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The Trading System That Never Works

  • #1
  • First Post: Oct 18, 2013 6:32pm Oct 18, 2013 6:32pm
I've noticed here in the trading system forum, we are all looking for trading systems that work as close to 100% of the time as possible. Perhaps that is a bit of an exaggeration. Maybe people are looking for as close to 60% as possible, or 60% or above. What is consistent between all trading systems I see here are that people are looking for one that works the most often, or often enough.

But what if we changed our mindset and decided to find and back test a system that never works? That loses you money 100% of the time? Doesn't that seem like an easier thing to do?

If we could find and write rules for and develop a system that loses you money 90% to 100% of the time, wouldn't that be a huge breakthrough in Forex trading?

You might think I'm crazy saying this, but imagine. If you found such a system, then all you'd have to do is the opposite to make money all the time.

Has this ever been considered?
  • #2
  • Oct 18, 2013 6:33pm Oct 18, 2013 6:33pm
yes it has and that system still wouldnt give you an edge if the signal was reversed
  • #3
  • Oct 18, 2013 6:37pm Oct 18, 2013 6:37pm
Quoting blamshakk
yes it has and that system still wouldnt give you an edge if the signal was reversed
What was the system?
  • #4
  • Oct 18, 2013 6:42pm Oct 18, 2013 6:42pm
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Reverse a losing system will never make a winning system ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #5
  • Oct 18, 2013 8:13pm Oct 18, 2013 8:13pm
Quoting Baggi
If we could find and write rules for and develop a system that loses you money 90% to 100% of the time, wouldn't that be a huge breakthrough in Forex trading? You might think I'm crazy saying this, but imagine. If you found such a system, then all you'd have to do is the opposite to make money all the time. Has this ever been considered?
Lol.... turning upside down your broken monitor only give you more worse.. picture... ...
  • #6
  • Oct 18, 2013 8:14pm Oct 18, 2013 8:14pm
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Quoting Kiads
{quote} Lol.... turning upside down your broken monitor only give you more worse.. picture... ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #7
  • Oct 18, 2013 9:26pm Oct 18, 2013 9:26pm
+1 blamshakk, FerruFx, and Kiads

and Kiads
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #8
  • Oct 19, 2013 5:30am Oct 19, 2013 5:30am
Quoting Baggi
Has this ever been considered?
No, not this week

See http://www.forexfactory.com/showthread.php?t=445982 for the lastest. Especially read post #20.

The complexity is greater than finding a winner system anyway because you need finding a consistently losing system which additionally wins when reverted.
No greed. No fear. Just maths.
  • #9
  • Oct 20, 2013 4:59pm Oct 20, 2013 4:59pm
That would only work for George Costanza.
  • #10
  • Oct 21, 2013 3:32am Oct 21, 2013 3:32am
Quoting Baggi
I've noticed here in the trading system forum, we are all looking for trading systems that work as close to 100% of the time as possible. Perhaps that is a bit of an exaggeration. Maybe people are looking for as close to 60% as possible, or 60% or above. What is consistent between all trading systems I see here are that people are looking for one that works the most often, or often enough. But what if we changed our mindset and decided to find and back test a system that never works? That loses you money 100% of the time? Doesn't that seem like...

Many many times.
Consider a system that buys at market price and immediately closes the position. Obviously, 100% of the time it would lose the spread on each trade. Obviously, if you "reverse" it so it only sells instead, it would still lose the spread on each trade.
  • #11
  • Oct 21, 2013 12:16pm Oct 21, 2013 12:16pm
No, not really. I do understand the idea of reversing it, but don't think that's going to do much. For one, the losing strategy in reverse is not exactly going to translate to $
  • #12
  • Oct 21, 2013 2:23pm Oct 21, 2013 2:23pm
will never? are you sure???

can i reverse a statistically profitable system into a loser?

then i reverse this loser back into a winner, can't I? you really need to think before speak.

