Fading an unsuccessful strategy?

[NihabaAshi]

It's impossible to be profitable in fading yourself if in prior you were a consistent losing trader unless you're using a mechanical or automated trading system.

A few losing trading days is a poor reason to try such and the thought of trying such also implies your current losing method is designed poorly. Thus, your time & energy is better serve by resolving the problems you have in your trade strategy.

However, if you're insisting on fading, just designed a method that fades the price action instead of trying to fade yourself via position reversals. I've met a few profitable traders that fade breakouts.

Mark

 

[clambill]

Quote from NihabaAshi:

It's impossible to be profitable in fading yourself if in prior you were a consistent losing trader unless you're using a mechanical or automated trading system.

A few losing trading days is a poor reason to try such and the thought of trying such also implies your current losing method is designed poorly. Thus, your time & energy is better serve by resolving the problems you have in your trade strategy.

However, if you're insisting on fading, just designed a method that fades the price action instead of trying to fade yourself via position reversals. I've met a few profitable traders that fade breakouts.

Mark

I'll give you an example of something I've seen with my method countless times. Let's say news is coming out at 8:30AM. And the price has gone up some before 8AM (or 7:45AM, whatever) and then the price starts dipping right before the news making your indicators point to a short signal. You go short then the news comes out and takes out your stop in no time. It's like over and over again, my method seems to be the perfect sucker's trap. It's almost as if the banks know technical indicators are going to point one way or another at any given time and they're ready to ram the price in the opposite direction to fool traders. Just like they'd want to push the price a bit farther to hit stops to cause a false breakout. The thing is, I think there might be a reason for my method to be failing.

I do want to try other things like adjusting the risk/reward ratio but was curious as to what kind of feedback I'd get.

Oh, I never implied 37 books is a lot. I've read book reviews on Amazon where some people were saying they read hundreds or thousands of books.

 

[NihabaAshi]

Quote from clambill:

I'll give you an example of something I've seen with my method countless times. Let's say news is coming out at 8:30AM. And the price has gone up some before 8AM (or 7:45AM, whatever) and then the price starts dipping right before the news making your indicators point to a short signal. You go short then the news comes out and takes out your stop in no time. It's like over and over again, my method seems to be the perfect sucker's trap. It's almost as if the banks know technical indicators are going to point one way or another at any given time and they're ready to ram the price in the opposite direction to fool traders. Just like they'd want to push the price a bit farther to hit stops to cause a false breakout. The thing is, I think there might be a reason for my method to be failing.

I do want to try other things like adjusting the risk/reward ratio but was curious as to what kind of feedback I'd get...

Assuming when you say "countless times" that you have statistical backtesting of your trading to support changing your entry method. Here's another solution...change your trade management "after" entry (it works for most).

Simply, your entry signal stays the same but you manage the trade differently in the wake of a news report than what you have been doing considering you're saying it occurs "countless times".

Another solution...ignore (don't take the trade) all signals that occur to close to a scheduled economic news event. Therefore, stay on the sidelines during this particular price action situation considering you seem to have a few pre-cursors to knowing when such will occur.

Mark

 

[Bolimomo]

Quote from clambill:

I'll give you an example of something I've seen with my method countless times. Let's say news is coming out at 8:30AM. And the price has gone up some before 8AM (or 7:45AM, whatever) and then the price starts dipping right before the news making your indicators point to a short signal. You go short then the news comes out and takes out your stop in no time. It's like over and over again, my method seems to be the perfect sucker's trap. It's almost as if the banks know technical indicators are going to point one way or another at any given time and they're ready to ram the price in the opposite direction to fool traders. Just like they'd want to push the price a bit farther to hit stops to cause a false breakout. The thing is, I think there might be a reason for my method to be failing.

From your description: if you solely trade based on news, that's a sure way to the poorhouse I think. Did I miss something?

Is your "strategy" an automated strategy or discretionary? What you may want to do is to step back and look at each trade for clues. Don't just look at the time-frames you were trading (5-min or whatever). Look at one time-frame higher up too. See if you are going against the higher time-frame. Higher time-frame always overpowers lower time-frame. Trading should not be single time-frame oriented.

Oh, I never implied 37 books is a lot. I've read book reviews on Amazon where some people were saying they read hundreds or thousands of books.

It doesn't matter if one reads over a thousand books - if he/she doesn't comprehend the idea(s). On the other hand you can read only a few good books, comprehend the ideas, apply them and do well.

 

[TATA]

clambill


Registered: Apr 2008
Posts: 256


02-12-10 12:38 AM

Has anyone here thought about doing the exact opposite of a trading strategy that just seems to totally BOMB!? I mean, in the last 30 trades, I've had like 27 losses. It's stupendous. Now, I just realized I could possibly just DO THE OPPOSITE and own the world in 4 months. What do you think?




Head straight forward and never look back.

 

[Random.Capital]

Quote from clambill:

In other words, every time you get in (either long or short), you might miss a signal in the opposite direction that could be a winner.

You get a signal to trade the other direction before you get stopped out? And this is all relative to one timeframe?

Oy.

 

[clambill]

Quote from Random.Capital:

You get a signal to trade the other direction before you get stopped out? And this is all relative to one timeframe?

Oy.

I mean get a signal a while after.

Regarding news, I could be waiting for hours and hours for a signal and if one occurs right ahead of news, I can't do anything about it.

To give you an idea of the entry point, let's say two moving averages cross each other then I get in.

Anyway, when I traded for a week in a trading contest and had a profit, I noticed all my profits were in the direction of the overall trend. So, I decided to only take signals with the trend of the longer term time frame. But, if you look at the EUR/JPY on the daily chart, you'll see the price really went up for a couple of days. With shorter time frames that means I was stopped out countless times.

Anyone can say yeah, but wouldn't that mean that you could have had some profits back on the way down. Well, one of the problems is when the price just tanks rapidly and by the time you get a signal to get in, the move is done and the price starts heading back up again and you're still stopped out.

The only downside maybe is having stops exactly twice as large as my profits. Some guy told me once he could improve his backtesting results by using large stops.

 

[JPope]

How about not trading going into big news announcements?

 

[ronblack]

Quote from clambill:

Has anyone here thought about doing the exact opposite of a trading strategy that just seems to totally BOMB!? I mean, in the last 30 trades, I've had like 27 losses. It's stupendous. Now, I just realized I could possibly just DO THE OPPOSITE and own the world in 4 months. What do you think?

LOL! It won't work because the other side will also reverse its trades to bring about the same result. I know, I know, you cannot understand what I'm talking about. If you could, you would have never asked the question in the first place.

 

[IronFist]

The opposite of a losing strategy is still a losing strategy.

I didn't believe it until I had backtested this ENDLESSLY because intuitively, you keep thinking that it should work.

But it doesn't.

Otherwise, I'd just go short every time there's a MACD bullish cross and be ready to retire after one year