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Successful Stop & Reverse - Semi Martingale Trend Following Strategy
- Thread starter jones247
- Start date
however, i am intrigued by the fact the OP says he applied it in the FX market. Care to xplain what the opening range is in a 24 hour market ?
On the surface, your strategy seems like a 'disaster in the making'.
Why?
1. Correct me if I'm wrong..but, your losers are significantly larger than your winners.
2. You are relying on past historical 'backtested' results to try and predict future market behavior. This is totally flawed. The past never repeats into the future. I can guarantee that your future winning percentage will be much different than your past winning percentage due to the LAW OF LARGE NUMBERS.
What will happen is that you may get 'lucky' with a string of winners that will delude you into believing that you have a winning system, until the blowup occurs. Be careful, it's only 'fools gold'.
I suggest you read "Evidence-Based Technical Analysis" by Aronson, before you trade your system with real cash.
Why?
1. Correct me if I'm wrong..but, your losers are significantly larger than your winners.
2. You are relying on past historical 'backtested' results to try and predict future market behavior. This is totally flawed. The past never repeats into the future. I can guarantee that your future winning percentage will be much different than your past winning percentage due to the LAW OF LARGE NUMBERS.
What will happen is that you may get 'lucky' with a string of winners that will delude you into believing that you have a winning system, until the blowup occurs. Be careful, it's only 'fools gold'.
I suggest you read "Evidence-Based Technical Analysis" by Aronson, before you trade your system with real cash.
Sorry but IMHO this is doomed to failure. Years ago I backtested strategies a lot like that. They always blew up.
Even though the mechanisims of trading are not quite like those of gambling, they are close enough. In much the same way a "random" "system" will not work on Roulette, a random system will fail on the markets. Eventually.
Without a definable edge in entry and/or exits, you are a "blind man without a cane, pal...".
Sure give it a try, just don't put all your net worth in to it.
Regards.
Even though the mechanisims of trading are not quite like those of gambling, they are close enough. In much the same way a "random" "system" will not work on Roulette, a random system will fail on the markets. Eventually.
Without a definable edge in entry and/or exits, you are a "blind man without a cane, pal...".
Sure give it a try, just don't put all your net worth in to it.
Regards.
Quote from alex.samant:
however, i am intrigued by the fact the OP says he applied it in the FX market. Care to xplain what the opening range is in a 24 hour market ?
you can choose any of the 3 major opening times: New York, Tokyo, or London.
However, there are a myriad of other indicators to use in an attempt to try and predict a trend. The flexibility of this system is that it is not doomed if your indicator or market time was wrong.
Quote from monti1a:
On the surface, your strategy seems like a 'disaster in the making'.
Why?
1. Correct me if I'm wrong..but, your losers are significantly larger than your winners.
2. You are relying on past historical 'backtested' results to try and predict future market behavior. This is totally flawed. The past never repeats into the future. I can guarantee that your future winning percentage will be much different than your past winning percentage due to the LAW OF LARGE NUMBERS.
What will happen is that you may get 'lucky' with a string of winners that will delude you into believing that you have a winning system, until the blowup occurs. Be careful, it's only 'fools gold'.
I suggest you read "Evidence-Based Technical Analysis" by Aronson, before you trade your system with real cash.
That's wrong... the cumulative effect of 7 consecutive loses would result in a loss of $2600. Each independent loss is a fraction of the winning amount.
My assumptions are based upon the laws of averages and probability. Regardless of the system, past performance is no guarantee of future outcome... this applies to ALL SYSTEMS!
Once you get 7 loses in a row, you would stop for the day and weight for more fundamentally and/or technically suitable set-ups.
Thanks for the reading reference. I certainly research it. I would recommend the following books of success that has help me to form my view on this system: Millionaire Traders (K. Lien & B. Schlossberg), Market Wizards (J. Schwager) and Fooled by Randomness (N. Taleb)
Quote from Wayne Gibbous:
Sorry but IMHO this is doomed to failure. Years ago I backtested strategies a lot like that. They always blew up.
Even though the mechanisims of trading are not quite like those of gambling, they are close enough. In much the same way a "random" "system" will not work on Roulette, a random system will fail on the markets. Eventually.
Without a definable edge in entry and/or exits, you are a "blind man without a cane, pal...".
Sure give it a try, just don't put all your net worth in to it.
Regards.
This has MM, which controls against a "blow up". This is not a true martingle. Theoretically, if you have an infinite amount of consecutive losses with ANY SYSTEM, it's doomed to fail. The edge is the trend catching concept... If one desires, this can be combined with many other "entry timing" techniques. As I stated on my original post, you can use almost any number of TA or Fundamental indicators with this system. As a matter of fact, perhaps Don's Open Order system would be perfect marriage with this technique, as their are not mutually exclusive.