Quoting FerruFx
Reverse a losing system will never make a winning system ...
  • #13
  • Oct 21, 2013 2:29pm Oct 21, 2013 2:29pm
you are not crazy, your issue is that you think you 'invented' an genius idea which has been taken by almost every experienced trader.

now, it is same difficult to find a losing system in your mind as a winning system. the reason is simple: if you reverse this kind of losers, you'll get a winner. now will this world be so easy to work out like this???

the 99% system we see in crap system section are random systems. they doesn't earn or lose, they just useless junk. you see they are losers that are mainly due to spread/commission paid over time, or their edge is not sustainable/tradable. reversing them is still a waste of time.

last, just pay your dues, don't be over-optimistic. the winner exists, but it is painful to get there.

Quoting Baggi
You might think I'm crazy saying this, but imagine. If you found such a system, then all you'd have to do is the opposite to make money all the time. Has this ever been considered?
  • #14
  • Oct 21, 2013 7:51pm Oct 21, 2013 7:51pm
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Quoting charvo
will never? are you sure??? can i reverse a statistically profitable system into a loser? then i reverse this loser back into a winner, can't I? you really need to think before speak. {quote}
Yes I am sure and this has been tested and proved since many years ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #15
  • Oct 21, 2013 8:28pm Oct 21, 2013 8:28pm
Quoting Baggi
I've noticed here in the trading system forum, we are all looking for trading systems that work as close to 100% of the time as possible. Perhaps that is a bit of an exaggeration. Maybe people are looking for as close to 60% as possible, or 60% or above. What is consistent between all trading systems I see here are that people are looking for one that works the most often, or often enough. But what if we changed our mindset and decided to find and back test a system that never works? That loses you money 100% of the time? Doesn't that seem like...
That will never work psychology, because a system that loses always is easily equivalent to a system that always wins, even if you deny it consciously.

In order for this to work, your mind would have to

(a) find a system which works close to 100%
(b) just reverse the signals.

You probably are thinking that it would relieve the pain and stress you might feel searching for the "impossible dream" (which isnt impossible, but it seems to be).

For that, I recommend reading "trading in the zone."

It introduces you to a new way of thinking:

Each trader is like a casino house: each has an edge which pays out consistently over time.
What is an edge? An edge is when the probability of winning is greater than losing. In the trader's case, you decide what edge you want based on how you perceive the market.
But just like a casino, you can't know 100% the outcome of every card hand. So the distribution between winners and losers is random.
If you lose and you feel pain, then that crushes your perception and narrows your focus, making it hard for you to perceive the market using all the knowledge you have learned. This causes you to rationalize not taking a trade, taking profit too soon, and other mistakes that dont allow you to objectively test your edge (objectively = no pain!)

So you need a way not to feel pain.
You can do this by building up a belief system which includes 5 fundamental truths (and the reason behind them), and 7 or so reasons why you are a consistent trader.

5 fundamental truths
1. Anything can happen.
2. You don't need to know what is going to happen next in order to make money.
3. There is a random distribution for a given set of variables for an edge between losers and winners.
4. An edge is nothing more than one outcome being more probable than another.
5. Each moment in the market is unique

Verifying these 5 fundamental truths will help you start using them logically and convincingly. Instead of being afraid, youll say something like "ok, anything can happen and i dont need to know what is going to happen next in order to make money, so i will place this trade because i am a consistent trader." I havent listed the 7 reasons for why some1 is a consistent trader, but you get the point!

Of course, you have to believe in these truths, otherwise the emotion will still be generated (Feeeeearrrrr!)

Thank you for reminding me, i forgot to get out my trading in the zone sheet for todays trading
  • #16
  • Oct 21, 2013 9:50pm Oct 21, 2013 9:50pm
Let me give you a hint as to what people are sometimes missing...you can and many do have strategies that lose the good majority of the time. But when they win, they hold their winners and they milk them for all their worth without fear.
  • #17
  • Oct 21, 2013 10:46pm Oct 21, 2013 10:46pm
Funny how people think they've come up with some amazing new idea, that nobody else has thought of, despite the fact that markets have been around for decades, and thousands of the best analysts, math and economic PhDs, IT experts, etc etc have been working on solutions for all of that time.
  • #18
  • Oct 21, 2013 11:00pm Oct 21, 2013 11:00pm
I've seen some good points in this thread and some really terrible points.

