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Buy/Sell Stop MM Strategy?

  • #1
  • First Post: Oct 9, 2008 4:29pm Oct 9, 2008 4:29pm
I was brainstorming earlier today, and while reading about hedging it occurred to me that this could be a possible way to minimize losses on a trade.

For example, the problem with breakout trades I've seen is that there are numerous false breakouts, sometimes 2 or 3 or more. Followed by the real breakout. After 2 false breakouts most people would call a quits for the day.

I'm positive this has been thought of before and if it has a name I'd like to know what you would call it, but the strategy is instead of placing a stop loss, you instead place a buy or sell stop in the opposite direction of where you think the price is going.

Instead of ending the trade there, you cover your losses by the buy/sell order when the price goes in the other direction. This buy/sell order has a stoploss at the original entry of your trade.

If the trade then turns around and finally hits your take profit levels, the buy order gets stopped at the original order position, breaking even, and then you get your original profit without being stopped out.

If the trade continues the opposite direction, then you are only out what your original stoploss would have been if you close both positions.

I hope I explained this clearly.. Any thoughts on this?
  • #2
  • Edited 8:59am Oct 10, 2008 8:40am | Edited 8:59am
Delfino, assuming that I understand correctly, I don't think it makes any difference.

Let's take an example, where, doing it in the 'traditional' way, you have TP=30 and SL=10. Then every time you're faked out you're -10, and (assuming you're willing to re-enter repeatedly at the breakout point) when price finally hits the target, you're +30 (less the losses on any fakeouts).

Doing it the way you suggested: After your second order is triggered, then every time price makes the journey between your second order and the entry point of your first order, you're -10 on the second order (you must reinstate the second order to retain protection, each time this happens). The when price hits the TP, you're +30 on the first order.

As long as (with the 'traditional' approach) you're willing to re-enter repeatedly at the breakout point, the net result is exactly the same (including the number of times you pay the spread). It's simply a toss-up as to whether you want to keep the original order 'alive', or re-enter it as many times as is necessary.

Irrepsective of which method is adopted, price will obviously travel the same route, and your net position (number of lots long or short) is the same at all points along the way.

All of this is assuming that I understand you correctly.

I've yet to find a hedging system where the hedging component offers an edge in its own right. More info here and here.

David
  • #3
  • Oct 10, 2008 9:10am Oct 10, 2008 9:10am
But wouldn't there be an advantage to using the buy/sell stop method because of numerous reports of some brokers stop-hunting?

Quoting hanover
Delfino, assuming that I understand correctly, I don't think it makes any difference.

Let's take an example, where, doing it in the 'traditional' way, you have TP=30 and SL=10. Then every time you're faked out you're -10, and (assuming you're willing to re-enter repeatedly at the breakout point) when price finally hits the target, you're +30 (less the losses on any fakeouts).

Doing it the way you suggested: After your second order is triggered, then every time price makes the journey between your second order and the entry point of your first order, you're -10 on the second order (you must reinstate the second order to retain protection, each time this happens). The when price hits the TP, you're +30 on the first order.

As long as (with the 'traditional' approach) you're willing to re-enter repeatedly at the breakout point, the net result is exactly the same (including the number of times you pay the spread). It's simply a toss-up as to whether you want to keep the original order 'alive', or re-enter it as many times as is necessary.

Irrepsective of which method is adopted, price will obviously travel the same route, and your net position (number of lots long or short) is the same at all points along the way.

All of this is assuming that I understand you correctly.

I've yet to find a hedging system where the hedging component offers an edge in its own right. More info here and here.

David
  • #4
  • Oct 10, 2008 9:28am Oct 10, 2008 9:28am
Quoting eagle4x
But wouldn't there be an advantage to using the buy/sell stop method because of numerous reports of some brokers stop-hunting?
Eagle,

If you adopt the traditional approach, you're net long (assuming an upward breakout) upon initial entry, and net neutral (out of the market) after the stoploss gets hit. Then net long again after you re-enter at the breakout point, and so on.

If you adopt Delfino's approach, you're net long after the first order is triggered, and net neutral (offsetting orders) after the second order is triggered. Then net long again when the second order gets stopped out at the breakout point. At which time the second order must be re-input.

Hence, regardless of how your broker causes price to move, the net position will be the same at all points along the way, using either method. So it makes no difference.

