Random is what random does
I think that the very first thing before reversing an EA, is that you convince yourself that there is more than a random relationship between the trade signals and the price movement.
An MA based EA is particularly weak in that respect, because it only can tell that there just have been a significant price movement. That is, the price is already significantly moved in the signal direction. What happens next is still unknown -- basically random; or rather, during some calendar periods, the signal direction movement continues, and during other calendar periods, the price more usually turns, causing a later, reversed signal.
Thus, the first signal is good, or it's bad and the next is good, but then of course the price might reverse again, making the second bad and third good, etc. In any case, when a signal happens you can flip a coin as to whether it's a good or bad signal. You may in fact forget about the signal and jump in at any time with your coin, and have a corresponding success.
Seems like once or twice a month someone resurrects the notion that reversing orders on a losing system will magically turn it into a winner. Personally, this was one of the first 'bright ideas' I tried only to discover like everyone before me that it doesn't work. Someone posted an excellent link in the not too distant past, where someone documents step by step the results of changing trade direction, spread and SL/TP in a simple MACD system to illustrate exactly why such a scheme is doomed to failure - unfortunately, I can't locate the link Suffice to say it's fails because of spread and the placing of stops.
Why spread is so much important? It is always against you whether you are following MA or going against it. Everytime you have to overcome the spread first to come into profit, isn't it?
As far as SL is concerned I mentiond not to use any SL at all. Thats why the drawdowns will be huge sometimes due to strong trends. But in the long run as MA strategy is bound to be a loser, the reverse must have to be a winner.
Anyone ever tried flipping a coin
Okay....I gave a second thought about this hypothesis and made a simple spreadsheet also. Yes I was partially wrong......broker spread makes a difference and the odds are never in our favour. BUT if I can find a GURANTEED loser system or EA then my system can make profit out it.
Take a simple calculation for example. Say your system takes a 1:1 risk/reward ratio trade of 30 pips SL and TP. But it should NOT be random trades. We know MA crossings doesn't work so lets guess my MA crossing EA is giving on avareage 70% losing trades. Take 4 pips spread into calculation for EACH trade. So in 100 trades this loser EA will gain 30x26 = 780 pips and loss 70x34 = 2380 pips making a net loss of 1600 pips. With just reversing the trade here is what you get........gain 70x26 = 1840 pips minus loss 30x34 = 1020 pips. So a net gain of 820 pips on the board.
Now what you need is a simple MA crossover EA with SL/TP choices and run it live on a demo and see how it works. It is better if you also do have a choice to reverse the trades by the same EA on another chart.
Is that possible to get such an EA???
Finally, Tony......I don't know what you meant by coin flipping but here we are not talking about randomness. We are looking for a sure shot losing EA.
Loss Maker EA, Please post here.
I'm in search of EA's that make or only make losses or that blow up the account. I am thinking of testing using a reverse trade EA and reverse those loss making EA to see if they can turn up profitable.
I'm a manual trader, But the tons of crap ea's people complain about, if their trades could be reversed maybe we could be seeing something great?
I think it will be fun.
Please post all Losing EA's here thanks,
unfortunately doesnt work like that.
if you want stuff to play with get some of steve hopwoods ea's on FF as they are worth reversing and playing with.
Wanted, non profitable EA that breaks even
Not sure why my post has been moved into here, it has nothing to do with Moving averages, so I've edited it out.
Loser 2 Winner
For those who have made it or near making it in trading what changed it for you to make you profitable?
Looking for loosing expert advisors please!
I am looking for expert advisors which blow up an account or lose consistently. Hopefully proven losers both on backtests and with forward demo or live tests.
Hope to see those losers!