Thread: If it's so easy to loose money, why don't you reverse your trades ?

Originally Posted by deyu16

I've tried this techniques once ,it doesn't work

One of the main reasons it doesnt work is because our brains will not allow us to take a trade if we believe that we shall NOT make money in it! Unless we have some sort of belief that we can make money on a trade, we will not take it. That is also the main reason why we need systems to trade- if we have a good one, at least it will enable us to take a trade even if our beliefs are not in sync but because we know that the system parameters are good enough to signal a reliable trade.
ckn

Originally Posted by ckn

One of the main reasons it doesnt work is because our brains will not allow us to take a trade if we believe that we shall NOT make money in it! Unless we have some sort of belief that we can make money on a trade, we will not take it. That is also the main reason why we need systems to trade- if we have a good one, at least it will enable us to take a trade even if our beliefs are not in sync but because we know that the system parameters are good enough to signal a reliable trade.
ckn

Well put. Just a thought would it work if for example we took hedging (Opposite) trades in two accounts, but looked at the average trading range and took a fraction of that as target in each account with the stop set to a smaller fraction of the ATR giving a R/R ratio of greater than 0.5 - would or could such a system be profitable if also used with appropriate money management rules?

i agree. but sometimes i am perfect kk.maybe this is input output hehe

Reversing can be confusing if you're not sure what the trend is. Rule of thumb. Only reverse into the dominant trend, not against it. Sideways markets are worse since you can get whipsawed especially if you are in the middle of a range.

The smaller the timeframe, the quicker and more frequent the reversals.

Originally Posted by Suraj

would it work if for example we took hedging (Opposite) trades in two accounts, but looked at the average trading range and took a fraction of that as target in each account with the stop set to a smaller fraction of the ATR giving a R/R ratio of greater than 0.5 - would or could such a system be profitable if also used with appropriate money management rules?

You still would need to get over the mental bias towards one of the accounts. We cannot avoid that except when we have surrendered to a system. Only at the level of professional trading can we maintain the necessary equanimity. That is one. Second is, with a R/R of 0.5, you are 100% bound to go bust over the long term unless your system has a very high Hit ratio (i.e. Winners over Losers). Any R/R less than 2:1 goes out of the window very soon.
ckn