David
  • #5
  • Oct 10, 2008 9:49am Oct 10, 2008 9:49am
One of the biggest myths in forex is that MM methods (e.g. hedging; scaling into and/or out of postions; position sizing systems; etc) actually offer long-term benefit. If there was an MM method that in itself provided a real edge, there would be no need for market analysis, and everybody would simply use it. We would all be forex millionaires.

There is a very simple truth in forex. To profit long-term, you must be net long when price is rising, and net short when price is falling, on balance, often enough to overcome costs. Ultimately, expectancy has nothing to do with MM (all MM does is magnify or diminish both return and risk in like proportion), or psychology for that matter. Profit is ultimately determined by how accurately you time your entries and exits (i.e. adjust your net position) relative to price movement. It is both as simple, and as difficult, as that.

David
  • #6
  • Oct 10, 2008 11:25am Oct 10, 2008 11:25am
Quoting hanover
One of the biggest myths in forex is that MM methods (e.g. hedging; scaling into and/or out of postions; position sizing systems; etc) actually offer long-term benefit. If there was an MM method that in itself provided a real edge, there would be no need for market analysis, and everybody would simply use it. We would all be forex millionaires.

There is a very simple truth in forex. To profit long-term, you must be net long when price is rising, and net short when price is falling, on balance, often enough to overcome costs. Ultimately, expectancy has nothing to do with MM (all MM does is magnify or diminish both return and risk in like proportion), or psychology for that matter. Profit is ultimately determined by how accurately you time your entries and exits (i.e. adjust your net position) relative to price movement. It is both as simple, and as difficult, as that.

David

totally agree. All talk about trading 'psychology' and MM as the pre-req for a succesful system are not true. You have to have an edge to begin with. Your mindset only helps you in following the rules (but if the system is jacked what's the point?) and MM only helps you bleed slowly (if your system has no edge).
  • #7
  • Oct 11, 2008 2:04am Oct 11, 2008 2:04am
Quoting hanover
One of the biggest myths in forex is that MM methods (e.g. hedging; scaling into and/or out of postions; position sizing systems; etc) actually offer long-term benefit. If there was an MM method that in itself provided a real edge, there would be no need for market analysis, and everybody would simply use it. We would all be forex millionaires.

There is a very simple truth in forex. To profit long-term, you must be net long when price is rising, and net short when price is falling, on balance, often enough to overcome costs. Ultimately, expectancy has nothing to do with MM (all MM does is magnify or diminish both return and risk in like proportion), or psychology for that matter. Profit is ultimately determined by how accurately you time your entries and exits (i.e. adjust your net position) relative to price movement. It is both as simple, and as difficult, as that.

David
Hi David, think outside the box for a minute.....

Let's say I'm net long in a falling market but I'm scaling into trades with a money management and position sizing system which allows for some extreme price moves against me, while at the same time keeping risks controlled. I'm also hedging using a similar strategy.

So, my system isn't actually based on accurately determining direction or timing entries and exits, or using traditional risk:reward or stops and limits, it's based on hedging, scaling, and money management, as well as the psychology needed to overcome panic and remain calm enough to apply my strategy with discipline.

Unpredictable and volatile market conditions like we're seeing now are an ideal example of when a strategy like this could be just as effective as trying to determine direction and time entries and exits accurately, in fact more so.

Even for more conventional trading strategies money management and psychology are key. Mantras like 'cut losses short, let profits run', 'don't bet the farm', 'plan the trade, trade the plan' are key elements of any consistently profitable trading strategy.

Kinda turns your theory on it's head doesn't it?
  • #8
  • Edited 7:39am Oct 11, 2008 7:13am | Edited 7:39am
Quoting lostinspace
.......So, my system isn't actually based on accurately determining direction or timing entries and exits.......
LiS, I don't believe it turns my theory on its head. If you're saying that you can succeed long-term with random entries and exits, then I must disagree. Costs make trading a negative sum game.

Re MM, you can:

-- vary position size, but with random entries/exits, it's simply a matter of luck as to whether your higher position sizes happen to coincide with winning trades, or vice versa.

-- scale in/out of trades, but - to attain long-term profitability - each component position must be profitable, on balance, in its own right. Hence the process of scaling achieves nothing in itself.

-- set your TP further away from entry than your SL, creating an R-value trade > 1. But, everything else being equal, an R-value of N:1 means that win rate is reduced to 1/N, because R-value and win rate are inherently inversely proportional to each other. In other words, the further away from entry your TP is, the more likely your SL will be reached first. Or put another way, cutting losses quickly and letting profits run will be profitable to whatever extent prices 'trend' (see my post here). In a rangebound market, the best strategy is to let losses run (anticipating a bounce) and cut profits (before the reversal occurs).

