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'Try to Lose Money' Experiment

  • #41
  • Mar 5, 2007 10:25pm Mar 5, 2007 10:25pm
Quoting FXTerminator
Also, why are you interested in losing systems and losers in general, if you are already so successful in the FX market, like you claim?
Well, part of the reason "I'm" here is because the forum content is getting a bit thin these days so every topic winds up getting read at some point. Trading for a living is boring work after all.

Losing systems can have significant value if they lose more then the spread on the average trade. Earlier you provided an example of a 5000 pip losing system that had a 5 pip spread to cover. That's fine for an example, but what if the system lost 6000 pips over 1000 trades? What if you could trade that system on an institutional platform with smaller spreads (maybe 4 or 3 pip)? Would it be worthwhile trading? Unless you already have something that provides more net profit, you would be stupid not to.

In short, every system is worth looking at in multiple ways, even losers.
  • #42
  • Mar 5, 2007 10:27pm Mar 5, 2007 10:27pm
Quoting FXTerminator
That means you need 100 trades to make 25 pips per day. So how much are they making an hour then?
200-300 trades per day at $500-1000 per pip. Doesn't sound so bad does it?
  • #43
  • Mar 5, 2007 10:28pm Mar 5, 2007 10:28pm
Quoting Darkstar
In the guys defense, I have never seen any trading system book that provided backtest results for the patterns discussed.
Precisely!

Ever wonder why Darkstar, even though the backtest itself could easily be done quickly...?

I mean if a pattern is REALLY profitable, wouldn't you tell us right away something like this in your book, if you were an author : "Hey look here, this pattern or that pattern made 2400 pips a year on average since the year 2000 on the GBP/USD, with only a 300 pip maximum drawdown, I have the proof right here, click here to see the results".

Why would an author "hide" this information from us ?

Think about it for a moment, the answer should be obvious...
  • #44
  • Mar 5, 2007 10:37pm Mar 5, 2007 10:37pm
Quoting Darkstar
200-300 trades per day at $500-1000 per pip. Doesn't sound so bad does it?
Sure, but I cannot even imagine the daily stress !
  • #45
  • Mar 5, 2007 10:44pm Mar 5, 2007 10:44pm
Quoting FXTerminator
Personnally I think that "psychology" has absolutely, positively, NOTHING to do with winning in the forex market.

To make money trading you need two things, and two things only:

1/ A backtested forex system that gives you a mathematical edge.
2/ Enough money in your account, at least twice the maximum drawdown.

Then as soon as your system signals a trade you simply place your bet, simple as that, psychology has nothing to do in that matter.

Do casino or race track owners need "psychology" or "discipline" to make billions over the years? No, they just need a mathematical edge to consistently fatten their bank accounts, day after day, month after month, year after year, period and end of story !!

This discipline-psychology-in the zone-zen-mumbojumbo is way overrated and I am sick of reading about it in every darn technical analysis book.

ha ha ha ha
he he he he !!! nice comments
but you will still have @morons@ to whom you could give a system yet still lose!

they will snatch profit, procrastinate in following the signal, or in many cases bend the rules

well - what scenario is this?
not psychology?
  • #46
  • Mar 5, 2007 10:53pm Mar 5, 2007 10:53pm
Quoting FXTerminator
Precisely!

Ever wonder why Darkstar, even though the backtest itself could easily be done quickly...?

I mean if a pattern is REALLY profitable, wouldn't you tell us right away something like this in your book, if you were an author : "Hey look here, this pattern or that pattern made 2400 pips a year on average since the year 2000 on the GBP/US, I have the proof right here, click here to see the results".

Why would an author "hide" this information from us ?

Think about it for a moment...
Because it takes more than a pattern to make a system. Take your standard head and shoulders top for example; what are you going to back test? What are your rules for that "system"? Without each securities costs structure (spreads, commissions, etc) and time period of choice, you don't have the requisite info to DO a back test. Once you have that info, you need to make choices about what your exact rules are for that pattern.

