Can anyone beat these Losses ?

[ukdaytrader]

All this bragging about how much money everyone is making - can anyone come close to beating these losses for this month ?

 

[N Rothschild]

lost more than that in a few seconds before..

 

[Mr Flibble]

Have to admire your honesty. I once lost 13k within 2 days trading a penny stock the good news was that I still made 2k from it but it was gut wrenching at the time.

 

[Masquerade]

Makes me feel a bit better about my day. I can't beat those losses and I don't intend to try to.

 

[TraderNumber7]

All this bragging about how much money everyone is making - can anyone come close to beating these losses for this month ?

Ok, I feel like making a contribution - hopefully you will learn from this post something of value.

Here it is: Build lots of trading signals; locate those that fail a very high percentage of the time; INVERT the signals that fail a high percentage of the time; go to the bank with a smile on your face.

That's it. No, really, that's it. Ok, it won't be the so-called Hollywood Grail, but it will improve your take-home pay.

Most traders get all bummed out because their trade signals fail at a high rate (like 70% to 90% failure rate). Well, duh, simply invert the signal if it continues to fail at such a high rate over a wide sampling of data and you instantly move from a failing system to a fairly high-output system, overnight. Done.

That will be $9.95 please - no PayPal accepted - cash only. LOL!

Have fun with it and remember, NEVER throw away your absolute WORST trading signals. Just invert them!

Trading can be fun when you learn how to use every tool in the shed.

 

[NQTraderJay]

Yes, just look at my profile pic.... True, failed signals are very useful. I have incorporated them into my trading plan.

 

[SH-101]

Most traders get all bummed out because their trade signals fail at a high rate (like 70% to 90% failure rate). Well, duh, simply invert the signal if it continues to fail at such a high rate over a wide sampling of data and you instantly move from a failing system to a fairly high-output system, overnight. Done.

Good idea in principle but not quite as workable as it may seem for "most traders", who are trading at a retail level as it doesn't take into account the impact of the spread.

If your bad trade is, say "long at 26, exit at 7" then you've lost -19 points. Assuming you paid a 3-point spread on the entry, this means that if you invert the trade, it becomes short at 23. Pay the spread on the exit and it becomes "short at 23, exit at 10", so your gain is +13 points - not quite the opposite of minus 19.

Similarly a short trade that's say, "short 63 exit 84" becomes "long 66 exit 81" in the same way, again assuming a 3-point spread. -21 becomes +15.

I'm a swing trader but have been testing a simple mechanical signal for intraday trading in recent weeks. Without any "filters" the system has lost -406 points over the course of 113 trades on a market with a 3-point spread. This means an average loss of -3.59 pips per trade.

If I inverted the system, and had to subtract 6 pips from each trade as in the examples above, I'd still be on to a loser to the tune of around -2.41 pips per trade...

 

[SH-101]

Although I guess if you can find a signal producing a much greater average loss then you might be on to something :cheesy:

 

[ukdaytrader]

Thanks for the advice. If you look at the ratio of the number of profitable trades to losses (not absolute value) you will see that this is quite high, so typically the system is working. The reason for the large loss on the S&P 500 was that I accidentally entered a 3 @ $250 per point instead of $50. I then s**t myself when I realised and immediately exited, I was not going to wait for the loss to turn to profit (at $750 a point) before exit as I could not hold that size of position the risk was too much. That position was supposed to have been held for a week had I put in the correct contract value, which would have returned a few 000.

The Veeco was a black swan even which was the first time I have been hit this hard with an earnings trade. This can happen sometimes.

 

[Masquerade]

The Veeco was a black swan even which was the first time I have been hit this hard with an earnings trade. This can happen sometimes.

You had a bet on over earnings and you call it a black swan? Or am I misunderstanding things.

 

[ukdaytrader]

Definition as follow's "The Black Swan Theory is used by Nassim Nicholas Taleb to explain the existence and occurrence of high-impact, hard-to-predict, and rare events that are beyond the realm of normal expectations."

It was hard to predict the upside, it had a large impact and it was not within my normal expectations therefore I can only conclude it was a Black Swan.

 

[Masquerade]

I think that's a bit irresponsible of you to put it down to a black swan. You knew about earnings, you took a position prior to earnings. They either come out better/worse or forecast. You can have it go in your favour, or against you. This time it went against you, but it's no black swan.

 

[ukdaytrader]

yes agreed - that was a particular bad trade. I did not do my analysis properly.

 

[TraderNumber7]

If your bad trade is, say "long at 26, exit at 7" then you've lost -19 points. Assuming you paid a 3-point spread on the entry, this means that if you invert the trade, it becomes short at 23. Pay the spread on the exit and it becomes "short at 23, exit at 10", so your gain is +13 points - not quite the opposite of minus 19.

If you could take home +13 instead of -19, would you care about abandoning the 6?

Similarly a short trade that's say, "short 63 exit 84" becomes "long 66 exit 81" in the same way, again assuming a 3-point spread. -21 becomes +15.

If you could take home +15 instead of losing -21, would you care about leaving 6 behind?

