meanreversion
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what is the modus operandi for your trade?
Event A occurred at time B on more than 80% of the time, therefore the next time B comes around, it is 80% likely that A occurs again.
what is the modus operandi for your trade?
Event A occurred at time B on more than 80% of the time, therefore the next time B comes around, it is 80% likely that A occurs again.
I've actually seen a presentation from a chap who trades this way. He data mines to find non-causal relationships, e.g. EUR/USD rallies first day of September 18 times out of the last 20 years.. then buys digitals the next time it comes round at (e.g.) 53%, believing that "true value" is 18/20 = 90%.
What you have outlined in this post is a weak system, primarily because 18 occurrences over 20 years is simply not enough to indicate any type of natural bias.
I have traded this system for about 7 months now, with a success rate that lines up with the back tested results. In addition, this system back tests over the last 19 months and 10 years with nearly the same staggering results. Can you explain why this trade has been successful for the last 10 years?
I simply cannot chalk this up to coincidence. There is a clear causal relationship between the US session ending bullishly and the AU session opening bearishly. As I said before, time-based trading works. The key to any successful, back tested strategy is the amount of occurrences over time. Both the time and the amount of occurrences bear this out. Here are the numbers since 06/05/09:
Total Trades: 233
Winners: 171
Losers: 62
Winning % = 73.39%
Gross Profit: $23,290.00
Gross Loss: $14,356.00
Net Profit: $8,934.00
Avg Monthly P/L: $446.70
hi
sorry but I am disagreeing with you.
NOT about the US / AUD thing... for example it could be that the easiest way to trade a good US session in australia is to short aussiedollar because of narrowing ir differentials. nobody i dont think is saying that is COULDNT make sense, but you are getting to a plausible conclusion from a coincidental route.
you say you wont put it down to coindidence. Have yu tested for this?
I reckon that if you got 10 different daily prices spread from asset classes over 20 years you can find SOME patterns that are stastically above/below average. that some will be above and below is written in the rules!
sorry but your strategy is not robust, it is retrospective. not to mention that its very hard to trade.
I have traded this system for about 7 months now, with a success rate that lines up with the back tested results. In addition, this system back tests over the last 19 months and 10 years with nearly the same staggering results. Can you explain why this trade has been successful for the last 10 years?
Firstly, you ask "can you explain why this trade has been successful for ten years".
You went looking for a pattern and found one, therefore this question is invalid.
Secondly, you claim to have been successfully trading it for seven months. If you think that is a significant length of time ... well keep on going. You are definitely "fooled by randomness" but I know I can't change your mind. Good luck.
Once again, you say random and I say that few continuing scenarios with recurring themes in the market (and in life in general) are coincidental. We come from two different schools of thought, thus we agree to disagree. However, I wish you the best as you continue trading.
hi
can you explain what causes the patterns you trade to occur?
hi
can you explain what causes the patterns you trade to occur?
This particular trade is successful because of the correlation between a bullish US close and a bearish AU open. In addition, my belief in the strength of this trade is not based solely on 7 months worth success trading the system, it is based on 10 years worth of back tested results. If this system has worked for a 10 year, 19 month, and for the last 7 month period how can it be coincidence?
Consider probabilities in a coin toss and apply that logic here. There is no way that these movements are a coincidence, the occurrences are too high.
This particular trade is successful because of the correlation between a bullish US close and a bearish AU open. In addition, my belief in the strength of this trade is not based solely on 7 months worth success trading the system, it is based on 10 years worth of back tested results. If this system has worked for a 10 year, 19 month, and for the last 7 month period how can it be coincidence?
Consider probabilities in a coin toss and apply that logic here. There is no way that these movements are a coincidence, the occurrences are too high.
Just skimmed over your post but how wide are your stops when trading the dailies and what markets do you trade?
I got anhialated trading the 4HR TF on EUR\USD because my stops were too tight. If you trade long TF's your stop must be protected by a decent support\resistance level or you'll get screwed. Also, ditch the notion that you need a certain RR ratio - 3:1 etc is ********.. If you have a 100 pip stop and market gives you 90 pips profit and you can see it turning then cut it quick... Don't wait for it to either stop you out or hit your 3:1 because the market couldn't give a **** about where your targets and stops are. It simply goes where it goes but gives plenty of clues on the way!
Er, ok, let's consider coin tosses. Let's say there are 100,000 people tossing coins, and one of them throws 100 heads in a row. Your data mining approach would lead you to conclude that THIS person is far more likely to toss a head the next time than anyone else.
Look, there are an INFINITE number of patterns. If you look hard, you can probably find a stock which is perfectly correlated with the temperature in central London. But it doesn't mean ANYTHING, unless there is a reason behind it (maybe this company sells sun screen?).
Please just take a step back and think about what you're doing. Just because there is a pattern over ten, or twenty or even thirty years, doesn't mean it's going to repeat.