Remember that story where a guy made a random entry system that was profitable?

And said it was due to "money management?"

I read somewhere that it used a "chandelier trailing stop."

Can someone elaborate on what a chandelier stop is and how it can make you profitable with random entry?

The only way I could make random entry profitable is with martingale, and then I'd only be profitable for a finite period of time. Heh.

 

Here you go:

http://www.leveragefx.com/chandelierstop.html

It's probably self-explanatory how it would work with random entry once you see it.

 

Different site, same result (random entry + ATR trailing stop ("chandelier exit") is profitable): http://www.tradingblox.com/forum/viewtopic.php?t=3637

 

The point is that it now seems UNprofitable. Didn't you read sluggo's results???

 

Read the followups. In combination with random entries, Chandelier with a (3 x ATR) trailing stop was nicely profitable in the distant past, lost money recently. Then londonpopart found that changing the Chandelier to a (10 x ATR) (wow!) stop made money both past and present.

Much of the discussion centered on the fact that (tighter trailing stops + random entries) used to be delightfully profitable but now lose money, and whether this fact is convincing evidence that "the markets have changed", or not.

 

That was my point. USED TO BE. But you said "("chandelier exit") is profitable)"

 

A random entry strategy would work if you have a stock consolidating in the same old range for at least a couple of weeks. Buy in the middle and sell when the price is above what you bought it at. It's so easy a caveman could do it.

 

If there's a trend you'll profit as long as you trade in the direction of the main trend (long/short).