Stop and Reverse Trading Systems

Discussion in 'Trading' started by gifropan, Feb 26, 2007.

  1. My trading experience has shown me that stop and reverse trading system generates quite large losses in non trending markets. I feel it is better to establish a direction for a given period, say a week, and then trade only in that direction. For example if you analysis indicates that the market is bullish during the course of a week, then use what ever system you have to take trades in the long direction only. In this case not only will you trade less, therefore not overtrade, and if you get stopped out once or twice you re-enter in the same direction but hopefully at a better price. This is supported by the observation that in many markets the same price level is visited many times during a given period of time. For example it can happen that during the course of a day the price goes above and below the opening price several times. In these situations an intrady trader using stop and reverse strategies sometimes generates losses , in terms of number o ticks, more than the whole days range.

    Your views would be most welcome.
  2. gif - it would depend on the trader and the methodology being used. If you have found that trading with the overall trend is best for you, that's half the battle! You found what works for you.
  3. Brownsfan-I hear what you are saying but purely as an acdemic question do you think stop and reverse strtegies can have overall a better result despite the losses accumulated during sideways market movements?