QuoteDislikedI think bad management of exits (sl, tp, whatever exit method) can make a system bad as well.
Of course. I consider that part of money management tho, as it alters risk during the trade. Semantics.
QuoteDislikedIf we can find a system like this, where the exit causes you to lose more than 2*spread per trade over a long period; that would make a winning system when reversed.
I can think of situations where that would not be the case. Remember price does not move in a straight line. But there might be systems that could be made to win that way, I'm not exactly the magic god of trading systems or anything.
Still, test reversibility with a mildly losing EA. It won't be profitable, but you can go thru the trade history and see why things aren't always reversable. I'm not necessarily talking about profits, I'm talking about the market itself. You'll need M1 data to do it tho.
QuoteDislikedThis would mean a reversal would have a trailing take profit; which after being set to breakeven, would lock in a bigger loss as the trade moves against you! Sounds crappy right? Not so fast; if the trade is 20 pips against you and normally you would exit, but this strategy has your trailing tp at -5, then most of the time it will hit your tp and save you 15 pips loss! This is because you know from losing with the same strategy that your trailing stop got hit too often, causing you to miss out on pips.
Uhm. If you move to breakeven then a -5 wouldn't be possible. The thing about a trailing stop is that you only do it when the trade is profitable, which means in this case you only do it when the trade is at a loss. Frankly I think that locks in losses and would make even the best systems a loser, but who knows. But anyway, a winning trade with a trailing stop basically relies on the trailing stop to make money. If you really wanted a big loser, you'd ditch the trail all together. A system that never takes profit will always lose, lol. It'll lose BIG. The inverse of that, of course, is a system that constantly takes profit.
QuoteDislikedIf your old system in most cases ended up exiting with -10 or so pips; you know most times you will exit (based on the same criteria; crossover or what have you), with +6 pips.
You have a system that says go long with an SL of 10 and a TP of 20. And price goes up 10 pips, then down 20. In that case you'd lose 10 pips, right? Now if you reverse all of that and go short with a TP of 10 and an SL of 20, you gain 10-spread, right? But you double your SL, which means losing trades are now bigger than they used to be.
If you had a system that was a massive loser, it would be because it had found an edge somewhere and was trading against it. In a system like that, there's no reason to waste money with a complete reversal. Just reverse the basic signal an apply the same MM (tp 20, sl 10, whatever). An edge is an edge.
QuoteDislikedNo strategy can automatically take out the element of human emotion, it is something that each trader needs to find for themselves.
Can you fix your quotes? I didn't actually say any of that. And yes, I agree with you. With a blackbox system there's still an emotional question of when to trust the computer. After 10 losers, the temptation is to pull the plug.