Everything else being equal, taking (for example) 3:1 R-value trades will result in a 25% win rate. Of course it might be possible to find inefficiencies (e.g. created by S/R) that improve the win rate. Some folk might call this MM, but I would say that it's the fact that entry is being timed relative to the S/R that's actually creating the edge.

Gaming (expectancy) theory postulates that you can't use MM in itself to improve expectancy (if so, we could use MM to beat the casinos at Roulette, for example). Expectancy is determined solely by the efficacy of entries and exits. In posts #31, #32, #43 of this thread, I've posted spreadsheets that allow experimentation with different MM strategies. No matter which strat is adopted, expectancy is always zero.

A negative expectancy method will bleed an account to zero, irrespective of MM. MM merely determines how quickly this will occur.

Re psychology: of course we are all human. I'm assuming a mechanical (or semi-mechanical) approach that trades rules with accuracy and consistency. To whatever extent the rules (or rationale) is being flouted, one really doesn't have a method.

Re hedging: it is the net position that ultimately determines profit or loss. For example, it doesn't matter whether we are out of the market altogether, or whether we are net long 1 lot, and simultaneously net short 1 lot. The offsetting positions effectively cancel each other, so the 'hedge' in itself does not create an edge. Our bottom line necessarily includes both realized P/L from closed trades, and unrealized P/L from currently open trades.

I reiterate: To profit in the long-term, we must be net long when price is rising, and net short when price is falling, on balance, frequently enough to overcome costs. I would challenge anybody to prove otherwise.

David
  • #9
  • Oct 11, 2008 8:01am Oct 11, 2008 8:01am
Quote
-- set your TP further away from entry than your SL, creating an R-value trade > 1. But, everything else being equal, an R-value of N:1 means that win rate is reduced to 1/N, because R-value and win rate are inherently inversely proportional to each other. In other words, the further away from entry your TP is, the more likely your SL will be reached first.

Assuming a random market at a random point, this is correct. Brownian motion is equally distributed both above and below the trade. But you cannot make money trading that way, as your wins and losses will equal out leaving you holding the transaction costs as a loss. The law of large numbers doesn't lie.

The market, however, does not always act w/ a normal distribution. There are times when ranges are extended, and when the market makes a long drive to value. This is generally related to the activity of the longer term traders that can afford to give up a short term edge in exchange for long term profits, so higher TF trends tend to skew the distribution the most. That is also why newer traders w/ a smaller edge tend to do better on longer TFs (less pit competition).

Shorter term time frames are less homogeneous in this regard. There are long periods of time where the market is effectively random, and long periods where the market is not. Being able to recognize, in advance, when the market is likely to drive out is a key element to being a successful trader, and is the foundation for most average retail trader edges in one form or another.

Quote
Or put another way, cutting losses quickly and letting profits run will be profitable to whatever extent prices 'trend' (see my post here). In a rangebound market, the best strategy is to let losses run (anticipating a bounce) and cut profits (before the reversal occurs).

I completely disagree with this. Ranging is nothing but a trend at a smaller time frame. There is a difference between a ranging market and a random market. If the market is ranging tightly on the daily you can move intra-day, if it's ranging tightly there you can move to an even smaller TF, or if it's outside of your transaction cost allowances then you can simply fade a range expansion.

Either way, there's no reason not to cut your losses short. If a person is unable to determine the short term trend w/ their edge, then they should not take the trade. If they let the loss run until it turns into a profit there will certainly be a time where the loss does not reverse and the range breaks out.

MM is no substitute for being an agile trader.

If you could perfectly determine when the market will range and when it will trend, you could get away with letting your losses run... but then again if you could do that you wouldn't need to let your losses run in the first place.

It's statistically proven that returns follow a normal distribution. They regress to the mean. Generally speaking, the mean is largely determined by how well you manage your losses. If you don't... then your first big period of drawdown might be your last.

Quote
One of the biggest myths in forex is that MM methods (e.g. hedging; scaling into and/or out of postions; position sizing systems; etc) actually offer long-term benefit. If there was an MM method that in itself provided a real edge, there would be no need for market analysis, and everybody would simply use it. We would all be forex millionaires.

