if 99% fail why not reverse what we trade | Page 3 | Forex Factory

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if 99% fail why not reverse what we trade

  • #41
  • Sep 15, 2011 1:28pm Sep 15, 2011 1:28pm
Quoting billytt
a what ????
eh?
  • #42
  • Sep 15, 2011 1:35pm Sep 15, 2011 1:35pm
whats a contrarian ??? eh, a what lol
SEE LINE,TRADE LINE..PRICE HAS TO GO SOMEWHERE,,, PRICE WILL GO SOMEWHERE.
  • #43
  • Sep 15, 2011 2:29pm Sep 15, 2011 2:29pm
Quoting Sirano
There is another point made earlier in this thread, about how pro's all tell you they blew several accounts before becoming profitable....hmmm. Well I know quite a few pro's and not one of them has ever mentioned blowing an account to me, I have certainly never blown an account.
Yeah. Blowing an account is probably a bad sign. Either you failed to do due diligence (learning the basics, risk management, etc.), or you were that bad of a trader that even with the basics you were still able to draw down the whole account. Even during my worst trading phases, when I simultaneously overtraded and overrisked, I still had enough wins speckled in with the losses to keep me from going too far under. I seriously can't imagine losing my whole balance
  • #44
  • Sep 15, 2011 5:12pm Sep 15, 2011 5:12pm
Quoting the redlion
if you run forward at the enemy and cuts you down with machine gun fire, you simply run backwards at the enemy and you will win?
wrong analogy...

the theory in here is simple: do the opposite of what losers are doing.
This is exactly what is called "contrarian". FXCM has a study on this called SSI. check it. And im applying it albeit with some success.
  • #45
  • Sep 15, 2011 6:34pm Sep 15, 2011 6:34pm
Quoting smittens4212
Yeah. Blowing an account is probably a bad sign. Either you failed to do due diligence (learning the basics, risk management, etc.), or you were that bad of a trader that even with the basics you were still able to draw down the whole account. Even during my worst trading phases, when I simultaneously overtraded and overrisked, I still had enough wins speckled in with the losses to keep me from going too far under. I seriously can't imagine losing my whole balance

It really all comes down to risk management

My personal record of a bad trading streak was I had exactly 4 winning trades out of 65...This was over the course of 7 months

In this time because I was very diligent with my money management I only drew down my accnt by 4%

This was years ago but the valuble lesson I learned was this.... Always be flexible with how much you risk... if you get on a losing streak the probabilities are greatly increased that your next trade will be a loser due to a myriad of reasons... and if you get on a winning streak chances are your next trade will again be a winner

So in essence the biggest reason people blow up accnts is because when they are losing psychologically it makes sense at the moment to risk more on the next trade to "make back what you lost".... IMHO this is suicide for a trader.... try reducing leverage after sustaining a few losses... increasing it back to regular leverage only after a few wins....

Same goes for winning.. if you get a few wins in a row with regular leverage... go ahead and up the ante a bit... use the markets money to procure some windfall profits


In all honestly I place far more losing trades than winners... but the percentage of my accnt I lose is exponentially smaller than what I gain...

again this is just my style... and it works for my tested style of trading....


Im currently creating more of a day trading method which has proven to be quite challenging and Im taking some hits.... but Ill get it.... persistence goes a long long way in this game

  • #46
  • Sep 17, 2011 2:43pm Sep 17, 2011 2:43pm
If you could play like that then head to the casinos!
  • #47
  • Sep 18, 2011 1:19am Sep 18, 2011 1:19am
  •  fivex
  • | Joined Sep 2011 | Status: This is the title that appears | 247 Posts
Quoting alstural
the answer is...

we take profits only partially

but losses are ours in full
can i use that?
  • #48
  • Sep 18, 2011 2:23am Sep 18, 2011 2:23am
Quoting the redlion
if you run forward at the enemy and cuts you down with machine gun fire, you simply run backwards at the enemy and you will win?
Redlion is completely right about this. Enemy cuts you down with machine gun fire, now it's time to take cover, plan a strategy to take out the enemy, make sure it works, execute the plan.
Have I got something on my face, SOLDIER?
  • #49
  • Sep 18, 2011 4:17pm Sep 18, 2011 4:17pm
Quoting Tedge UK
Yes you are correct Marv about the 99% i pulled it out of the air,its probably more like 99.9%
I have heard numbers up around 95% but fail is a bad term to use.

