Profitable System??

Discussion in 'Strategy Development' started by Boib, Nov 15, 2008.

  1. Boib

    Boib

    Are you losing money every day? Does your system end up showing a loss at the end of the week? Here is a simple solution.

    When your system gives a buy signal, sell instead of buying. When you get a sell signal, buy instead of selling.

    It stands to reason that if your system is constantly unprofitable then reversing the signals will make it profitable.

    Don’t have a system? Then you probably shouldn’t be trading.

    The same should apply if you bought a system that loses money on a regular basis.
     
  2. apak

    apak

    that won't work because problem is money management

    99% can't solve that problem :cool:

    they let the loses run and take profits quickly

    dead before they even start :(
     
  3. Boib

    Boib

    Exactly. Most don't have a system or the disipline to follow a system.
     
  4. apak is right. Money management is the key to trading successfully.
     
  5. TraDaToR

    TraDaToR

    WRONG.

    -Both systems will have profitable and unprofitable periods. At the time you switch, the initial can become profitable.

    - You don't take commissions and slipage( if any ) into account, both opposite systems can be net losers in the end.
     
  6. asap

    asap

    not only both systems can net losers but also <b>most probably</b> they'll be net losers, as slippage and comms drain any eventual edge to the point where only the most robust and well developed and executed systems can survive it through time.
     
  7. this classifies as one of the worst threads in EliteTrader history.

    People lose money because they panic. There are fast or illiquid markets. Trading is a negative sum game, including data feeds, commission/slippage and other costs. People make mistakes. They take profits too early, average down, or hold&hope. You cannot do the reverse of this, because doing the opposite will bring completetly different emotions and circumstances.

    Welcome to the 95%...
     
  8. In testing, your theory does not fly, unless your profit targets and stop exits are axiomatic to the entry point of your signal 100% of the time. And such a reckoning would disclose that system uses a risk-to-return ratio of exactly 1:1, foolish in my estimation.

    Most traders do not use targets or stops, believe it or not. They prefer to manage their trades emotionally. Idiots. But that is reality.
     
  9. Boib

    Boib

    I think there ought to be a prize for that.:D
     
  10. Boib

    Boib

    That’s the point I was trying to get across. Most traders don’t have a system.

    By system I mean a plan that includes not only a set-up to enter but also an exit strategy that takes losses and lets profits run. It includes a money management strategy to keep you in the game.

    You don’t have to know what the market will do. You have to know how you are going to react to what the market does.

    I still maintain that if your strategy is traded with discipline and it consistently shows a loss, by reversing the system you should show a profit. It might mean a 10-point stop and a 5-point target, but if you are now being stopped more times than you hit your target maybe the probabilities are in your favor if you reverse.
     
    #10     Nov 17, 2008