I am back with new ideas :)

HI all, I think you all who knows me noticed that I dissappear form the FF, I made very few posts and basically was reading and thinking of my new strategies . I want to discuss one of my new strategies which I plan to test these days. The difficulty is that you cannot test it on DEMO you need live account and at least two of them OK, do you feel confused? never mind, here I am I will explain now. It is known that a guy who changes strategies all the time is dead in long-run. Yes, this is true But I am not doing it. As I converted my trading to long-term one I do not use big figure strategy on Cable and 5minute strategy. One of my strategy (reversal strategy, search on FF I posted it here somewhere)showed me short in EURUSD after such a rally, went short at 1.2135 only on DEMO because of NFP ahead, placed stop at 1.22 and planning 200 pips, still holding this position open. If it was real I would have taken half position and placed stop at BE but consider that I did so . OK let's do not get away from the point, I am telling this because I am now long-term trader and I do not change strategies but replacing one with another. Also I got good job and look for a fixed income too so what I need to do is to convert all strategies to long-term trades. BUt my recent research suggests me to consider very interesting short-term or even 24 hour one too I called this strategy: Trading Human's Emotions

First of all why I got this idea. You know I am running investors' funds, mostly I trade not my money. Recently where I worked I got bank as an investor they gave me 20 000 USD for live trading to test what will happen. I traded quite well first week I got about 3%. My trades really worked, did not use high leverage and always used stops, but on one day I lost about 2% and had 20 pips unrealized loss on EURGBP stop was 33 pips, and position size was 200K. I had talk with bank director and he was mad on losses, I was under preassure on that day and traded withought stops to take 10-20 pips to recover losses, I noticed that I was trading with fear, with fear that bank director would not be satisfied. I was propensed to take 10-15 pips profit and allowed 50-100pips unrealized losses with hope of reversal. Really it reversed and I was fully recovered. As i noticed I was trading this account with fear I talked with bank director and I dropped it. I was trading this only 2 month and ended with 0.7% loss, this is shame to cry for this amount. But this gave me good experience. I created new strategy based on trading with fear. I discovered and examined myself how fearful traders try to take small profits and let losses run. It does not matter what kind of setup you use, you are fearful, belive me, you are dead in long run, because you always let losses to run and take small profits. In reality successful traders do opposite, Yes I have other account which I manage and trading with success. My belif is I will gain in over 60-70 trades and lose 30-40, trying to get at least 100 pips for each trade depending on currencies I use. OK let's get to the subject of my post. As I discovered this and experienced by myself I got this idea. I will open two minis with 500$ each, I will give one account to my friend who is very fearful and emotional, impulse trader, I belive he will take small profits and let losses run, I believe he will not use stops at all. What I need is to monitor his trades, when he sells I must buy when he has 10 pips profit and fixes it I have 10 pips loss and I fix it too, I am more than sure that he will have 50-100 pips unrealized losses, in this case I will have 50-100 pips unrealized profit, so in long-run my account is proditable and he is deadman. In case he manages to win I am not in loss much I lost on one account and gained on another, I payed only spread, in this case my strategy is garbage to throw away. I will test this and if in 10 cases I am profitable in long-run I will trade with 2-3 or more lots when he trades only one. So I will gain 2-3 or more times much than he losses.
I belive brokers are doing the same, and they are trading against newbies they belive that 90% is loser and they trade against all newbies and with big lots.
Well this is it, wish me luck. I do not think it is unfear because both is my money and I do not make my friend to lose.
Now I need emotional, fearful, clever, impulse, not-objective trader. Usually peaple who think they are cleverest they are first losers because they are not objective about market.
what does move currency market? fundamentals? technicals? no just humans' emotions, can you mathematically or economically calculate what each traders belief is? no, so all strategies must be based on psychology of the market. Fundamentals datas and technicals are only for entries and exits, now one's setup will work if it shows clear buy signal and most traders will sell. However this technical stuff is connected with psychology, showing overbought/oversold areas, double top/bottom which are considered by traders' minds.

basically your idea is about closing the positions, no matter short or long or when opened. to simulate the behaviour of a "fear trader" you need to set tp very close and sl fery far if any, right? so you dont have to look for a "fear trader" - just open a position (no matter what and no matter when) ans set close sl and far tp. Am too far from your goals?