There is some edge to scaling in, but it's not where you'd think. If you scale in over time (weeks or months) you are inherently following the long term traders, provided you're only trading w/ the trend. That inherently provides an edge, and is one that investors have used for decades (dollar cost averaging) to bolster their retirement portfolio. Still, it is dependent on the trend for a numerical edge.
  • #10
  • Oct 11, 2008 9:20am Oct 11, 2008 9:20am
Quote
Ranging is nothing but a trend at a smaller time frame. There is a difference between a ranging market and a random market. If the market is ranging tightly on the daily you can move intra-day, if it's ranging tightly there you can move to an even smaller TF, or if it's outside of your transaction cost allowances then you can simply fade a range expansion.

Fair enough, if you consider multiple timeframes.

David
  • #11
  • Oct 11, 2008 10:18am Oct 11, 2008 10:18am
Quote
Fair enough, if you consider multiple timeframes.

Nod. If you're focused on a single set of TFs only then it'd only be a matter of trading, or not trading.
  • #12
  • Oct 11, 2008 10:34am Oct 11, 2008 10:34am
Quoting hanover
LiS, I don't believe it turns my theory on its head. If you're saying that you can succeed long-term with random entries and exits, then I must disagree. Costs make trading a negative sum game.

Re MM, you can:

-- vary position size, but with random entries/exits, it's simply a matter of luck as to whether your higher position sizes happen to coincide with winning trades, or vice versa.

-- scale in/out of trades, but - to attain long-term profitability - each component position must be profitable, on balance, in its own right. Hence the process of scaling achieves nothing in itself.

-- set your TP further away from entry than your SL, creating an R-value trade > 1. But, everything else being equal, an R-value of N:1 means that win rate is reduced to 1/N, because R-value and win rate are inherently inversely proportional to each other. In other words, the further away from entry your TP is, the more likely your SL will be reached first. Or put another way, cutting losses quickly and letting profits run will be profitable to whatever extent prices 'trend' (see my post here). In a rangebound market, the best strategy is to let losses run (anticipating a bounce) and cut profits (before the reversal occurs).

Everything else being equal, taking (for example) 3:1 R-value trades will result in a 25% win rate. Of course it might be possible to find inefficiencies (e.g. created by S/R) that improve the win rate. Some folk might call this MM, but I would say that it's the fact that entry is being timed relative to the S/R that's actually creating the edge.

Gaming (expectancy) theory postulates that you can't use MM in itself to improve expectancy (if so, we could use MM to beat the casinos at Roulette, for example). Expectancy is determined solely by the efficacy of entries and exits. In posts #31, #32, #43 of this thread, I've posted spreadsheets that allow experimentation with different MM strategies. No matter which strat is adopted, expectancy is always zero.

A negative expectancy method will bleed an account to zero, irrespective of MM. MM merely determines how quickly this will occur.

Re psychology: of course we are all human. I'm assuming a mechanical (or semi-mechanical) approach that trades rules with accuracy and consistency. To whatever extent the rules (or rationale) is being flouted, one really doesn't have a method.

Re hedging: it is the net position that ultimately determines profit or loss. For example, it doesn't matter whether we are out of the market altogether, or whether we are net long 1 lot, and simultaneously net short 1 lot. The offsetting positions effectively cancel each other, so the 'hedge' in itself does not create an edge. Our bottom line necessarily includes both realized P/L from closed trades, and unrealized P/L from currently open trades.

I reiterate: To profit in the long-term, we must be net long when price is rising, and net short when price is falling, on balance, frequently enough to overcome costs. I would challenge anybody to prove otherwise.

David
Hmmm, lots of theory and it all looks very impressive, but unfortunately none of it actually applies to not having to accurately determine direction or time entries and exits to be profitable.

Outside the box David, s-t-r-e-t-c-h your imagination.......

Think averaging, maximum loss, money management, trade size.
  • #13
  • Oct 11, 2008 10:44am Oct 11, 2008 10:44am
Quote
Think averaging, maximum loss, money management, trade size.

You can't average your way out of a loss over time.

It sounds like you're talking about a semi-martingale. Using hedged positions for an SL, closing profits to grow your account while keeping losses hedged, etc. If that's the case, you're missing a crucial detail that will inevitably blow up the account.
  • #14
  • Oct 11, 2008 10:54am Oct 11, 2008 10:54am
Quoting Rabid
You can't average your way out of a loss over time.

It sounds like you're talking about a semi-martingale. Using hedged positions for an SL, closing profits to grow your account while keeping losses hedged, etc. If that's the case, you're missing a crucial detail that will inevitably blow up the account.
There must be a million different ways to do it, I'm not a mathematician, the point being it is feasible to trade profitably, consistently, no time limits, with a strategy which doesn't use technical or fundamental analysis.