Some examples for a head and shoulders might be:

1) The standard format: Short the neckline break. Place stop above right shoulder. TP goes 2X the height of the center peak.

2) Fade format: Long 5 pips below the neckline break. Place stop at a fixed # of pips below entry and TP at the center peak high.

3) Preemptive entry: Short at the place where a right shoulder should form with a stop at the center peak high and any manner of target you deem appropriate.

4)Second test entry: Wait for first retracement after neckline is broken and enter....

They may all be statistically profitable, or they may require slight changes for teh exact time/pair/broker your dealing with. Then you need to factor in what type of trader you are. Different traders will want to build systems that fit their personality and trading style. Using the wrong system "for you" is about as useful as random entry.

Also, it's good that they don't provide statistics for each pattern or everyone would trade them the same way and the pattern would no longer occur. The entire purpose of the pattern books is to show you common patterns that you can look out for and potentially build systems around. How you want to trade them is up to you.
  • #47
  • Mar 5, 2007 10:54pm Mar 5, 2007 10:54pm
Quoting Darkstar
Trading for a living is boring work after all.
Well said. Trading SHOULD be boring, that means you are now trading with a good system, completely detached from the outcome of each trade, just like a pro. Congratulations then, you are now a black belt in the forex arena.

Quoting Darkstar
Losing systems can have significant value if they lose more then the spread on the average trade. Earlier you provided an example of a 5000 pip losing system that had a 5 pip spread to cover. That's fine for an example, but what if the system lost 6000 pips over 1000 trades?
Sure, absolutely, if a system is generating a loss of let's say 10,000 pips in 1000 trades then yes, doing the reverse is extremely profitable. The problem is to find such "big losing" systems in the first place

Quote
What if you could trade that system on an institutional platform with smaller spreads (maybe 4 or 3 pip)? Would it be worthwhile trading? Unless you already have something that provides more net profit, you would be stupid not to
You are right, some losing systems do become profitable if you change the spread, but not that much.
  • #48
  • Mar 5, 2007 11:03pm Mar 5, 2007 11:03pm
Quoting FXTerminator
You are right, some losing systems do become profitable if you change the spread, but not that much.
What difference does "not much" have to make? A system that nets 10 pips a week with a $1million account will pay more in 1 year then most will earn in a lifetime. It's all a metter of perspective.
  • #49
  • Edited 11:22pm Mar 5, 2007 11:06pm | Edited 11:22pm
Quoting Darkstar
Because it takes more than a pattern to make a system. Take your standard head and shoulders top for example; what are you going to back test?


We are not talking about head and shoulders patterns here, but specific patterns like the one Igor described on page 148. Now I am not saying that this particular pattern is a losing pattern, I just want to know how much MONEY I can make(or lose) from it in the long run, period. This is the only question that every trader need to ask, "the rest is just conversation"

But these technical analysis authors are very clever, some of the patterns they are writing about are so subjective in nature that they are virtually UN-backtestable and they know it, so that almost no one can come back and say :" Hey, this pattern does not work at all, I backtested it and it produced a 2000 pip loss after 500 trades, what are you talking about??"

  • #50
  • Mar 5, 2007 11:08pm Mar 5, 2007 11:08pm
Quoting Darkstar
What difference does "not much" have to make? A system that nets 10 pips a week with a $1million account will pay more in 1 year then most will earn in a lifetime. It's all a metter of perspective.
Yes, but I was talking percentage wise, not absolute value in dollars.
  • #51
  • Mar 5, 2007 11:20pm Mar 5, 2007 11:20pm
Quoting FXTerminator
We are not talking about head and shoulders patterns here, but specific patterns like the one Igor described on page 148. Now I am not saying that this particular pattern is a losing pattern, I just want to know how much MONEY I can make(or lose) from it in the long run, period. This is the only question that every trader need to ask, "the rest is just conversation"
I still stand by my example. The pattern will have very different results on a 5 minute chart of usd/jpy then it will on a 5 minute chart of eur/usd. On the 1hr charts you will get totally different numbers. Trading any of those periods will yield different results at Oanda then they will at FXCM because the spreads are different. We didn't even look at position size effects and they can make or break a systems viability. How much of the book should be dedicated to showing you backtested results that account for every situation?

