Topic: Long, short, or both
It is a coincidence that we have a pair defined as EURUSD and not defined as USDEUR (there are only historical reasons why EURUSD and not USDEUR has been chosen). So what today is called long in the EURUSD pair would be, in the case USDEUR was the historical choice, called short. So, in principle, there should be theoretical symmetry in behavior logic for long and short dynamics of Forex data (I have to write “theoretical” because Forex market is often operated by people and people psychologically behave differently on long and short trades).
FSB seeks to find a winning structure in windings of a pair and to create a strategy which will work utilizing this structure. Logic created for long trades will be mirrored to create short trade logic. The compass of FSB is directed towards Financial North, where North will be the highest Net balance or System Quality Number or Sharp Ratio or some other chosen criterion. This search is done in the gigantic space of all possible strategies (by cooking statistically a stew on different indicators). The result of such a search is a strategy which I will call “double direction strategy”, as it is designed to work in both directions of trade.
Usually we will look at the results of this search process (a double direction strategy) in a glued form – we don’t separate results from long trades of a strategy and short trades of a strategy. But when I will do the separation and study the balance curve for the long trades and the balance curve for the short trades, I will often discover that those curves are very different. One direction (long or short) can make money, while the other will be just a drain. The sum of both will give positive results, but those results could be yet better if only one direction of trade has been chosen and the other has been removed.
A perfect double direction strategy should work equally well in both directions – long and short (equally only in a long run, and assuming that a pair is ruled by same logic in short and long trades). But mostly it is not the case. So I have been testing possibility to force FSB to search only in one direction of trade (by using “Long or Short” indicator). I suspect that this way of generating a strategy should result in better strategies, because such strategy will be not cluttered (as a sum of two underlying behaviors).
Now I need your opinions on this, my fellow FSB travelers. Also opinion of our Capitan, Mr. Popov will be highly appreciated.
Let me end with my acronym AIRON? (Not yet known by everyone!) (Am I Right Or Not?)
P.S. Today there is a possibility to force FSB to produce strategies exclusively in one direction of trade by including indicator “Long or Short”. I think that this should be parameter controlled behavior, a criteria set in “Settings” or “Common” menu.