Trading INVERSLY
- Thread starter estrader
- Start date
i agree. i actually did try reversing my buttons a while ago. but as i watched my trade, i couldn't forget the buttons were switched, so i still sucked.
i think it would be interesting to do a scientific study.
take a bunch of very new traders. don't tell any of them that some will have their trades be opposite. also have a group with normal buys/sells. then see if the group with the opposite buttons did any better.
i would bet the ones with opposite buy/sells would do better because i believe average human emotions might be a negative trading edge.
This is nonsense.
This would assume that trading is about "being right or wrong" about your decision to put on a trade and it's direction.
This is a common fallacy that all beginners fall for. Trading has got little to do with directional bias. Directional bias, in the short-term, can give you a slight advantage as to knowing which direction it's gonna go. But essentially you can't predict it. And there's no system etc out there that can.
So the problem is that all this you're talking about simply focuses on the entry. The entry actually has comparatively little significance.
What is significant is trade management. That is an appropriate stop-loss and a good exit.
You could theoretically flip a coin and trade "heads" long and "tails" short, and win over the long term if you're trading with good trade management.
To make it simple: If you're flipping coins, over the long run you'll have a 50/50 distribution, but if you cut your loser-trades short and let the winners run, you'll still end up net profitable.
This sounds easy by principle, but it sure isn't. The hardest bit, in my opinion, is to let the profits run. It's a damn dog. Where to take profits and how much? An age-old question.
Marty Schwartz discussed the same as his main problem in "The Market Wizards". Read the book again! It's great.
You're always battling fear versus greed, and that's what kills you. The initial direction of the trade matters little.
All the best to you, brother. And good luck with your trading.
~Scientist
Scientist,
good post, but i would like to add that there are definitely times when a larger move than normal may occur. as you said, even at this point, the direction may be close to random, but, imo, an entry is still important because it can give you big winners when you are right.
even if you can't predict which direction it's going to go, you CAN still research the market for times when bigger moves than usual might occur. i don't think you'll disagree with me.
The exit is where the profit or loss is taken.
Again, nonsense.
You're just not getting the point.
YES. An entry IS important because it can give you big winners when you are right. But it STILL doesn't matter which direction you take - Because you CANNOT know if you were right BEFORE the fact.
The thing you're talking about is called "fat-tail distribution", and it doesn't matter whether you're long or short, or if you're flipping the coin. If you cut your losses short and manage to let your profits run, you'll win.
If you don't - It doesn't matter if you're "right" or "wrong" about the direction. You'll still lose. Get that into your head, Gekko, you're just not getting it. You will not have a chance to succeed as a trader until you do. Really.
Entry = Statistically Almost irrelevant. Flip a coin can make you win or lose, it doesn't matter.
Stop-Loss & Exit = Decides everything.
Entry timing or your choice of direction is just a gimmick to make you feel good and hopefully slightly boost your overall returns.
It's got nothing to do with trading success.
There are traders out there (in options) who are only "right" 15% of the time, "wrong" 85% of the time, and still make good money.
Get it man - Right or wrong - Doesn't matter.
Trading isn't about being right or wrong. It's about admitting and getting out straight away when you're wrong and sitting through patiently when you're right.
AMEN.
Bye now, don't ask me anymore.
~Scientist
dude, it seems YOU aren't getting the point.Quote from Scientist:
Again, nonsense.
You're just not getting the point.
YES. An entry IS important because it can give you big winners when you are right. But it STILL doesn't matter which direction you take - Because you CANNOT know if you were right BEFORE the fact.
The thing you're talking about is called "fat-tail distribution", and it doesn't matter whether you're long or short, or if you're flipping the coin. If you cut your losses short and manage to let your profits run, you'll win.
If you don't - It doesn't matter if you're "right" or "wrong" about the direction. You'll still lose. Get that into your head, Gekko, you're just not getting it. You will not have a chance to succeed as a trader until you do. Really.
Entry = Statistically Almost irrelevant. Flip a coin can make you win or lose, it doesn't matter.
Stop-Loss & Exit = Decides everything.
Entry timing or your choice of direction is just a gimmick to make you feel good and hopefully slightly boost your overall returns.
It's got nothing to do with trading success.
There are traders out there (in options) who are only "right" 15% of the time, "wrong" 85% of the time, and still make good money.
Get it man - Right or wrong - Doesn't matter.
Trading isn't about being right or wrong. It's about admitting and getting out straight away when you're wrong and sitting through patiently when you're right.
AMEN.
Bye now, don't ask me anymore.
~Scientist
i agree with a lot of what you say, but there are a few things you either aren't aware of, or didn't read my post right.
when i talked about looking for entries which may provide a larger than average sized move, EVEN THEN i wasn't saying you could know the direction or NEED TO. that is one of the things people do when they look for edges -- find points where big moves may occur; you don't even need to know the correct direction.
as for the fat tails, an example of fat tails would be.... enter long/short on coin flip at random times, but use a trailing stop on winners. eventually you'll make money because of fat tails. what i was talking about before is that good traders try to FIND THE FAT TAIL TRADES while newbies are taking all the other weak trades, too.
p. s. don't talk to me like:
not to be offensive, but everything in your post i already know. no sh!t you can make money winning 15% of the time. stop talking to me like i don't know anything. i know more than most people on this site and quite possibly, you. i am just open about my trading problems.
one other thing, you should lose your ego. you think you're gonna reply speaking down to me and get away with ending your post with, "Bye now, don't ask me anymore." you're messing with the wrong dude.