It sounds like you want them to tell you exactly what timeframe/broker/pair/account size/etc you should trade that pattern on and give you results. Unfortunately the second they did that everyone and their brother would start taking the same trade and the pattern would be destroyed. Then you would be bitching that the pattern doesn't meet the backtest results anyway.

Trading is not a "follow the book" business. It takes thought and hard work to build something that works long term. If your not willing to put the effort in, maybe a career in accounting will serve you better.
  • #52
  • Mar 5, 2007 11:23pm Mar 5, 2007 11:23pm
Quoting FXTerminator
Yes, but I was talking percentage wise, not absolute value in dollars.
A system that guarantees 10 net pips a week can be traded will full leverage. 100:1 on any account size at 520 pips a year would yield 520%. What are you doing right now that comes close to that?
  • #53
  • Edited Mar 6, 2007 9:57am Mar 5, 2007 11:40pm | Edited Mar 6, 2007 9:57am
Quoting Darkstar
I still stand by my example. The pattern will have very different results on a 5 minute chart of usd/jpy then it will on a 5 minute chart of eur/usd. On the 1hr charts you will get totally different numbers.
Darkstar, you are commenting on a book you did not even read obviously. The pattern on page 148 on Igor's book has nothing to do with time frame !!! You only need a specific number of pips after the Asian session to trigger a buy/sell entry. The author does NOT show us the backtest results of this extremely simple, clear-cut pattern on ANY pair at all. In fact, he will often show you a pattern and tell you how to profit from it and a few pages later, he will show you the same pattern and tell you to take the opposite position, depending - get this - on your "risk tolerance"????

In other words he is telling us that it does not matter if we are buying or selling, the pattern will make money either way, sell or buy it does not matter ?!?!?!?


Quote
How much of the book should be dedicated to showing you backtested results that account for every situation?
Since each pattern is simple enough, a quarter of a page will do. But no, the book is just a compilation of patterns with no tangible proof that they are profitable.

Quote
Unfortunately the second they did that everyone and their brother would start taking the same trade and the pattern would be destroyed. Then you would be bitching that the pattern doesn't meet the backtest results anyway.
Are you kidding me? The FX market is so vast it is like peeing in the Pacific, it won't make the ocean any saltier for the dolphins. Everyone knows about trendlines, support and resistance lines, fib, double tops and bottoms for instance so according to you these patterns should have stopped working decades ago since "everyone and their brother would start taking the same trade and the pattern would be destroyed." Come on DarkStar.
  • #54
  • Mar 5, 2007 11:43pm Mar 5, 2007 11:43pm
Quoting Darkstar
A system that guarantees 10 net pips a week can be traded will full leverage. 100:1 on any account size at 520 pips a year would yield 520%.
Did I say otherwise?

An secondly there is NO such thing as a guaranteed trade in the forex, unless your are doing arb.

You trade you risk, simple as that.
  • #55
  • Mar 5, 2007 11:54pm Mar 5, 2007 11:54pm
Quoting FXTerminator
Darkstar, you are commenting on a book you did not even read obviously. The pattern on page 148 on Igor's book has nothing to do with time frame !!! You only need a specific number of pips after the Asian session to trigger a buy/sell entry. The author does NOT show us the backtest results of this extremely simple, clear-cut pattern on ANY pair at all.

Since each pattern is simple enough, a quarter of a page will do. But no, the book is just a compilation of patterns with no tangible proof that they are profitable.