People quit trading for a number of reasons even if they are making some money so i think that number is highly overstated.

Some start trading because they think they are going to make big money in a short period of time. They show a little bit of profit but no where near what they anticipated so they put their money elsewhere.

Some think they can make some money with not much time and effort. They soon find out that it takes a lot of effort and time and even though they are showing some profit they decide the whole thing is just not worth all the time and effort and stress it is costing them.
  • #50
  • Sep 18, 2011 6:43pm Sep 18, 2011 6:43pm
Quoting Jack Ripper
I have heard numbers up around 95% but fail is a bad term to use.

People quit trading for a number of reasons even if they are making some money so i think that number is highly overstated.

Some start trading because they think they are going to make big money in a short period of time. They show a little bit of profit but no where near what they anticipated so they put their money elsewhere.

Some think they can make some money with not much time and effort. They soon find out that it takes a lot of effort and time and even though they...
The ones who survive and prosper in this forum and as traders are the 5% of traders who succeed. If wee keep this up, you'll find out that this forum can be a 5%. Not all, but if we keep applying new knowledge, price action, discipline, emotional intelligence, we can be the 5%.
Have I got something on my face, SOLDIER?
  • #51
  • Sep 18, 2011 7:47pm Sep 18, 2011 7:47pm
Quoting bumapatria
Not all, but if we keep applying new knowledge, price action, discipline, emotional intelligence, we can be the 5%.
I think you have a great attitude especially when you mention " applying new knowledge". Markets change so it is a must that we adjust to them. What once held true yesterday may not necessarily hold true tomorrow.

I still think that 20%-30% of people do not lose money trading FX. That is a conservative estimate. They simply just stop trading for so many different reasons.
  • #52
  • Sep 19, 2011 12:06am Sep 19, 2011 12:06am
Quoting Jack Ripper
I think you have a great attitude especially when you mention " applying new knowledge". Markets change so it is a must that we adjust to them. What once held true yesterday may not necessarily hold true tomorrow.

I still think that 20%-30% of people do not lose money trading FX. That is a conservative estimate. They simply just stop trading for so many different reasons.
I believe thats a wrong statement my friend . 20-30% are consistent profitable traders. im sure everyone loses. Even all the big-name so called top forex robots lose (fapturbo, megadroid, etc.) About reasons, yeah theres a wide span of those.
Have I got something on my face, SOLDIER?
  • #53
  • Oct 3, 2011 9:15pm Oct 3, 2011 9:15pm
I've tried reversing signals before...the issue is that your stop-loss then becomes a takeprofit and your takeprofit then becomes a stop-loss...thus reversing everying ...I've even tried technical analysis on equity curves - it doesn't work very well
  • #54
  • Oct 3, 2011 10:02pm Oct 3, 2011 10:02pm
unless you are sure that everything you do( even in life) is 99% at loss... then u can reverse your actions on trading, otherwise its just plain impossible as there are many aspects to trading other than placing the orders...
  • #55
  • Oct 4, 2011 12:05am Oct 4, 2011 12:05am
All you have to do is look for M and W at the High of the day and the Low of the day and you will be right over 90% of the time. Try it an you will see.
  • #56
  • Edited Oct 5, 2011 1:50am Oct 4, 2011 6:38pm | Edited Oct 5, 2011 1:50am
To expand on Marv's post earlier in the thread:

Suppose I play roulette, betting on black every time, but at the end of an hour's playing, many more reds than blacks get spun, and consequently I'm down $100.

So I think to myself, "heck, if only I'd bet on red all the time, I would have been ahead, instead of down". The statement is true, but the inference that continuously betting on red is a winning roulette strategy, is not.

Roulette is a random game, and whether I'm ahead or behind over a certain period of time, is nothing more than statistical fluctuation, or (if your prefer) good old fashioned "luck".

