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This so called "self-destruction" of trading systems...

  • #61
  • Mar 16, 2007 7:11pm Mar 16, 2007 7:11pm
Quoting FXTerminator

We can only guess that the pattern we are looking at is indeed pattern X. Then we use the proper stops and make our bet. Win or lose it does not matter, if we keep betting on those patterns that way we will win in the long run, because we are simply betting that people will react the same way when confronted with the same situation, that's why these patterns had stood the test of time.

.
Okay, I see where you are coming from now. I was not sure before. What do you do when the patterns develop on a larger scale or on a smaller scale though? Say on the daily chart for gbp/usd pattern X forms in a 200 pip range 30% of the time, 20% in 250 range, 30% in 300 range, 20% in other etc? Placing stops would be difficult to realize even after extensive backtesting. Even though I now agree with you completely about these patterns always forming, the size north and south, width of X amount of days will always be different.

Quoting FXTerminator

Who said you were welcome in MY restaurant in the first place, I already bought that restaurant with my forex profits!
I must say... good comeback.

Be cool guys.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #62
  • Mar 16, 2007 7:11pm Mar 16, 2007 7:11pm
My view on systems is that optimizing stops and profit targets is generally barking up the wrong tree. The main focus in system development should be on improving system logic rather than on finding optimal or robust parameters.

My $0.02
  • #63
  • Mar 16, 2007 7:27pm Mar 16, 2007 7:27pm
Quoting FXTerminator
So if I talk about beers in a forum for example that means I need to have a truckload of Heineken to give away first?


If you want to advocate that giving away beer doesn't cost the giver anything, yes you do.

Quoting FXTerminator
Not quite, over 90% of the forex volume is done on the 7 majors against the dollar. 1/3 is done on the EUR/USD alone.


OK, so $833B of the $2.5T in volume runs on EUR/USD. Dividing the remaining volume evenly over the other 6 majors, dividing it across the entire daily range, and dividing it for both sides of the market, were still only left with $1.3B per pip if it was evenly distributed AND there were no retracements. In your magical world were this is the case, any fund can move prices 1 pip with a $13mio account. A $1B account could push prices about 77 pips.

I guess if your system only works on eur/usd then there is no harm in sharing. That's hardly the same thing as a blanket statement that no system will be impacted by sharing.

Quoting FXTerminator
Then next time move the forex market by 75 pips in your favor and you will do just fine


I'm not quite there yet, but I'll be sure to move it 75 pips against your head and shoulders trade when I am.


Quoting FXTerminator
I already do


I'm happy for you. Let us know how that works out for you this time next year.

Quoting FXTerminator
I am working on it.


See above.

Quoting FXTerminator
Who said you were welcome in MY restaurant in the first place, I already bought that restaurant with my forex profits!


It's good you’re making plans for the inevitable failure of your system. I would truly hate to see you homeless.

Quoting FXTerminator
Thanks for the good jokes Darkstar, really


Anytime.
  • #64
  • Mar 16, 2007 7:33pm Mar 16, 2007 7:33pm
Quoting ilanr
This hasn't been a nice post, Darkstar. Everybody is trying to contribute to the best of her or his ability, expertise, and experience.
Fair enough, I was a bit mean. It just gets on my nerves how often misinformation is handed out as gospel on this forum by people with zero experience. Maybe I'm just becoming jaded with the whole forum experience...
  • #65
  • Mar 16, 2007 7:44pm Mar 16, 2007 7:44pm
Quoting Darkstar


I guess if your system only works on eur/usd then there is no harm in sharing. That's hardly the same thing as a blanket statement that no system will be impacted by sharing.
I agree with this. Certain strategies applied to lesser volume pairs will likely be affected by heavy exposure.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #66
  • Mar 16, 2007 7:57pm Mar 16, 2007 7:57pm
Most of us can tell when someone is a newbie. Beyond that, the level of experience that some other anonymous trader has is mostly unknown. So the righteous indignation some take because I or someone else has the nerve to have a differing opinion on a subject is truly amazing.