Are you kidding me? The FX market is so vast it is like peeing in the Pacific, it won't make the ocean any saltier for the dolphins. Everyone knows about trendlines, support and resistance lines, fib, double tops and bottoms for instance so according to you these patterns should have stopped working decades ago since "everyone and their brother would start taking the same trade and the pattern would be destroyed." Come on DarkStar.
Fine. Let’s say his pattern has zero predictive value. Now what? Are you any closer to developing a profitable system by knowing that? The bottom line is that either you can take information from whatever source and make it profitable or you can't. If you want to go through your trading career proving that it's impossible to earn a profit, by all means that is your choice. Just don't waste your time trying to prove it to me.

And if you want to believe the unlimited liquidity fairytale then by all means go ahead and share with the world every profitable system you develop; complete with back tested results. After a few of them suddenly and inexplicably stop working, you may come to realize there is more to a market then a bouncing line on a chart.

Luck be with you sir.
  • #56
  • Mar 6, 2007 12:19am Mar 6, 2007 12:19am
Quoting hilmy83
of course you never see them losing tempers and all..cause they got their emotions under control..that's why they're the casino owners :-)

But hey, it's the emotions that we feel inside that I'm talking about. I just cannot believe anyone can eliminate their emotions completely. Some express it, and some really negatively affected by it
and some built the business based on it... LoL
  • #57
  • Mar 6, 2007 6:25am Mar 6, 2007 6:25am
Quoting Darkstar
Well, part of the reason "I'm" here is because the forum content is getting a bit thin these days so every topic winds up getting read at some point. ...
Me too.
Trying to find Nison's e-mail address to ask him "Why can't you tell me how much I should be risking on 3 Dark Crows? After all, I did pay over $100.00 for the book a number of years ago."

  • #58
  • Mar 6, 2007 7:52am Mar 6, 2007 7:52am
Quoting Darkstar
And if you want to believe the unlimited liquidity [of the FX marker] fairytale then by all means go ahead and share with the world every profitable system you develop; complete with back tested results. After a few of them suddenly and inexplicably stop working, you may come to realize there is more to a market then a bouncing line on a chart.
Did you know you can money in the forex with a simple 200 day moving average, if you know how to manage your risk? Well this particular moving average has been around for decades and decades and you see it published in every major financial newspaper every day, and yet it's still working just fine today, so there is absolutely no evidence to support the idea that you could somehow "destroy" a system if "too many" people act on it.

In fact every technical analysis pattern known to man since day one is still working today, solid "like a rock" (like the Bob Seger song).

Quoting Darkstar
Luck be with you sir.
 Thank you but luck has definitively nothing to do with trading. Sure, it is nice to be lucky sometimes (I once made $25,400 in less than 60 seconds during a Non-Farm Payroll report, totally by mistake) but don't count on Lady Luck to pay your bills.
  • #59
  • Mar 6, 2007 8:32am Mar 6, 2007 8:32am
For anyone who is interested, or too lazy to do their own research.


CHART PATTERN FAILURE RATE
ref: Enclopedia of Chart Patterns by T. N. Bulkowski

PATTERN FAILURE RATE %

DOUBLE TOPS 65

DOUBLE BOTTOMS 64

HEAD AND SHOULDERS BOTTOMS 5

HEAD AND SHOULDERS TOPS 7

RECTANGLE BOTTOMS 0

RECTANGLE TOPS 2

TRIPLE BOTTOMS 4

TRIPLE TOPS 15
  • #60
  • Mar 6, 2007 8:40am Mar 6, 2007 8:40am
Quoting marwan2010
ha ha ha ha
he he he he !!! nice comments
but you will still have @morons@ to whom you could give a system yet still lose!

they will snatch profit, procrastinate in following the signal, or in many cases bend the rules

well - what scenario is this?
not psychology?
No Marwan, this is not psychology, this is pure stupidity. I mean if a trader has a good backtested FX trading system and is not taking every darn signal the system is generating then the guy is an idiot, period.
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