Doing the opposite

[thriftybob]

Well, it worked for me. I was losing on F 100% of the trades, so i reasoned that if I had sold each time I was deciding to buy, and bought back each time I normally would have taken a stop loss or bailed in panic/disgust, I'd MAKE money on each trade instead of losing. I managed to get a very high percentage of wins on F with it.

Haven't tried it lately. Maybe should be doing it now.

 

[number22]

Quote from HolyGrail:

No, it doesn't work. The problem typically stems from your management of the trade after entry. It doesn't matter what the entry actually is, opposite or not, the problem lies elsewhere.

Ditto; Pick your entry point; honor your stop; and trend is your friend.

 

[Brucelee]

Asking this question based on losing more than you are making lends me to believe that the only process you need to reverse is how you handle your trades, so get rid of your losers and hang on to your winners. Not the other way around

 

[lar]

Quote from carbtrader:

I've been thinking of my current blowup and failure as a trader (but not complete failure since I intend to learn from my mistakes and recitfy them), but was thinking that with my extremely low win rate that perhaps if I did the opposite of what I think I should do then I would be better off?

Maybe common sense thinking when applied to the markets doesn't work? Has anyone entertained the idea or tried to implement taking the opposite of the trade you think you should take?

Even if it did work, methinks it would be a short and direct route to the nuthouse when mixed with position pressure and random rewards.

Peace and gtty,
Lar

 

[jimmygold]

Funny you should mention this topic. I know the last 6 months of Trading E minis I have found counter-intuitive tradng to be very very profitable.
Can I serve anyone a "short" plate of Failed Hammers ?? HEHEHE .... Or how about going long on a shooting star pattern that malfunctions and keeps going up and up and up.....

These are two great plays that you can spot and capitalize on if you are swift and nimble.

It just takes a little bit of thinking outside the box. And getting into the head of the herd mentality!!!

 

[polpolik]

Like Holygrail said, it's most likely your money management that did you in, not your entries.

Generally speaking, every trade, you can either buy or sell which gives it a 50% chance that you'd be correct. Most traders lose out big because they just couldn't bear taking a loss. That's all there is to it.

Quote from carbtrader:

I've been thinking of my current blowup and failure as a trader (but not complete failure since I intend to learn from my mistakes and recitfy them), but was thinking that with my extremely low win rate that perhaps if I did the opposite of what I think I should do then I would be better off?

Maybe common sense thinking when applied to the markets doesn't work? Has anyone entertained the idea or tried to implement taking the opposite of the trade you think you should take?

 

[kwtrade]

Hi,

I'm new too, and I have almost no business replying to this, since I've thought the same at time, but the method I'm using is on paper documenting many statistics for each buy as well as any thing that really made me feel it would be a good deal. Also pay attention to when conference calls happen and do not buy from a scalper right after a call. Wait a week or two for the price to stabilize. Thoughts?

Kris

 

[kwtrade]

Quote from Brucelee:

Asking this question based on losing more than you are making lends me to believe that the only process you need to reverse is how you handle your trades, so get rid of your losers and hang on to your winners. Not the other way around

Bruce, when do you decide to get rid of the losers? I know that may be not an easy answer, but perhaps you could name two or three indicators that would tell you it's not just a blip.

Thanks
K

 

[jsmooth]

Quote from carbtrader:

but was thinking that with my extremely low win rate that perhaps if I did the opposite of what I think I should do then I would be better off?

Your problem wont be solved by 'doing the opposite'....the problem you have is that <b>your not letting your winners run</b>, and your not cutting your losers as soon as you know the trade is wrong.

All you have to do is alter your trading approach so your risk:reward ratio on winning trades is 3:1 (or more)....then you only have to be correct 40% of the time and you'll still make money.

I also had this problem at one time....Try doing this (to learn how to hold onto winners - it worked for me):

If i had a winning trade (the trade was working)...and i started to feel the impulse to liquidate (get out of the position too soon). I would force myself to wait 2-4 candle bars. So if i'm trading off a 60min chart, the trade was working, and i start to get an impulse to liquidate, i would force myself to wait 2-4 more bars (120-240 more minutes)....Usually, if the trade was a winner, within that time period the trade would keep working and trade higher. Note: I still have my stop and limit in place.

To learn how to take only trades with a high risk:reward ratio I also started to trade calls & puts. And i wouldnt take the trade unless the risk:reward was around 3:1....so if i bought an option for $100. My price target would be AT LEAST $300 (option value at expiration). Using options forced me to only pick high r:r trades because I would not liquidate the position until a day before expiration...So i was either right (if the options ITM)/wrong (expires worthless)/or basically a scratch trade (if it was somewhere in between). But i did notice that I never had too many scratch trades - my option was either way past my price target, or expired worthless...This also was a great way to test my trading strategy (if i had a lot of scratch trades, obviously my trading plan had no edge).

Also note that, the lower the time frame your trading on, the more difficult it is to find high risk:reward trades....because you're going to be trading a lot of random market noise. If thats your problem...you probably dont have any trading edge (all your doing is trading noise)....to solve that, you might want to try trading a different time frame. If you usually trade off a 5min chart (with no success), try trading off a 10-15 minute chart.

I had the same problem, doing the things above helped me solve those problems.

 

[myminitrading]

Quote from jsmooth:

Your problem wont be solved by 'doing the opposite'....the problem you have is that <b>your not letting your winners run</b>, and your not cutting your losers as soon as you know the trade is wrong.

All you have to do is alter your trading approach so your risk:reward ratio on winning trades is 3:1 (or more)....then you only have to be correct 40% of the time and you'll still make money.

I also had this problem at one time....Try doing this (to learn how to hold onto winners - it worked for me):

If i had a winning trade (the trade was working)...and i started to feel the impulse to liquidate (get out of the position too soon). I would force myself to wait 2-4 candle bars. So if i'm trading off a 60min chart, the trade was working, and i start to get an impulse to liquidate, i would force myself to wait 2-4 more bars (120-240 more minutes)....Usually, if the trade was a winner, within that time period the trade would keep working and trade higher. Note: I still have my stop and limit in place.

To learn how to take only trades with a high risk:reward ratio I also started to trade calls & puts. And i wouldnt take the trade unless the risk:reward was around 3:1....so if i bought an option for $100. My price target would be AT LEAST $300 (option value at expiration). Using options forced me to only pick high r:r trades because I would not liquidate the position until a day before expiration...So i was either right (if the options ITM)/wrong (expires worthless)/or basically a scratch trade (if it was somewhere in between). But i did notice that I never had too many scratch trades - my option was either way past my price target, or expired worthless...This also was a great way to test my trading strategy (if i had a lot of scratch trades, obviously my trading plan had no edge).

Also note that, the lower the time frame your trading on, the more difficult it is to find high risk:reward trades....because you're going to be trading a lot of random market noise. If thats your problem...you probably dont have any trading edge (all your doing is trading noise)....to solve that, you might want to try trading a different time frame. If you usually trade off a 5min chart (with no success), try trading off a 10-15 minute chart.

I had the same problem, doing the things above helped me solve those problems.

Correct