Sure, the "fear trader" doesnt open position just tossing a coin, but....he has his OWN reasons to do so, you will probably not do the same in 99% of trades, so actually you can assume that opening of a position comes just like as a result of a toss-up.

Comments?

No, it is not enough to take small profit and let losses run to simulate fearful trader's trades. Fearful traders are filter of those 5% who are winners in the market. None of fearful traders is profitable in long-run.
Also it will be good to choose not one but more traders and trade against them. This is because in theory of probability the chance will increase, when number of attempts rises. So trading against at least three fearfull traders will make system more reliable.

I will test this system very soon and we will see results

Welcome back 777
Thought you were on honeyoon. Was kinda quiet here without you and your ideas.

Your experience with "let the losses run is where I am at now". And that really sucks ... 15 wins, 1 loss and you're still at the start.

As for looking for a fearful trader ... what if he's luck run for a year, would your account still be there?

Glad to have you back
Habeeb

Hi Habeeb, how are you?
you are asking if he manages to be lucky for a long time? It's chances is very little but You are sure that in long-run (maximum 2-3 year) he is dead.

But this does not mean that you will be making gains after 2-3 years, Because what fearful trader will do is they will not use stop loss orders at all and they often hope for reversals. Well, mostly this reversals can happen and your fearful trader is still alive but, this does not mean that you lost because before market reversed you took big profits and gained pips on your account and then market reversed and you are flat on your second account too.
SO to gain does not always mean a trader you are trading against to lose, but it is inevtable a fearful trader to have big unrealized losses which I am more than sure will be in case of trading with fear. Believe me, I have experienced it by myself.

hes back! the MAN is back!

was getting a little worried about you 777. glad to see you were just in the lair cooking up systems. happens to the best of us

Thanks Merlin

I will never get lost from FF. This is really great place.

I have not joined PF yet because I simply do not have time, but I will join soon

thanks again

Really I ended with only 0.7% loss after trading for 2 month (on this account which I was trading with fear) But if anyone had been trading against me could have gained over 10%, because I had positions where I had unrealized losses over 3-5% of total account, but I traded with hope to reverse. really they reversed but anyone who had position against me would have been happy now he/she would have taken profit when my unrealized losses were 3-5%. If you make trader to trade under preassure he will become faerful trader and will trade like i traded this account. This person must have feeling of responsibility and must be emotional. He will not use stops at all

So, you're looking for someone to trade an account with emotions, so that you can trade against him. In other words, if he goes long, you go short ... right? Then why not just open a buy and a sell at the same time on the same account? Although you'd want to trade against the other guys emotions, it's sounds more like "guessing" the market.

Looking forward to seeing you in the PF. It's really fantastic and fun. Since you've switched to long term trading, it'll suit you perfectly 'cos that's what we're learning to do at the moment ... trading off weekly and daily charts.


I'm very well, thanx.

Take Care
Habeeb

No, selling on one account and buying on another does not mean you are trading on one account like fearful trader and hence on another account against him. No, let farful trader execute trades by himself. It is statistics that fearfuls take small profits and let losses run. If you buy on one account and sell on another you will not be sure on which to take loss and let profit run, if you look at technical stuff, this is not the trade we are talking about and it is better not to use these two accounts and trade only one with that technical stuff. BUt if statistics say that 100% of fearful traders are losers and furthermore in denomination of unrealized losses they are huge and fast losers. So, that is what you need - unrealized huge losses. Be sure Fearful trader will have huge unrealized losses. Believe me I am trading forex for almost two years, I am successful on my accounts and my Swissie investor's but I traded this bank's account with fear because of owner's attitude with me and I made sure how fearful traders tend to trade. I had been trading this account only for two month but I had 10% unrealized losses but ended with only 0.7%. This means that if someone traded against me would have won not 0.7% but whole 10% or slightly less (it depends when he fixed profits).