Do Trading Systems Work? - page 2

Enrique Dangeroux  
Yashar Seyyedin #:

Trading Systems only work if they are applied to the direction that fundamental analysis suggests.

It does not mean that if you know the fundamental direction of market you get 90% accuracy.

I mean if you do not know the  fundamental direction of the market then your system output is 50-50.

Of course you loose the commission fee. But if you know the  fundamental direction then you may achieve 60% win rate or even higher.

Put a 1000 point stoploss with a 1 point take profit. Win rate 99%. You will lose money over time. Win rate is meaningless. Win rate is directly related to the risk reward ratio.

Forum on trading, automated trading systems and testing trading strategies

Food for thought and brainstorming

Simon Gniadkowski, 2013.03.14 23:13

Take a look at this chart,  it shows the relation between Win rate (WR)  and Risk:Reward (R:R), in this case the spread was 0 and uses a simulated coin toss with an even number of Long and Short trades taken at random with no attempt to predict the direction of the market.  You will see for a 50:50 R:R scenario the WR is 50%.

 

 

You said TP and SL are 40 pips,  did you mean 40 pips or 40 points ?  Yo need a figure that is at last 10 times the spread or the spread will play a big part in your results. 


Yashar Seyyedin  
Enrique Dangeroux #:

Put a 1000 point stoploss with a 1 point take profit. Win rate 99%. You will lose money over time. Win rate is meaningless. Win rate is directly related to the risk reward ratio.


I appreciate your comment.

All numbers i gave above are for 1:1 risk-reward ratio. I should have mentioned. 

It has been a long time I am just thinking in 1:1 ratios. and forget to tell that in advance to you guys.

Nico Schirrmacher  

Trading systems can be effective tools for automating the decision-making process in trading and can potentially help traders to make money. However, it is important to keep in mind that no trading system is guaranteed to be successful, and all trading carries the risk of loss.

The effectiveness of a trading system will depend on a number of factors, including the quality of the system, the trader's ability to follow the system consistently, and the market conditions under which the system is used. It is also important for traders to understand that past performance is not necessarily indicative of future results, and that it is possible for a trading system to experience periods of underperformance or even losses.

In order to increase the chances of success with a trading system, it is important for traders to thoroughly research and test the system before using it to trade live, and to carefully manage risk by using appropriate position sizing and risk management techniques. It is also important for traders to continue learning and adapting their approach as market conditions evolve.

N Ahmad hunaini  

Yes absolutely works,

Strategy Needs disciplin, testing, experiences, experiment and knowledge.

voneberbach  
Sure they do work! No hesistations at all!
Francisco Rayol  
Yes. They do. But every trade system must consider the asset and even the broker in which is being used. These aspects can make deep diferences in the overall trade system's performance.
GumarSafin  
YES, trading systems do work, it really depends on how trader tune-up to individual criteria of success, and how disiplined and reilietn h(s)e is. For me, to know whether the systems is good or bad in general on the first approcah is what determine the entry and exit strategy. 
GumarSafin  

Guess, that really depends upon your dominior, risk appetite and character. 

The best thing is to find a trading strategy/system that fits your character and daily routine best.

skylarwalker  
Enrique Dangeroux #:

Put a 1000 point stoploss with a 1 point take profit. Win rate 99%. You will lose money over time. Win rate is meaningless. Win rate is directly related to the risk reward ratio.


It's true. Magnitude of wins vs losses is what's important.

Chinedu Onuoha  

Yes.

Edited

I am not sure what the purpose of this thread is but asking this question is like questioning whether or not trading the financial market is profitable.

I am not sure anyone trades without a trading system/strategy. It is possible that some people flip the coin to take trading decisions but that is gambling.


So whatever the reason for this thread is, YES trading systems work thats only if you have a good system