How long does a trading system last? | Forex Factory

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How long does a trading system last?

  • #1
  • First Post: Jun 1, 2008 8:12am Jun 1, 2008 8:12am
Dear All..

This might sound like a stupid question, but if i dont ask, i would never know??

I have heard that any trading system you sue looses its edge with time or when market condition changes or when lots of people start using the same system??

If the above statment is true then shouldnt it also applied to the candle stick (like doji, shooting star, morning star,or engulfing )pattern which are high reliability patterns or like pin bar in bar charts.

Would the candle sticks will loose their reliability if market changes?

OR

Is it possible that in future the forex market (i dont know the correct word), changes so much that these candle pattern does not hold any importance??


regds

zamir
Thanks and Regards Zamir M Iqbal
  • #2
  • Jun 1, 2008 8:36am Jun 1, 2008 8:36am
I think right now candles don't have as much importants--unless tied to relative strength and momemtum. I don't believe much in candles.....Also, moving averages don't work like they did ten years ago. there is some statistical support to show it. MA will drive you to drink looking for the right one to work... .I think also with forex ---which makes it harder ---- is that you have to consider the "just one more day" against the oscillator type patterns. --- I think, this is occuring because of the computer driven models and the brokers desires to take the stops out of the system - ie push the market up and gather the stops equity before the sell offs... The daily charts tend to hold up better but you can still have some deep draw down. (I also work every day and I am biased on my method--combination ea and manual daily trades). I believe there are some traders on this forum making a killing because they have the born ability to see chart (candle patterns) and "feel the swings" better than average traders and have a higher propensity to take risk than I do. Everyone has there own "game" to defeat the other market participants. I think the question is what type of edge does your system have to offer and are you able tio execute better than the next guy.
  • #3
  • Jun 1, 2008 8:52am Jun 1, 2008 8:52am
Quoting zamiriqbal
Dear All..

This might sound like a stupid question, but if i dont ask, i would never know??

I have heard that any trading system you sue looses its edge with time or when market condition changes or when lots of people start using the same system??

If the above statment is true then shouldnt it also applied to the candle stick (like doji, shooting star, morning star,or engulfing )pattern which are high reliability patterns or like pin bar in bar charts.

Would the candle sticks will loose their reliability if market changes?

OR

Is it possible that in future the forex market (i dont know the correct word), changes so much that these candle pattern does not hold any importance??


regds

zamir
Systems and methods need to be evaluated year on year , etc.

There is no doubt that the very nature of any free market means there is always an entity (or entities ) developing ways to take advantage of some type of inefficiency in any particular market.
Even price bars/candles are susceptible to one entity or another taking advantage of the situation by flooding the market with the right order flow to create a particular pattern that causes a large group of traders to react a predictable way.

...well.... You would do that too if you knew it gave you an edge, wouldn't you??

There is one thing that can't be over powered. Fair value. Once the majority decides that an instrument is over valued (or under valued), it will eventually find it's way towards fair value (or over-shoot) ...one way or another.

The market. ...Any market, will find equilibrium with it's perceived. (that sounds so cool man. :nerd: )

Ultimately all those candlestick patterns are useful. You just have to adjust the way you handle them over time, to allow for changes in the market's inefficiencies.
Bundy's status today: "Waiting..."
  • #4
  • Jun 1, 2008 9:28am Jun 1, 2008 9:28am
Quoting bundyraider

There is one thing that can't be over powered. Fair value. Once the majority decides that an instrument is over valued (or under valued), it will eventually find it's way towards fair value (or over-shoot) ...one way or another.

The market. ...Any market, will find equilibrium with it's perceived. (that sounds so cool man. :nerd: )
Totally agree with that.
  • #5
  • Jun 1, 2008 9:53am Jun 1, 2008 9:53am
Well, I guess others know how to trade with candles more than I do. I also don't know the "fair value" concept...I mean how do determine how much the economy of the us is worth compared to the entire economy of europe and put it into a chart and be able to come up with equilibrium?
I mean geeze-- I think california today slowed down and Italy turned up while germany turned down? Order flow of the forex? 1 billion here versus 2billion there? Do you have access to all the worlds brokers? What is this "percieved" thing ama gig?
are these like mystical quotes? I mean, all you have is a screen and a up or down trade tomorrow.
  • #6
  • Jun 1, 2008 10:06am Jun 1, 2008 10:06am
Quoting 4XWeezal
Well, I guess others know how to trade with candles more than I do. I also don't know the "fair value" concept...I mean how do determine how much the economy of the us is worth compared to the entire economy of europe and put it into a chart and be able to come up with equilibrium?
I mean geeze-- I think california today slowed down and Italy turned up while germany turned down? Order flow of the forex? 1 billion here versus 2billion there? Do you have access to all the worlds brokers? What is this "percieved" thing ama gig?
are these like mystical quotes? I mean, all you have is a screen and a up or down trade tomorrow.
Oh man. You totally missed the point.
Bundy's status today: "Waiting..."
  • #7
  • Jun 1, 2008 10:29am Jun 1, 2008 10:29am
No, I didn't miss the point. All you really have is the chart in front of you
and the ability to buy and sell. Click once for up/ Click once for down. The forex is so big that each of us don't have the ability to look at economies and go "equilibrium" and handle that candle - or engulfing pattern so its going to be a up day tomorrow.
  • #8
  • Jun 1, 2008 10:30am Jun 1, 2008 10:30am
I think the concept of fair value is generally misunderstood by most. If the majority of market participants believe price is overbought then the market will recede and vise versa. Market participants determine fair value in the end (which there is none). There is not a 'correct' price which the market oscillates around until finding.

It follows that the more participants there are looking at one particular system or setup, the more successful that setup would be. Until the reaction becomes automatic and predictable, then it is open to exploitation. This is why I like using a confluence of indicators. Idea being, if a variety of setups all trigger together than maybe the move will have the strength to avoid most entanglements.
  • #9
  • Jun 1, 2008 10:45am Jun 1, 2008 10:45am
Well I am still happy with my system ,it worked for 12 months and it still working no matter what market conditions are.I hope its gonna work at least 5years.We will see...
{Promotion Removed}
  • #10
  • Jun 1, 2008 11:06am Jun 1, 2008 11:06am
Very good...Joe! Kind of like the Euro Yen right today....
Ready for a big retracment.
- oversold
-no momemtum -but one more day up to finish it off.
-triangle.
-2 elliot wave patterns just finished.

TIME TO EAT! ... But I am only 1 participant and other may think differently
  • #11
  • Last Post: Jun 1, 2008 5:51pm Jun 1, 2008 5:51pm
Quoting 4XWeezal
Very good...Joe! Kind of like the Euro Yen right today....
Ready for a big retracment.
- oversold
-no momemtum -but one more day up to finish it off.
-triangle.
-2 elliot wave patterns just finished.

TIME TO EAT! ... But I am only 1 participant and other may think differently
Triangle?
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