All of us have our moments when we make some boneheaded statements. But when someone questions another's experience with insults it shows what little experience they in fact have.
  • #67
  • Mar 16, 2007 10:02pm Mar 16, 2007 10:02pm
Quoting witchazel
so the question is, does publishing your system in effect destroy it. you betcha! notice that turtle trades dont work anymore
you might notice that the reverse turtle trades dont work anymore.
First of all the famous Turtles traders trade on the futures market and this market is at least 100 times LESS liquid than the the forex market, ALL contracts combined. And as you know, it's sooooo easy to "manipulate" these thinly traded contracts like Orange Juice, Palladium, Oats, Lumber, Platinium, etc... the smallest rumor and the prices hit the roof.

Secondly the Turtles simply changed one parameter and bingo, their system is back on track.

On the other hand, try to "destroy" a good FOREX trading system and see what happens. Zero, nada, even if you have Soros's pockets.


Quote
there are 2 reasons for this.
1) you have to do the opposite of 90% of other people to make money

There are speculators and hedgers on the forex. Speculators (at least the good one) make money mainly from hedgers and not necessarily from other speculators. The 20 pips you made today is probably coming from Gillette or Kodak, not necessarily from Darkstar for example (even though it seems that he has lost much, much more than that, judging by his mood today : )

The hedgers are not the bad guys of course, they just take position on the FX to protect their business-related profits, they are not in the currency speculation business.

They are the one we are making money from most of the time, even though they don't care who is winning or losing, it they win 10 millions on the FX they lose 10 millions on their business, so they are even. On the other hand If they lose 10 millions on the FX, that means 10 millions more for their business due to currency valuation, so they are even again.

All they want is to get even no matter what the currencies are doing.

Quoting witchazel
as for the head and shoulders being "still good". they are great, after they happen.
The trick is to detect them and act on them, they have and excellent winning percentage combined with a high risk/reward ratio so I always play them the minute I spot one of them.

Quoting witchazel
if you could predict them, dont you think everyone would be rich now?
Just like in life in general, if everyone could work hard and be disciplined we would all be rich doctors and lawyers and so forth. But how MANY people actually work hard enough to be a successful person? The fact is most people are just plain lazy and prefer to work just the minimum.

Same thing in forex, you could publish the best trading system on earth on the first page of the New York Times and a month later 90% of the traders are already searching for something ELSE the minute they encounter their first serious drawdown.
  • #68
  • Mar 16, 2007 10:13pm Mar 16, 2007 10:13pm
I think once I make a lot of money i'll be more forthcoming with how I trade. As for now i'll remain chincy.
How you act is more important than how you feel.
  • #69
  • Mar 16, 2007 10:24pm Mar 16, 2007 10:24pm
Quote
What they don't tell you is that it would take many billion and billion dollar orders to move the FX market a couple of pips, if at all.

A Billion dollars might not move the market if it is from one person. ...becuz of market psychology. I agree The rest of the sharks may follow (other banks on level II) but if they dont that billion billion dollar wont go anywhere
  • #70
  • Mar 16, 2007 10:26pm Mar 16, 2007 10:26pm
Quoting Darkstar

If you want to advocate that giving away beer doesn't cost the giver anything, yes you do.



OK, so $833B of the $2.5T in volume runs on EUR/USD. Dividing the remaining volume evenly over the other 6 majors, dividing it across the entire daily range, and dividing it for both sides of the market, were still only left with $1.3B per pip if it was evenly distributed AND there were no retracements. In your magical world were this is the case, any fund can move prices 1 pip with a $13mio account. A $1B account could push prices about 77 pips.

I guess if your system only works on eur/usd then there is no harm in sharing. That's hardly the same thing as a blanket statement that no system will be impacted by sharing.



I'm not quite there yet, but I'll be sure to move it 75 pips against your head and shoulders trade when I am.




