Reverse Psychology/Trading
- Thread starter romik
- Start date
Somebody wasn't paying attention! Too wide stops are perfect for the scheme, too narrow are bad, because as I ALREADY MENTIONED it is harder to fade successfully a scalper, thus we teach them SWINGTRADING. And because of that, they are not going to overtrade...
I didn't mention moneymanagement, but thanks for the idea, we will teach them that (badly, of course) too...
i probably have to tell her it's not for real, otherwise the idea of losing so much "real money" might do some damage to our marriage.
She will need to study the market though, as random order placement will lead to almost insignificant win vs loss. I think if she follows indicators like RSI, MA, etc that will give her a good start. I will probably allocate 5% of my trading capital to this. I don't think I will tell her anything about money management, she will make her own mistakes there, like most do in the beginning.
Any more ideas will be welcome.
P.S. One of the more common mistakes that junior traders make is entering into trades when the market is about to reverse, done it myself so many times when papertraded.
You have a pile of shit. Flip the pile over. You still have a pile of shit.
More-so, you wasted time and energy.
More-so, you wasted time and energy.
Well... shit happens.
Quote from NihabaAshi:
I know two guys in Seattle doing this very successfully.
The basic of their setup is this...
One guy (trader A) is a consistent losing trader with real money (lost about 62k trading futures in a few years) via some particular method he got from a book about position trading.
His buddy (trader B) a breakeven trader at the time...convinced him to stop trading with real money and to switch to simulator trading and to continue using the same losing method.
Trader B than enters and exits trades that are the complete opposite of Trader A positions almost at the exact same time.
Trader B is trading with real money (almost 3x the size) and Trader A is trading that same losing method on a simulator.
They use the same broker (execution platform) and trade side by side in Trader A home office.
Accordingly to them they are very profitable with this type of reverse trading style.
I'll be visiting the Seattle area this summer (camping trip) and will watch them do this in person towards the end of my vacation because I'm curious to see this type of reverse trading relationship.
Maybe this can be automated ???
However, trying to do such by oneself via fading your own trade decisions...I don't think is possible.
Mark
(a.k.a. NihabaAshi) Japanese Candlestick term
Wouldnt trader A eventually screw himself by starting to look harder for losers, thus turning them in to winners, this seems like a game where you would eventually fail because of the psychology of it, wouldnt you eventually screw yourself trying to do this?
OK, jokes aside for a sec, i do not understand what you meant by flipping a bad trade and still having a bad trade. by no means i am saying that this thing will work in real life, but you and i both know that trading strategies based on, well let's just call it luck/guessing/gambling, can not sustain a winning cycle and eventually run out of $. If we were sitting by a roulette table, then i would not argue with u, but in trading there is either up or down, only 2 variables. am i missing something?
The problem with your theory is if you take 10 newbie traders, on any given day they have a 50% chance to win or lose. If 5 are losers and 5 are winners for the day, and you fade all 10 your PnL will be neutral and will actually end up negative after commissions. So you just fade the 5 losers right ? The problem with that is everydaythe losers and winners wil still change.
I hear you. Let's talk real life, how many people will make it in the stock market? Not many have disputed opinions that 5% will, 95% won't. Now you suggest 50/50? Of course, if you talk about trades placed in 1 day, i agree, chances are that reversing will put you in the red. But I am looking (and Pekelo i believe) at the final result, which for 95% 80% 75% whatever, the majority of us anyway, will be a dead end scenario. And that is what's important, not intraday.
P.S. Stronger side will always reverse the weaker one to create dis balance. The big players will go against the flow quite often, sometimes it works, sometimes it doesn't. I am sure it works OK in the long run. They know how to squeeze the smaller players out of their positions, at which level the pressure points will start working. I guess the majority lose in this game, due to the belief factor. We humans can't live without it. We like believing in being right and believing that markets are not manipulated. Unfortunately, the stock market is like jungle, the strongest survive the weakest. THIS IS NOT RELATED TO INVESTING IN THE STOCK MARKET.