How is this for a strategy since 95% of tradres loose

Its said that most traders trade worse than random, but will the edge obtained by fading them exceed transactions costs?

Eg Trading one ES contract, a newbie might lose $230, but you will only make $200 fading the trade ($5 comms + $25 spread).

On the next trade he makes his 230 back. You fade so you end up losing $260.

Net result he broke even after 2 trades but you lost money.

The only viable way of having this work would be to book the trade yourself. This way you can keep the commision and spread and also book any net losses too.

In the UK you can legally setup a Spread betting company, charge 2x the normal spread and book all trades. In return the punter gets tax free profits (if any) and the UK government takes a cut of the total net losses too via betting duty.
 
Quote from mikesmithv:

I was only trying make the distinction between newbies that loose because their actions are random vs. those that loose because their actions are correct except they are on the wrong side of too many otherwise winning trades. Following random newbies you will loose by reversing what they do and the others you will win. I'm not saying it wouldn't work, just that it seems unlikely.

I can see how this might work in a professional trading environment where a newbie has it half-right. Watching a newbie watching the market might give you insight into what that 95% is thinking. The newbies I know are far too random for anything like this to work.
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Learn to spell loose correctly using "lose" in the sentences.
 
Quote from Businessman:


Net result he broke even after 2 trades but you lost money.

The only viable way of having this work would be to book the trade yourself.
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Although you had a valid point, there is a way to make money out of newbies:

1. Use leverage. Thus you trade 2-5 times the amount what the newbie does. That takes care of the slippage loss. Also the slippage works both ways, thus half of the time you will get a better price...

2. Because some of the newbies will succeed even if just for a while, you have to take the opposite of a bunch, let's say 10 at least to make it....

Here is the original plan, posted back in January:

http://elitetrader.com/vb/showthread.php?s=&postid=1340742&highlight=evil+plan#post1340742
 
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