Anyone trade like this? (pic)

I

IronFist

Saw this on a forex forum. It's trend following for people who can't predict direction. You start small and if price goes against you, stop and reverse with a bigger lot size, if it goes against you again, stop and reverse with a bigger lot size, etc.

You're betting that price will eventually trend enough for you to make money before it bounces back and forth x amount of times.

One guy ran this out to 24 progressions (starting from like 0.1 lots and ending up at 63 lots or something) and said he never lost.

Here's a pic illustrating:

2z6xtl5.jpg


It's almost like modified martingaling with the trend (since most martingale systems are counter trend).

Discuss.
 
Trading like this means you accept the fact that you don't have a clue. This is not trading, it's gambling and will lead to financial ruin.

Edit: There is nothing wrong with using Position Sizing, or Money Management but it has to be based on some sort of edge that goes a bit farther than guessing. Money Management is probably the most misunderstood concept of trading and it is probably the most important but you can't begin using MM unless you have some sort of edge. Without some sort of advantage MM, Position Sizing, Martingale, whatever you want to call it, will lead to maximum loss.
 
lol..fees and commissions would eat you up..also when do you exit the profitable trade...lol as you increase size you increase fees etc... pick a direction and stick with it...instead of closing those positions why not add to the long at the lower level..support ..then you make it big when it spikes..so you never close the position..you continue to get a beteer..lower and lower aveerage price!
 
Quote from the1:

Trading like this means you accept the fact that you don't have a clue. This is not trading, it's gambling and will lead to financial ruin.
More...

Seems more like betting on volatility, sort of like an option straddle.

Or maybe the person does have a clue and realizes that they really cannot predict direction.

I dunno. It was like a 25 page thread on another forum.
 
Quote from IronFist:

Saw this on a forex forum. It's trend following for people who can't predict direction. You start small and if price goes against you, stop and reverse with a bigger lot size, if it goes against you again, stop and reverse with a bigger lot size, etc.

You're betting that price will eventually trend enough for you to make money before it bounces back and forth x amount of times.

One guy ran this out to 24 progressions (starting from like 0.1 lots and ending up at 63 lots or something) and said he never lost.

Here's a pic illustrating:

2z6xtl5.jpg


It's almost like modified martingaling with the trend (since most martingale systems are counter trend).



Discuss.
More...

If you do the math in your picture example you are down like 300 pips before you get the right trend in this hypothetical. Basically if the market chops you rack up huge losses hoping for that big trend which is not required by any law to come by any means.
 
Quote from limitupmike:

lol..fees and commissions would eat you up..also when do you exit the profitable trade...
More...

When it hits your TP. I think the guy was using a 10 pip reverse and 40 or 50 pip TP.
 
I would most certainly agree with you that a person cannot predict or time the market and that taking nibbles in key areas is a good way to trade but any strategy that increases sizes exponentially will always suffer a huge loss that will wipe out all the earlier small gains. I tried a system like this back when I was green and the result was always the same. Small steady gains and than BAM -- month gone. You need some sort of an edge before you can use MM -- period! MM then turns that edge into a razor's edge.

Quote from IronFist:

Seems more like betting on volatility, sort of like an option straddle.

Or maybe the person does have a clue and realizes that they really cannot predict direction.

I dunno. It was like a 25 page thread on another forum.
More...
 
Quote from optioncoach:

If you do the math in your picture example you are down like 300 pips before you get the right trend in this hypothetical. Basically if the market chops you rack up huge losses hoping for that big trend which is not required by any law to come by any means.
More...

No you're not.

The sequence in that pic is like this:

-10
-20
-30
-50
-70
-120
+360
---------
+60

edit - were you thinking it was a grid system? It's not. He's stopping and reversing, NOT opening simultaneous positions.
 
Quote from logikos:

This is NOT trading. It's Vegas-style gambling.
More...

I'm not disagreeing. But I guess if your account is big enough to run it out to 24 progressions, combined with good entry rules, there's a good chance you won't lose.

He later modified it to only go 7 progressions deep.
 
You must log in or register to reply here.
Back
Top