I'm a swing trader...

As Swing Traders, we don't care about spreads. We work in a realm of big movements and whether the spread is 0 or 16, we just don't care, because if we are smart Swing Traders, then we have already accounted for the average trade cost and built that into our Revenue Model - which we "accept" as good enough for Production Trading. So, 0 spread or 20 spread, we've already agreed in our own minds that it "works" for us.

Spreads don't bother me. Having my intermediary close my successful trades without my direct and explicit instructions to do so - or - waking up in the morning and finding out that several new positions have been opened without my tacit agreement and direct execution - now - THAT bothers me.

Spreads are not the problem. Bucket Shops and Rigged Server Side Trade Management DLL's and Add-on Modules that you never see as the Customer/Trader, now that's the problem. All I need is for my positions to move. I don't care what direction they move in, just MOVE. If they are moving, I'm winning, regardless of the spread. Heck, in my case, spreads could be 40 pips and I'm still winning. For that matter, 75 pips, and I'm still going to win a very high percentage of the time, even if it takes me all month to do it.

Focus not on the spread. Instead, focus on ways to position your capital in front of the "next" wave of price action.

I am reminded of that movie called: Stand And Deliver. Remember that one? Remember when the Calculus instructor, Mr. Jaime A. Escalante told his students to "...Just Fill the hole..." And, ....A negative times a negative equals a positive.....say it.....A negative times a negative equals a positive.

There is so much truth to this in trading the Forex. Nature abhors a vacuum.

[youtube]9SFJKLbYmtw[/youtube]

...but have been testing a simple mechanical signal for intraday trading in recent weeks. Without any "filters" the system has lost -406 points over the course of 113 trades...

Its not the magnitude of the aggregate loses that matters alone. It is the magnitude, frequency and cyclic pattern of the losses that matter in synergy. You have to look at more than just pips over time. You have to also include a study of pips over time per cycle and isolate magnitudes that cover profit requirements, so that you don't end up with an aggregate -2.41 in the end.

If I inverted the system, and had to subtract 6 pips from each trade as in the examples above, I'd still be on to a loser to the tune of around -2.41 pips per trade...

Not if you signals that failed very well with enough magnitude, the right frequency and in cyclical patterns that lend themselves to "routine" probabilities.

"...Just Fill the hole..."

....A negative times a negative equals a positive.....say it again.....A negative times a negative equals a positive.

 

[trader_dante]

As Swing Traders, we don't care about spreads.

I repped the original post because it probably caters to short term traders but I have to say I agree with you 100% and like your post.

When I was in prop no one would touch spreadbetting with a bargepole because they always argued that the spreads were unbeatable. Our most eminent scalpers eyes would be wide with horror as he contemplated a spread of 1 tick compared to 0.5 on the FTSE. LOOOOL

I cut my teeth on wide spreads so it makes no difference to me. 3 in the Bund p*sses me off because I just see no need for this at all when others are so tight but ultimately you just deal with it.

I use to pay 16 in GBP/JPY. That's since been slashed to 8 which is, of course, better but it makes no noticeable difference to my bottom line.

Unless you are scrambling to grab a tick every time Trichet coughs, I'd say: if the spread matters, you shouldn't be trading.

That won't do me any good in the popularity ratings but its still my opinion.

 

[montmorencyt2w]

If we believe that spread betting companies really do make their profits out of their spread, then perhaps we should give thanks for a wide spread, because they will be happy with that, and they won't come after us with the nefarious alleged tricks, stories of which this forum is replete with.

And if Tom's claim that "if the spread matters, you shouldn't be trading" is correct, then it shouldn't matter to the trader.


i.e the spread affects the bottom line of the SB company, but not the bottom line of the half-way competent trader, unless he is trying to scalp, in which case he should arguably not be using spread betting, other than Prospreads or possible FXCM.

 

[Hoggums]

The exotics interest rate derivs dept I worked in lost £8m in one week in the crash of 2008.

 

[teewoods]

Definition as follow's "The Black Swan Theory is used by Nassim Nicholas Taleb to explain the existence and occurrence of high-impact, hard-to-predict, and rare events that are beyond the realm of normal expectations."

It was hard to predict the upside, it had a large impact and it was not within my normal expectations therefore I can only conclude it was a Black Swan.

Then you had no business looking at that trade. Not that anyone can really predict the markets expect trade on probability.

 

[montmorencyt2w]

The exotics interest rate derivs dept I worked in lost £8m in one week in the crash of 2008.

Did heads roll?

 

[SH-101]

If you could take home +13 instead of -19, would you care about abandoning the 6?.......

etc

....A negative times a negative equals a positive.....say it again.....A negative times a negative equals a positive.

I do agree entirely with all your points made in this post - my original response was simply to point out that "inverting" a failing system to become profitable is not simply a matter of "duh, done" as you originally suggested. If you were making +15 instead of -21 I'm sure you'd be happy, but the main point really was that inverting a system doesn't provide an exact "mirror" of it.

I wonder if it's any easier to find a system that loses big on a regular basis than it is to find one that wins big on a regular basis?