Whether it would be profitable enough is another matter, like I've said I imagine the returns would be small by comparison, but perfectly achievable nevertheless.

Blow up risk? Well like I say, only if the currency or trading in that currency ceased, or the broker run off with the money!
  • #15
  • Oct 11, 2008 10:56am Oct 11, 2008 10:56am
Quoting lostinspace
Think averaging, maximum loss, money management, trade size.
Seems that we have the same way of trading.
  • #16
  • Oct 11, 2008 11:46am Oct 11, 2008 11:46am
Quoting Xaron
Seems that we have the same way of trading.


I'm usually a short-term trader (scalping even!) but when the markets are as volatile as they have been I think traders have to adapt.
  • #17
  • Oct 11, 2008 8:11pm Oct 11, 2008 8:11pm
Quoting lostinspace
Hmmm, lots of theory and it all looks very impressive, but unfortunately none of it actually applies to not having to accurately determine direction or time entries and exits to be profitable.

Outside the box David, s-t-r-e-t-c-h your imagination.......

Think averaging, maximum loss, money management, trade size.
LiS,

As I see it, the bottom line is that any activity that involves speculation and risk is ultimately subject to expectancy theory. However impressive (or otherwise) the theory might appear, the laws involving probability, expectancy, etc are as trustworthy and uncompromising as the law of gravity.

Of course one doesn't have to be a mathematician to be a profitable trader. It's quite possible (especially for a discretionary trader) to have an edge, but be unable to express it in mathematical terms. He simply understands the way the markets work, applies his rationale consistently, and banks his profits.

S-t-r-e-t-c-h-i-n-g my imagination (LOL) to its fullest possible extent, I expect that it is possible to profit without using TA or FA (depending on how we choose to define these), by exploiting some known (and statistically valid) aspect of price behavior. As a possible example, supposing that we know that a the daily range of a certain pair exceeds X pips only once every 100 days, on average. Then we could create a grid, and trade this advantageously using only "averaging, maximum loss, money management, trade size". However, at the risk of being labeled pedantic, I would say that any edge (positive expectancy) is being provided by the characteristics indigenous to the price movement, rather than the MM. Why? Well, if we transplanted the same MM into another pair whose price behavior was completely different, then the edge would be nullified. Alternatively, if our entries and exits were made at completely different points, the edge would likewise be affected, even if the MM remained the same. Hence my view regarding the timing of entries and exits relative to price movement.

I don't believe that it's possible to win at forex using random entries and exits, no matter what MM is used. Costs make forex a negative expectancy exercise. Hence I agree with Rabid.

Anyway, no offense intended; I respect your opinions highly, and always enjoy reading your posts. And I appreciate the time you've taken to try to help me, by answering my questions.

Best wishes,
David
  • #18
  • Oct 12, 2008 2:32am Oct 12, 2008 2:32am
Quoting hanover
LiS,

As I see it, the bottom line is that any activity that involves speculation and risk is ultimately subject to expectancy theory. However impressive (or otherwise) the theory might appear, the laws involving probability, expectancy, etc are as trustworthy and uncompromising as the law of gravity.

Of course one doesn't have to be a mathematician to be a profitable trader. It's quite possible (especially for a discretionary trader) to have an edge, but be unable to express it in mathematical terms. He simply understands the way the markets work, applies his rationale consistently, and banks his profits.

S-t-r-e-t-c-h-i-n-g my imagination (LOL) to its fullest possible extent, I expect that it is possible to profit without using TA or FA (depending on how we choose to define these), by exploiting some known (and statistically valid) aspect of price behavior. As a possible example, supposing that we know that a the daily range of a certain pair exceeds X pips only once every 100 days, on average. Then we could create a grid, and trade this advantageously using only "averaging, maximum loss, money management, trade size". However, at the risk of being labeled pedantic, I would say that any edge (positive expectancy) is being provided by the characteristics indigenous to the price movement, rather than the MM. Why? Well, if we transplanted the same MM into another pair whose price behavior was completely different, then the edge would be nullified. Alternatively, if our entries and exits were made at completely different points, the edge would likewise be affected, even if the MM remained the same. Hence my view regarding the timing of entries and exits relative to price movement.

I don't believe that it's possible to win at forex using random entries and exits, no matter what MM is used. Costs make forex a negative expectancy exercise. Hence I agree with Rabid.

Anyway, no offense intended; I respect your opinions highly, and always enjoy reading your posts. And I appreciate the time you've taken to try to help me, by answering my questions.

