100% Guaranteed Trading Strategy

[£10kLoser]

1. Take your average newbie trader.

2. Get him to make up a trading system.

3. Now, sell when the system says buy and buy when the system says sell.

This must make a profit - or newbie traders can make up a profitable system...

What's the flaw in the logic , guys?

If a system losses money, why not do the opposite and then we'll make money?

 

[fifty2aces]

A system is more than just a set of buy and sell signals - what about exits? Also slippage, spreads + commissions will always be a factor.

 

[Hotch]

Most newbie trader strats will be 50/50 actually, and will lose on commission, slippage, spreads etc

Close, buy no cigar

 

[£10kLoser]

A system is more than just a set of buy and sell signals - what about exits? Also slippage, spreads + commissions will always be a factor.

Exits are also buys and sells.

 

[KillPhil08]

Flaws - never tell the newbie this otherwise he'll reverse his signals.

 

[£10kLoser]

Most newbie trader strats will be 50/50 actually, and will lose on commission, slippage, spreads etc

Close, buy no cigar

Ha! 50/50 - you should be so lucky....

 

[Chorlton]

What's the flaw in the logic , guys?

Correctly identifying when to Buy and Sell is only one element to developing a profitable strategy.

Look at the Turtles as the classic example. Some made very good money, some lost all of it....yet they were supposed to be following the same rules.....

 

[techinvest]

What's the flaw in the logic , guys?

The only flaw is that you said "A" newbie trader. What you need is a bunch of your average traders. Add it all up and you're golden. I can't disclose a lot, but those of you familiar with some of the components of the metatrader backend will recognize this. Here is a shot of the open loss on one of our metatrader demo servers. -$34M. All you'd have to do is take the opposite trades. Demo accounts especially as people blow those up at will.

 

[£10kLoser]

Nice one. Yes, average traders will do nicely, thank you.

But still no one has thought about this seriously. Why can't we take a losing system and do the opposite?

I'm not saying we can - I'm just opening the topic up for discussion.

My friend said that doing the opposite was still a system and since 95% of systems fail...

Something is missing in the logic.

Update from the same friend:

"No, my point really is a philosophical one. It doesn’t really matter whether you do the opposite or not. Once you have a system of trading in place - remember “system” is any kind of methodology based on some predetermined rationale - so, once you have a system in place its then down to individual psychology, self-discipline, consistency, etc (character, in other words). These drawbacks will still persist somewhere in your brain and cause sub-optimal results to arise…."

Now we are getting somwhere, but what about an EA?

 

[Hoggums]

It will never work because human psychology treats a winning trade completely differently to a losing one.

Take a winning position you have then flip your chart across the horizontal so that it looks like a losing trade and analyse what you will do with that position. I guarantee it will not be the exact opposite of what you are doing with the winning trade.

 

[Hotch]

Ha! 50/50 - you should be so lucky....

In my experience it is 50/50, losing on overheads etc like i said.

Think about it, a newbie isn't really going to have a strat, hence his results are going to be RANDOM, and as the market can either go up or down (ignoring sideways, as sideways won't hit your stop or target), it's really 50/50 (assuming markets go up and down equally in inratraday not investing).

Maybe you're just really unlucky...

 

[timsk]

But still no one has thought about this seriously. Why can't we take a losing system and do the opposite?

For the simple reason that doing the opposite of a losing system doesn't necessarily make it a winning one. In fact, you could end up with two losing systems even though they mirror one another - or two winning ones for that matter. It's the trader who makes a system a winning one or a losing one - not the system itself. Failure to distinguish between the system and the trader is why this question gets asked time and again. A so called 'losing system' may well make excellent profits in the hands of another trader. In other words, there is no such thing a winning or losing discretionary trading system. There are only winning (profitable) or losing (unprofitable) traders. I suppose there may be some mileage in applying the idea to mechanical systems, but I can't comment as I know nothing about them. Sorry £10kLoser, but I'm afraid that your '100% Guaranteed Trading Strategy' is anything but!

Tim.

 

[OPGI]

The ability in discriminating trends and buy/sell signals from "false alarms" is less accurate for newbies than for experts. Therefor the 50/50 concept (e.g. zero distinctive power!) has some value.
Hoewever, the most important difference between a pro and a newbie is the skill to cut the losses short and being able to reduce risk. Risk/rewards-ratio & stick to the plan.

It's like playing poker.

 

[zupcon]

1
What's the flaw in the logic , guys?

If you're considering purely mechanical systems then in all likelihood, you would be replacing what would be at best a random system, with another equally random system, and the distribution of wins and losses from each would therefore be equal.

By the same argument, an experienced discretionary trader will be able to take exactly the same entry as the new trader, or fade the entry, and still achieve a better performance over a large enough sample size (for exactly the reasons given in the post above).

 

[megamuel]

Although Kinda pointless this thread has got me thinking quite deeply about this! I often thought in my first few months of spread trading that if I just did the opposite of everything I had been doing then I would have made a killing! I even seriously considered doing it at one point! However the various 'systems' (if you can call them that!) that I was trying out were as zupcon said "Random"! So for a system to be reversed to make it consistently profitable it must be consistently losing in the first place. So is it fair to say that if money were no object it would be equally difficult to design a consistently losing system as a consistently profitable one? Well probably not because of spreads or commisions etc... Ok so lets say there are no spreads, just one moving price, and no commisions, is it then equally as difficult to design a consistently losing system as a consistently winning system? Hmmm....

Sam.

 

[tar]

It is not about the direction of the price in the first place , it is about money managenet and discpline

 

[alfiemal]

Hi, there are plenty of successful traders with 50/50 win rates some even less, the key is trade management, strict discipline even in drawdown phase, letting winners run, cutting losers etc...

It all sounds easy until your actually trading cash in the market and have to sit through losses, thats when its psychologically very hard. Its the trader not the strategy that makes the money!

 

[accendotraders]

"Guaranteed" Trading System

The only flaw is that you said "A" newbie trader. What you need is a bunch of your average traders. Add it all up and you're golden. I can't disclose a lot, but those of you familiar with some of the components of the metatrader backend will recognize this. Here is a shot of the open loss on one of our metatrader demo servers. -$34M. All you'd have to do is take the opposite trades. Demo accounts especially as people blow those up at will.

Well as an experienced trader, you know that there is no guaranteed system, even newbies can get lucky from time to time. That's what sucks them in to lose all of their money. I appreciate your sarcasm.

 

[Goober]

He-he Trading contrary to my system is my most successful trading strategy!

1. Take your average newbie trader.

2. Get him to make up a trading system.

3. Now, sell when the system says buy and buy when the system says sell.

This must make a profit - or newbie traders can make up a profitable system...

What's the flaw in the logic , guys?

If a system losses money, why not do the opposite and then we'll make money?