15.3%
  • #4
  • Jun 29, 2024 7:56pm Jun 29, 2024 7:56pm
Quoting aranneera
An EA is making loss and backtest graph shows clear down the hill.. lets call it DownHill EA, Now I reprogram the EA to reverse the trading instead of BUY trades as previouse DownHill EA, now this reprogrammed version takes opposite orders = SELL, Logically this should make profit, instead of ...lets say 10k loss on original EA, reverse trading should make at least 5k or 8k profit (even after.. spread taken into consideration). Even this reprogrammed EA also makes loss in backtest.. Can anyone please give me clear explanation please?
Nobody will give you that answer. You have to find it for yourself.
Why is a Raven like a Writing Desk?
  • #5
  • Jul 1, 2024 9:13am Jul 1, 2024 9:13am
Quoting Rastus81
Nobody will give you that answer.
On the contrary: the answer is very obvious and it was immediately and correctly provided in the very first response above.
  • #6
  • Jul 2, 2024 7:11am Jul 2, 2024 7:11am
Quoting KarlKraus
{quote} On the contrary: the answer is very obvious and it was immediately and correctly provided in the very first response above.
No it wasn't. OP specifically said spread had been taken into consideration.

Answer = a trend system in ranging market / ranging system in trending market.

Congratulations ScalaFX for coming out of the closet!
  • #7
  • Nov 4, 2024 2:21am Nov 4, 2024 2:21am
Quoting aranneera
An EA is making loss and backtest graph shows clear down the hill.. lets call it DownHill EA, Now I reprogram the EA to reverse the trading instead of BUY trades as previouse DownHill EA, now this reprogrammed version takes opposite orders = SELL, Logically this should make profit, instead of ...lets say 10k loss on original EA, reverse trading should make at least 5k or 8k profit (even after.. spread taken into consideration). Even this reprogrammed EA also makes loss in backtest.. Can anyone please give me clear explanation please?
There is a widely held belief that the strategy will work if a losing one is simply reversed. Below are some factors to consider why reversing your EA strategies may also be a losing proposition:
Market Nature: It is not a straight line. A loss-making strategy may be dependent on certain market aspects that will not occur simply when you reverse the order of the trades. What was a bad signal to buy may not be good to sell either.
Timing and Execution: Entry and Exit timing is paramount. In as much as you may reverse the trades, the environment that was used to deploy the trade may result to losses. The market can be more aggressive for a sell-off than a rally.
Slippage and Spread: These include factors of slippage carry over and spread carried over a sale thus a straight forward phenomenon of reversing trades does not capture these costs of trading.
Strategic Considerations: This strategy might be flawed from the start and cannot be outlined in any coherent fashion. Its reversal absolutely doesn’t fix the problem with the rationale and the very flawed assumptions about the market it’s based on.
Issues Related to Optimization: There is need to optimize the existing EA for the new trade direction. For instance, the existing buying parameters may not apply for selling.
  • #8
  • Nov 4, 2024 5:40am Nov 4, 2024 5:40am
Quoting Phant0m134
There is a widely held belief that the strategy will work if a losing one is simply reversed.
No - that belief isn’t "widely held" at all: anyone who knows the first thing about it can see immediately that it’s nonsense, for all the reasons clearly explained above.
  • #9
  • Nov 4, 2024 12:21pm Nov 4, 2024 12:21pm
good afternoon! I want help from someone to convert and automate two TradeView indicators to MT4.
  • #10
  • Nov 4, 2024 4:59pm Nov 4, 2024 4:59pm
Your sl can hit in both cases first..
  • #11
  • Nov 6, 2024 4:41am Nov 6, 2024 4:41am
Quoting aranneera
An EA is making loss and backtest graph shows clear down the hill.. lets call it DownHill EA, Now I reprogram the EA to reverse the trading instead of BUY trades as previouse DownHill EA, now this reprogrammed version takes opposite orders = SELL, Logically this should make profit, instead of ...lets say 10k loss on original EA, reverse trading should make at least 5k or 8k profit (even after.. spread taken into consideration). Even this reprogrammed EA also makes loss in backtest.. Can anyone please give me clear explanation please?
Reversing trades in a losing EA doesn’t guarantee profit due to increased spread/slippage, unsuitable market conditions, suboptimal stop/take-profit levels, lack of a true edge, and execution delays.
  • #12
  • Dec 2, 2024 12:36am Dec 2, 2024 12:36am
Quoting gabipessin
good afternoon! I want help from someone to convert and automate two TradeView indicators to MT4.
Ideally you should reach out from developers on this. You will need to source the code to make it happen.
  • #13
  • Dec 10, 2024 7:21am Dec 10, 2024 7:21am
if you can provide the EA, i can make it work on reverse

i need source code or logic how it is taking trade
  • #14
  • Dec 11, 2024 3:53am Dec 11, 2024 3:53am
Reversing trades won’t fix a flawed strategy. Spreads, slippage, and poor logic still lead to losses. The issue is the strategy, not direction.
  • #15
  • Last Post: Dec 15, 2024 11:16am Dec 15, 2024 11:16am
Quoting aranneera
An EA is making loss and backtest graph shows clear down the hill.. lets call it DownHill EA, Now I reprogram the EA to reverse the trading instead of BUY trades as previouse DownHill EA, now this reprogrammed version takes opposite orders = SELL, Logically this should make profit, instead of ...lets say 10k loss on original EA, reverse trading should make at least 5k or 8k profit (even after.. spread taken into consideration). Even this reprogrammed EA also makes loss in backtest.. Can anyone please give me clear explanation please?

It is because the basic concept is flawed, you will lose whether you buy or sell. Best illustrated by example: Consider a strategy that takes a 5 pip profit with a 100 pip stop loss. You can be right 19 times in 20 trades and would still be losing. This strategy is bound to lose over the long haul because more than 1 trade in 20 will go against you 100 pips without ever showing a 5 pip gain; it's just the way markets work. This strategy will lose whether you buy or sell the entry signal because the entry signal is not the problem, the fatal flaw lies elsewhere.

Hope that helps.
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