I'm happy for you. Let us know how that works out for you this time next year.



See above.



It's good you’re making plans for the inevitable failure of your system. I would truly hate to see you homeless.



Anytime.


Hey,
hopefully you can answer this question. Assuming that giving away your system could potentially lead to its becoming useless and ineffective, all the different vendors of EA's, automated programs, strategies, etc. are basically making their money by selling those things as opposed to actually utilizing them to make money trading. Clearly, their intention is to have as many people use the system as possible. And since we know that the more people use it, the less effective it will become, isn't it obvious that the vendors know it too and they are just trying to make money selling those products? That would be logical, and therefore it would prove that these programs are useless in the long run (if they were in fact really good, the vendors would try to limit the number of people who use them, while they do exactly the opposite). Am I correct in this?
Matt
  • #71
  • Mar 16, 2007 10:28pm Mar 16, 2007 10:28pm
Quoting Darkstar
OK, so $833B of the $2.5T in volume runs on EUR/USD.
Yes, so how many BILLIONS would it take to move the FX market 1 pip on this currency pair, according to your "calculations"?

Quoting Darkstar
That's hardly the same thing as a blanket statement that no system will be impacted by sharing.


Please show us one single forex system that has stopped working because "too many" (???) people were acting on it.

Quoting Darkstar
It's good you’re making plans for the inevitable failure of your system. I would truly hate to see you homeless.


Don't worry about me, but please feel free to drop by my restaurant anytime if you blow up your mini forex account, I will always have a hot soup ready for you and a warm blanket to put over your...head and shoulders during those cold windy and pip-less nights

Have a good weekend everyone!

(Moderators, we are just kidding, don't worry.)
  • #72
  • Mar 16, 2007 10:36pm Mar 16, 2007 10:36pm
Quoting StockKJay
If CITI and Deutsche Bank both decided right now... at this very moment that they wanted to push the gbp/usd down 75 pips they couldnt do it?
i doubt it becuz it's Friday 22:36 EST , market close.
  • #73
  • Mar 16, 2007 10:41pm Mar 16, 2007 10:41pm
Quoting StockKJay
Okay, I see where you are coming from now. I was not sure before. What do you do when the patterns develop on a larger scale or on a smaller scale though? Say on the daily chart for gbp/usd pattern X forms in a 200 pip range 30% of the time, 20% in 250 range, 30% in 300 range, 20% in other etc? Placing stops would be difficult to realize even after extensive backtesting. Even though I now agree with you completely about these patterns always forming, the size north and south, width of X amount of days will always be different.
Hello, sorry I didn't notice your post.

I did not specify this but of course all these patterns have their own built-in take profit and stoploss, there is no need for backtesting or optimum stop/limit, all the work has ALREADY been done by Edwards and MacGee and others.

Once you think you see one of them, you pull the trigger knowing well in advance what the stop/limit are, it's called "measured move" or expected move in technical analysis. These stops/limits are described in every technical analysis book and I trade these simple price formations on the 15 min chart.
  • #74
  • Mar 16, 2007 10:44pm Mar 16, 2007 10:44pm
Quoting FXTerminator


Please show us one single forex system that has stopped working because "too many" (???) people were acting on it.

.)

