Fading a system.... http://www.elitetrader.com/vb/showthread.php?s=&threadid=24618&highlight=reversing+signals
Good advice, but if I see a buy signal I will just do the opposite, and go short,as I know from experience that I constanty generate losers and that I will lose if I believe in own speculation. Its all about being strict to the rules.
I have never understood this predicting randomness. All price movements have a reason, and most olf them because of fundamentals which one cant predict in advance. What one can do though with a mechanical system is outlining and depicting reoccuring patterns as the human mind will always react in the same way. A mechanical system tries to make sense from the psychology of traders, and how they react. The fundamentals are the real cause of price change, and the small noise that accompany it is due to trader's expectations. There are many people out their who thrive on their mechanical system for me too reject its validness.
just remember to lower your profit targets as you would have been tightening your stops. in order to fade your own thoughts, you may have to live with a system that has an inverse risk:reward profile at the outset - when you put the trade on. however, it is the actual risk:reward profile in your account that matters at the end of the day (is $ lost: $ won), not perceived risk at the outset - which infact is ALWAYS an unknown. stops help, but they are no guarantee, especially when trading against the house/bucket shop. my advise is to ignore everyone elese opinion (including this) and do what feels right for you.
Regarding stop losses: The tighter the stop loss, the bigger the chance that you wont make it a winner. The more space you give to the stop loss the bigger the chance that you will make a bigger loss. So what is most important, to make it a winner, or the chance of incurring bigger losses? One would however set a stop loss in accordance to the currency pairs behavior for maximum profit.
Well, good luck with that, and let us know how it turns out. You've been very honest so far. I still think you should post some of your losing trades here for analysis, so that we can see if there is something wrong with the signals themselves or if your signals are ok but you have bad trade management. In any case, I wish you luck. Re: randomness... it's hard to understand, but there sure are a lot of people, even around here, who think that price movements are random. At least we know you don't believe in anything as weird and wonderful as the random walk theory.. oops!! sorry, oddi...
I do know that it's easy to say a lot of things, but things might not turn out as expected when your money is on the table.
Too often traders set their stop limits as the limit of how much money they feel that they can afford to lose. The market dont care about your feelings, and If you want to be profitable you should follow the market and design your strategy to fit in with the market, not your own feelings. The funny thing though, is that I dont practice 90% of the theories I believe in. I know I should do it, but just dont do it. I think its because im too focused on whats happening right now with the price, and thus forget about historical data. I wil get two months holiday soon, and then I will begin designing my system, as I at this point have none. Hopefully I will get more profitable.