New Guy and Exits

First thing I think of when I see a win/loss of less than 40% is can I invert the trade.

Dan

yes if you knew a system was a guaranteed flop you could make a fortune counter trading it - providing it didn't get too funny : )

a system is at the very least an entry and an exit. Using a timed exit allows you to evaluate an entry. i've also heard it said that if you gave 2 good traders a position at the same entry price but different directions they could both make a profit!

I believe in choosing the time frame first then fitting a system to that. eg if you planned on holding a position for 4 hrs then i would close it if it moved 35 pips into profit and the average 4hr range was 50 pips. why? because forex prices do tend to return to their origin. It's pretty rare for a price to only be crossed once except after a news event.

Stop losses do lock out as many pips as they lock in but i still think they have a place in trading. I'm starting to question the use of hard stops though as they really are based on fear. I think they have their place as a SystemStop eg. to stop trading at a 20% drawdown to preserve your capital.

I also think they are good for exiting a position in profit.
If prices have been trending strongly and already moved over 80pips in the last 2 hrs then hard stops should be employed IMHO.
But with the usual ebb and flow of prices there's almost always another opportunity at the same price after a volatile move even when a S/R line has been broken.

Always reduce leverage before the news.

steve

Except it's not a matter of direction, it's a matter of momentum. Reason crossovers fail (when they do) is whipsaw due to lag. Price moves in the right direction, at first, then it moves back enough to make it a wash. There's not enough momentum to take a counter trade, you'll just end up with the same problem as before... sideways movement.

Sure, that's why MA crossovers don't work. I have a breakout that trades better as an inverted trade though. Not profitable yet, but I've found when it indicates a long go short. Probably more related to support and resistance than a breakout.

Dan

Nod, in the book "Street Smarts" Linda Raschke talks of a similar approach called "turtle soup." It's basically fading the 20 day breakout in the turtles manual.

Dan, in your quest to find/develop a system that offers 60%+ entry (i.e. without compromising RR too much), some thoughts of mine here (for whatever they're worth): http://www.forexfactory.com/showthread.php?p=2068062

David