I don't know much about it, as I was not in the market through 2004 - July 2006. But according to Jimmy Young, it was the over exposure that changed news trading... specifically straddling.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #75
  • Mar 16, 2007 10:46pm Mar 16, 2007 10:46pm
Quoting Igrok
Based on my own experience I can say that trading bigger contracts doesn't work exactly the way you assume it in your posts. A few times with orders of just 200-300 mio in size I had been able to stop the market for a few hours by completely absorbing the opposite liquidity at a particular level on EUR/USD. I was surprised myself with the effect but the dealer confirmed that my trade was the reason for the market to stall.
1.6 bio "sell" order on USD/JPY, that I placed once during Asian session, had triggered some additional stops below the traded zone and eventually led to a fast drop of about one big figure. It took another 3-4 hours for the market to recover to the intial level that day.
A lot depends on how the order has been placed, at what level and at what time. Sometimes even a relatively small order can trigger a bigger move just because it pushes the market through some significant stops level.
and that my people is what i was getting at anyone can move the market and it doesn't require alot. It only require a common market psychology
  • #76
  • Mar 16, 2007 11:00pm Mar 16, 2007 11:00pm
Quoting Darkstar
It just gets on my nerves how often misinformation is handed out as gospel on this forum by people with zero experience.
This is nothing but an assumption. Unless you give account statements or provide signals there is no way to really know whether someone is full of BS or not.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #77
  • Mar 16, 2007 11:16pm Mar 16, 2007 11:16pm
Quoting Darkstar
Fair enough, I was a bit mean. It just gets on my nerves how often misinformation is handed out as gospel on this forum by people with zero experience. Maybe I'm just becoming jaded with the whole forum experience...
I agree. If 90% of the wannabe traders never make it, then that means at any one time, maybe not 90%, but still much more than half of the traders here aren't successful and if they aren't successful at trading, then they shouldn't be handing out advice on trading.

Maybe that's a bit extreme but I sometimes get the feeling that some of the posters here spend more time posting than trading.
  • #78
  • Mar 16, 2007 11:45pm Mar 16, 2007 11:45pm
Quoting aicccia
...

Maybe that's a bit extreme but I sometimes get the feeling that some of the posters here spend more time posting than trading.
Tru Dat,

Hey! I heard there is {easy} Money to be made here and I want in. Tell me how to do it or you r an a$$ le.


Nuff said.
  • #79
  • Mar 17, 2007 1:19am Mar 17, 2007 1:19am
Quoting Darkstar
Fair enough, I was a bit mean. It just gets on my nerves how often misinformation is handed out as gospel on this forum by people with zero experience. Maybe I'm just becoming jaded with the whole forum experience...
Ok, I'll not talk about Igrok with his 15 yr tenure. I'll talk about myself, only one yr doing forex full-time. My experience is 24 yrs in statistics, psychometrics, data analysis, etc. As I understand something about numbers, some claims made by some people on this forum, even the most experienced ones, make me mad - as they are obviously, utterly wrong from statistical point of view.

Thinking of the way I do my own trading now, I realize that almost nothing in it was adopted from what people said on this forum. However, paradoxically, almost everything I do now was influenced by the stuff I've read here: I read it, tested it, saw it was wrong, and by doing that found the right way to do things. I am immensly grateful to FF community for that.

Even your post contributed to me by making me realize what I've said above...
sans peur et sans reproche
  • #80
  • Edited 3:22am Mar 17, 2007 3:11am | Edited 3:22am
Quoting Igrok
A few times with orders of just 200-300 mio in size I had been able to stop the market for a few hours by completely absorbing the opposite liquidity at a particular level on EUR/USD. I was surprised myself with the effect but the dealer confirmed that my trade was the reason for the market to stall.
1.6 bio "sell" order on USD/JPY, that I placed once during Asian session, had triggered some additional stops below the traded zone and eventually led to a fast drop of about one big figure. It took another 3-4 hours for the market to recover to the intial level that day.
Igor, I respect you as a fellow currency trader (even though I did not like your forex book a bit) but I have strong doubts about those alleged multi million mega trades of yours that "stopped the market for a few hours" (??). When did those trades (exact date and time) take place exactly? I mean if you were trading the Russian Ruble against the Indian Ruppee, I would understand, but on the EUR/USD???

Quoting Igrok
Sometimes even a relatively small order can trigger a bigger move just because it pushes the market through some significant stops level.
Yes, it's called a breakout and it happens all the time, this is perfectly normal.

It does NOT mean, however, that John Doe or any other small trader can move the forex market from his tiny mini mini account at will, if this is what your post is implying.
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