But of course it's actually a little more complex than that. On every roulette wheel there are one or more zeros that are neither red nor black. Therefore there will be occasions where I will lose, no matter which color I choose. That is why, over a long enough number of spins, the casino will always eventually win. It's called the "house edge".

However, if I can find a roulette wheel that's physically biased, i.e. the ball lands in some section of the wheel more often than others, then I have a real edge. If this edge is greater than that imposed by the zeros, then I have a game with the odds stacked in my favor. All I need to do is bet consistently on the numbers in that section, and I will - if I can play for long enough without the casino personnel detecting my play, and banning me - beat the casino.

So what does any of this have to do with forex trading?

The vast majority of newbie traders lose because they don't understand statistical fluctuation. After a few weeks, or even a few months, they might find themselves ahead, and they think they have mastered the market. Or they might find themselves behind, and think that by simply reversing their strategy, it will become a winning one. But in both cases, their method of entries and exits is probably no better than making random guesses, and inverting a random signal generator will only ever result in another, albeit different, random signal generator.

Just as the zeros on the roulette wheel give the casino an edge, the spread gives the br0ker an edge. Hence both trading and roulette are "negative expectancy" games, which means that the trader, given long enough, will eventually lose. Just like the casino patron who plays roulette.

However, just as with the physically biased roulette wheel, it's possible to gain a real edge with trading, one that's capable of overcoming the spread. But to achieve that, you need to how and why markets move, and the chart patterns that these movements create. That, grasshopper, along with the ability to (1) devise a method of entries and exits capable of exploiting these patterns, (2) master your emotions well enough to consistently apply this method, and (3) risk a small enough amount of money per trade, to allow you to survive occasional adverse statistical fluctuation, is the challenge that confronts you. Good luck!
  • #57
  • Oct 20, 2011 5:43am Oct 20, 2011 5:43am
Quoting hanover
To expand on Marv's post earlier in the thread:

But of course it's actually a little more complex than that. On every roulette wheel there are one or more zeros that are neither red nor black. Therefore there will be occasions where I will lose, no matter which color I choose. That is why, over a long enough number of spins, the casino will always eventually win. It's called the "house edge".
The zero's are not the casino's edge. Their edge is in the probability of them winning (and you losing). If we are looking at European roulette, there are 37 slots, and of those slots one is zero, so there are 18 red slots and 18 black slots. If you choose either black or red, your probability of winning is (18/37)*100 = 48.6%, which means your probability of losing is 51.4%. If you are picking just a number your probability of winning is (1/37)*100 = 2.7%, which means your probability of losing is 97.3%.
Good judgement comes from experience. Experience comes from bad judgement.
  • #58
  • Oct 20, 2011 9:38am Oct 20, 2011 9:38am
Quoting Dighi
I've tried reversing signals before...the issue is that your stop-loss then becomes a takeprofit and your takeprofit then becomes a stop-loss...thus reversing everying ...I've even tried technical analysis on equity curves - it doesn't work very well
If "equity" means your own trades' account equity and then one charts equity between trades, then why not?
One can journal during and between trades and study most-recent P/Ls' chart.
I still look for a candle version with shadows from possible profit and loss during the trade.
  • #59
  • Aug 18, 2013 4:02am Aug 18, 2013 4:02am
Reversing trades does work, however because EA's are designed to win, they struggle to lose 'enough' to be reversible. This is due to the spread (obviously), as when you reverse trades, you would need to overcome double the spread with the reversed account.

Has anyone found an EA that seems to lose a lot more than it wins? I've backtested 832 EA's already, and because they're designed to win they don't lose enough to be reversible.
  • #60
  • Aug 20, 2013 4:30pm Aug 20, 2013 4:30pm
Good point on the double spread on reversed account. I have noticed that in backtesting with the reverse feature in play. While an EA that loses -1000 on 500 trades over 2 years looks like it can be reversed to give out +1000, it in fact doesn't because the 500 trades X 2 pips average spread erases all the theoretical gains.

I have found that only EAs that have a profit factor less than 0.5, the lower the better, can be profitably reversed. And this only on EAs using 0.1 fixed lots, no fancy lot sizing that can throw off the results. Most of the time you hardly see an EA that is less than 0.5, but if you do, play with the reverse feature and it should turn out a nice profit.
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