Modeling novice traders can be done with a fairly simple algorithm. Make subtle changes to the algorithm 100 times and presto...there is your team of losing traders. Use a significant standard deviation channel around the equity curves and use the top of the channel to close out the inevitable minority of lucky "traders". Ride the rest. Works great...been doing it for years.
Chuck Lebeau used a similar logic in teaching his new futures traders in the 80's. He had them give him - in his own personal account - the worst trades they could think of (ie, If they were sure corn futures were going to die, he got long corn, etc). And by properly handling the exits, he showed them exactly what you're positing: he made money, on average. So your point is well taken. But I don't follow you in terms of how this would work. If what novice traders believe will be a good idea, by and large, leads to losses, the inverse will have to be true if the buttons are mis-labeled. The entries and exits are both inverted if the buy and sell buttons are. An account that loses 20k in a week would have to be up 20k in the same period if the buy and sell orders were inverted.
A lot of the losses from trading come from commission, fees, and slippage. And those wil be there regardless if you invert it or not.
Indeed. Good point. And they don't have legal problems and they don't soften the blow on the way out. In fact, the whole industry is in part already using this idea to some extent in one manner or another.
Maybe I'm not getting it, but it seems the algorithm would have to be pretty complex. Care to elaborate?
You're the OP and this is your thread. So you get to do what I suggest and make the money. Set up a circular room with screens facing in and great trader seating facing out. On each trading setup alternate the markets traded. Recruit only proven detractors and guys who criticize others. Use TZ, T28, ivanovich, bighog, RN and T^^^ as models. You will only need about 25 to set world records. The mechanics of the room are very important. The trading desks move clockwise and the seating center disk moves counterclock wise. The indexing of the floors is set up so that periodically one or the other moves but never by waiting the same amount of time. Trading desks always go in the market arbitrarily when the desk is moved. These 25 traders are moved every so often too and they can be moved more than one position in a move. The movements are as they say "random" or at best "chaotic". Use chaotic. Traders can ONLY do EXITS of the trade they found already underway. Then they sit until they are moved to another station to do their criticizing and exiting. Make them wait and watch after they fucked up. You can always be setting the scene (remotely) and be mind fucking these guys as you wish. The bigger the assholeness they exhibit, the more you fuck with their minds as they arrive at each station. Their job is to only outsmart the trade they find underway with their critically honed detractor minds. As the week goes by the trading hours change relative to regular trading hours. To keep these people upset with their peers, change the seating daily so different people sit next to each other. always make the following day an hour longer too. By Friday you will really be churning out the profits. Flipping a switch to do the same or opposite could be optional; probably using trending and rangebound as the criteria would be a refinement you could do after a while. Do profit sharing artificially. Keep decreasing the share as each week goes by. Naming the organization is tricky. Smartass, Inc would appeal to the employees, probably. Newbies aren't any fun. The criticizers and detractors is where the highest bullshit level is located. Exits is the place where they really screw up too. LOL...... This could replace Cramer, I bet......
Or you could spend your time and effort just sizing up in your own trades and making more. Just a thought.
No way it would work. The market is tougher than random. Good entries and exits exist for a small fraction of the time. When you understand that you will understand why jack's thought experiments do not equal real world profits. The opposite of a bad traders is probably still a bad trader.
dumb idea b i bet if you eliminated spread, commission, ecn fees, and other fees then most trades would just break even. also, you would have to hide any level 1 or 2 and time and sales from them. if the bid and ask are 20.01x5000 and 20.05x2000 and the person thinks he's buying 1000 shares and he sees the bid turn into 10.01x4000 instead of the ask turning into 20.05x1000 the jig would be up. and imagine the look on a trader's face if he marketed in 2000 shares on a thin stock with only 100 shares at each level. you'd create a big spike on the chart... in the opposite way! and i can't even begin to think about how illegal it would be