I understand the desire to dismiss ideas put forth here because they've been there, done that, bought the T-shirt.

I also understand the desire to think you're smarter than the other guy, so you get a thrill from pointing out how stupid the other guy is.

But let's dismiss with this simple explanations and delve into the more complex. Here are some of the good points.

Quote
Consider a system that buys at market price and immediately closes the position. Obviously, 100% of the time it would lose the spread on each trade. Obviously, if you "reverse" it so it only sells instead, it would still lose the spread on each trade

This is a great example of how taking a losing system and turning it around creates another losing system. Therefore, in an attempt to find a system that loses 100% of the time, we'd have to avoid developing a losing system that loses due to spread alone. So such a system is out.

But, does this point mean that the idea is in itself wrong? Well, no. Not even close. It's an example of what not to do.

​
Quote
can i reverse a statistically profitable system into a loser?

then i reverse this loser back into a winner, can't I?


Exactly right. If one reverses a consistently winning system, it should in theory become a consistently losing system. Reverse it back again, and you're back to a consistent win. Therefore, in practice, it would be possible to reverse engineer a system that starts with losing.

​
Quote
That will never work psychology, because a system that loses always is easily equivalent to a system that always wins, even if you deny it consciously.


And this I think gets to the crux of the issue. Except, the author and I disagree. I think the psychology of it is what makes it doable.

It should, in theory, be easy to find losing systems. Many, many, many losing systems. The trick is to find a losing system that can be reversed into a winning system.

Some of the respondents seem to think that if it's not as simple as it sounds, then its not possible.

But perhaps there is deeper thinking called for here, rather than the shallow thinking and mockery that tends to fill the internet thanks to the anonymity that comes behind a computer screen.

This is what we've learned.

1) Losing systems are easy and simply reversing a losing system doesn't create a winning system.
2) The psychology of losing may be the same as the psychology of winning. Here I disagree.
3) It sounds easy, but clearly it would not be.
  • #19
  • Edited 12:02pm Oct 22, 2013 10:43am | Edited 12:02pm
  •  traade
  • | Joined Apr 2013 | Status: the market knows every move u got | 14 Posts
system 1: always use 1 pip stoploss and check for result after 1 to 2 hours. this system is optimal if a trade is executed 1 to 10 minutes before N.F.P. this should work more than 99% of the time.
system 2: make a trade using 90-99% of account balance using maximum leverage and make sure you don't set t.p/s.l. After approximately 24hrs check if a margin closeout is registered. repeat until net account balance is negative or zero.
system 3: buy your favourite alcoholic beverage. make sure it has at least 30% alcohol. take a couple of shots until you feel tipsy. put on your head sweat band, wear your cool shades and light up a cig. when you are sure that you feel like a tough person, go and start trading using a 1 minute chart. use any system you like and feel free to reverse your trades if they go against you. trade and trade until you feel sober and then check your balance.
system 4: make a E.A. that buys and sells every 5 minutes. no fancy technical stuff. just let it buy and sell every 5 minutes.

(disclaimer: all the above systems are not profitable)

dear Baggi, I don't intend to make fun of you by making this list. I just want you to know that as kids in school we were programmed to believe that they are opposites in nature. the truth is that such logic is simplistic and robotic. e.g. if you believe the opposite of black is white you are wrong because both are colours and space is a third option since no can prove the colour of space. if the opposite of female is male then why is it both have more similar features than differences. if the opposite of positive is negative they why do we have neutral or could it be that neutral is a code word for yet undiscovered or inexplicable polarities etc. if you do the "exact opposite" of the above list you could still be unprofitable because if you think deeply they will always be an alternative "opposite."
  • #20
  • Oct 22, 2013 10:52am Oct 22, 2013 10:52am
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Quoting traade
system 1: always use 1 pip stoploss and check for result after 1 to 2 hours. this system is optimal if a trade is executed 1 to 10 minutes before N.F.P. this should work more than 99% of the time.
With 1 pip SL few minutes before NFP ... you surely get a 99%+ rate ... of losing.
MT4/MT5 EAs/Indicators/Alerts coder
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