Best wishes,
David
Not far enough out of the box

Bear in mind I'm just a daytrading speculator not a mathematician, there will probably be an infinite number of far more viable combinations for the following example but I'm not smart enough to work one out! The strategy need not consist of anything more than math. I expect the returns would probably not justify the investment but the point is it can be done....

The minimum value of a currency is what, zero? Let's take something mainstream like the US Dollar against the Japanese Yen as an example. USD is around 100 Yen at the moment so there's potentially 10,000 pips for the dollar to fall. Using a money management formula and perhaps some form of martingale you could buy Usd every x pips and take profit every x pips and keep doing that pretty much forever. The higher it goes the further it has to fall but profits have been banked to offset that, maybe set a buying ceiling according to equity. No losses, no technical analysis, no fundamental analysis, just math and money management. The strategy would be transferable to any instrument, currencies, commodities, equities, with a simple adjustment to take into account the instrument's value.

There are probably a million different ways to do it, that's just a very basic idea, for example trades could be hedged using other pairs, maybe trade more exotic pairs which have less downside, somehow take advantage of interest rate differentials using different brokers, maybe use options or ? as well, etc etc.... but the point is it relies on nothing more than math and MM.

The only risks I can see are either the currency which is being held becomes worthless or not able to be traded, or the broker goes bust, or for some reason they liquidate all open positions.
  • #19
  • Oct 12, 2008 3:01am Oct 12, 2008 3:01am
Quoting lostinspace
Not far enough out of the box

Bear in mind I'm just a daytrading speculator not a mathematician, there will probably be an infinite number of far more viable combinations for the following example but I'm not smart enough to work one out! The strategy need not consist of anything more than math. I expect the returns would probably not justify the investment but the point is it can be done....

The minimum value of a currency is what, zero? Let's take something mainstream like the US Dollar against the Japanese Yen as an example. USD is around 100 Yen at the moment so there's potentially 10,000 pips for the dollar to fall. Using a money management formula and perhaps some form of martingale you could buy Usd every x pips and take profit every x pips and keep doing that pretty much forever. The higher it goes the further it has to fall but profits have been banked to offset that, maybe set a buying ceiling according to equity. No losses, no technical analysis, no fundamental analysis, just math and money management. The strategy would be transferable to any instrument, currencies, commodities, equities, with a simple adjustment to take into account the instrument's value.

There are probably a million different ways to do it, that's just a very basic idea, for example trades could be hedged using other pairs, maybe trade more exotic pairs which have less downside, somehow take advantage of interest rate differentials using different brokers, maybe use options or ? as well, etc etc.... but the point is it relies on nothing more than math and MM.

The only risks I can see are either the currency which is being held becomes worthless or not able to be traded, or the broker goes bust, or for some reason they liquidate all open positions.
OK, you got me! (aren't these animated emoticons fun?)

I'm not sure that I have deep enough pockets to run a Martingale across a 10,000 pip chasm, while somehow banking regular, worthwhile profits along the way. But your logic is unchallengeable, IMHO.

Sad to say, we programmers have very little imagination, we tend to think in straight lines (IF...... THEN..... ELSE......). Perhaps that's been a big part of my problem, in terms of trying to develop a consistently profitable system. LOL.

Wishing you many more pips,
David
  • #20
  • Oct 12, 2008 7:42am Oct 12, 2008 7:42am
Quoting hanover
OK, you got me! (aren't these animated emoticons fun?)

I'm not sure that I have deep enough pockets to run a Martingale across a 10,000 pip chasm, while somehow banking regular, worthwhile profits along the way. But your logic is unchallengeable, IMHO.

Sad to say, we programmers have very little imagination, we tend to think in straight lines (IF...... THEN..... ELSE......). Perhaps that's been a big part of my problem, in terms of trying to develop a consistently profitable system. LOL.

Wishing you many more pips,
David

I agree, I didn't really think it was a viable strategy, adapted it might have potential but then we're back to price/market analysis to determine a range etc

Talking of programmers, I wouldn't mind getting a look inside one of those black boxes which operate on the exchanges, I wonder if they've been turned off again this past few weeks. I bet there are similar systems running on the fx market.

Remember you were saying about laying off analysts.......this from an article back in 2005

"....What is also rarely talked about is the impact that black box trading—and electronic trading in general—are having on the IT rank and file. A case in point is Goldman Sachs, which has laid off 30 people, most likely because of electronic trading....."

Best,
LiS
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