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Posts: 5

Topic: turn around loosing strategy, still no profit?

Hi,

how is this possible: I make a loosing ea with sl=tp and do backtests in FSB. When a strategy with tp=sl (with always the same lotsize) is loosing, that means, that the strategy reaches sl more often than tp. So if you would replace tp with sl and vice versa it should become a winning strategy. But it doesn't work.

I did as follows: the parameters that started a long-trade, start now a short trade and vice versa. 

Where's the fault?

Re: turn around loosing strategy, still no profit?

Hi Christine,

Are you referring to Reverse trading?  i.e reverse your trading signal = instead of buying/long, you short/sell

Here is my personal view about it as mentioned in this link https://forexsb.com/forum/post/32865/#p32865

3 (edited by hannahis 2019-11-02 17:31:50)

Re: turn around loosing strategy, still no profit?

Hi Christine,

Are you referring to Reverse trading?  i.e reverse your trading signal = instead of buying/long, you short/sell


For those who still want to try reverse trading, you can use Fxblue copier to reverse trade from one trading account to another other trading



Here's my observation and review about Reverse Trading.
Before we try Reverse Trading, I think it is good to start with the question "What constitute a winning trade?"

In my opinion, here is my observation in my EA development.

My winning formula is one that is able to identity a good opening (I usually aim for break out) and a good closing (near the end of the trend, ready for a reversal of trend).

What makes my EA lose?

1.  Good opening (right direction) but too early closing (too "sensitive" parameters/short parameters, that react too fast to price changes)
2.  Good opening but late closing (too strict closing conditions or wrong/long parameters that are not "sensitive" to react to price changes)
3.  Bad opening (wrong direction or open too near the end of trend) and Good closing (need large SL to wait for trend to turn around, posting too much risk, hence overall lose badly in the long run)
4.  Bad opening and bad closing (this one most likely suitable for Reverse trading).

So before you want to Reverse your EA, you need to understand the characteristics of your EA, which of the above mentioned is the problem found in your EA.  Because not all reversal would work.

From the above 4 conditions

1. Good Open (right direction), too early Close (after reversal, R) you get = Bad Open (wrong direction), too early close = Lose
2. Good Open, late Close (after R) = Bad Open (wrong direction), late Close (may win some if you have huge SL to wait for trade to turn around)
3. Bad Open (wrong direction), Good Close (after R) = Good open, Bad close.
4. Bad Open and Bad Close (after R) = Good Open and Good Close

Now from the examples above, we see that only option 4 is suitable for Reverse Trading.  Hence, we can't totally rule out Reverse Trading but just need to know under what kind of circumstances it would work.

Here is my personal conclusion:

1.  I need to understand why my EA fail in the 1st place in order to know whether Reverse Trading is suitable or not.

2.  If I can understand why my EA fail, I would rather spend time to perfect it and make it better than just reverse it.

3.  Even if I happened to reverse one of my losing EA and turn it out to be a winning one, I still haven't figure out how to develop a good winning formula/EA.  I still haven't understand the fundamental principles of what constitute a good winning EA and how to achieve it.

4.  Lastly, I rather spend my time to figure out how to make my EA work then to try to reverse my thinking on how to come out with a lousy EA and reverse it.  It is because of my endless trials and errors and analyzing my EA that I develop better and better EA as the time goes by.

Before we conclude whether Reverse work or not, we must know under what circumstances, it would likely work and under what circumstances it is bound to fail.

Would I spend my time and effort to develop a Revere EA?  Definitely not.  I rather spend the same amount of time and effort developing a good one instead of a lousy one (and then reverse it).  But I won't stop anyone from trying.  I fail doesn't mean others would.

Re: turn around loosing strategy, still no profit?

christine wrote:

Hi,

how is this possible: I make a loosing ea with sl=tp and do backtests in FSB. When a strategy with tp=sl (with always the same lotsize) is loosing, that means, that the strategy reaches sl more often than tp. So if you would replace tp with sl and vice versa it should become a winning strategy. But it doesn't work.

I did as follows: the parameters that started a long-trade, start now a short trade and vice versa. 

Where's the fault?

Your strategy must first overcome trading costs to turn a profit. If it originally couldn't do it, it won't do so in the future. If you can skip trading costs, then yes, losing trades become winning trades.
A system with no real edge cannot be turned into profitable strategy.
Read more here if you're interested: https://mechanicalforex.com/2011/03/des … e-one.html

Re: turn around loosing strategy, still no profit?

Hi footon, I think this must be the answer.

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