cowmadagan
Sergeant
- Messages
- 393
I was just explaining this strategy to my friend, and I found that it can be summarized much more quickly.
Before I get to the explanation, I want to say one thing about Pipperoni's roulette and Martingale trick. The problem is dependent and independent probabilities. Roulette is completely based on independent probabilities (like how you can't bet that there won't be seven blacks in a row; you can only bet that the next one will be black...thus the future each time is totally independent of the past.) The market is cumulative, and so it does have a certain amount of dependency. In my humble opinion, despite not testing the system yet, I think the chart above or any unsuccessful trading that's based on this system is due to lack of monitoring. The only shape that would nail this strategy in theory would be a widening triangle. That is an extremely rare situation in my experience. Furthermore, if you monitor the price action more, then the likelihood of being constantly twarted before manually intervening at some profitable price point is really low. You can be certain of this, as the distances between the triggered buy stops and sell stops will become greater, and this fact alone makes it far less likely. Lastly, if this strategy makes a habit of this in a certain pair, I find it really unlikely that it will do that in another pair to (so just bail at some point.)
The explanation of the system works is:
All you need to know is what a buy stop and a sell stop is. A buy stop is where you 'buy' at a more expensive price than now (at some price in the future.)
A sell stop is where you 'sell' at a cheaper price than now.
Now everyone knows 'sell high, buy low,' and that's why this strategy is tough for people to figure out for themselves.
Here's a chart with the orders.
Look at the far left, middle of the graph, and you'll see buy orders above the current price, and sell orders below the current price.
This strategy will catch every huge movement that happens, even if your broker is a thief.
Its weakness is the same as with Fibonacci numbers, as you have to choose the reference point yourself. This means not all entry points are equal.
If you're going to give this a try (do it on a demo first) I recommend doing it for range trading, which means that you ONLY enter your trade when it is hitting a peak or trough anyways.
Before I get to the explanation, I want to say one thing about Pipperoni's roulette and Martingale trick. The problem is dependent and independent probabilities. Roulette is completely based on independent probabilities (like how you can't bet that there won't be seven blacks in a row; you can only bet that the next one will be black...thus the future each time is totally independent of the past.) The market is cumulative, and so it does have a certain amount of dependency. In my humble opinion, despite not testing the system yet, I think the chart above or any unsuccessful trading that's based on this system is due to lack of monitoring. The only shape that would nail this strategy in theory would be a widening triangle. That is an extremely rare situation in my experience. Furthermore, if you monitor the price action more, then the likelihood of being constantly twarted before manually intervening at some profitable price point is really low. You can be certain of this, as the distances between the triggered buy stops and sell stops will become greater, and this fact alone makes it far less likely. Lastly, if this strategy makes a habit of this in a certain pair, I find it really unlikely that it will do that in another pair to (so just bail at some point.)
The explanation of the system works is:
All you need to know is what a buy stop and a sell stop is. A buy stop is where you 'buy' at a more expensive price than now (at some price in the future.)
A sell stop is where you 'sell' at a cheaper price than now.
Now everyone knows 'sell high, buy low,' and that's why this strategy is tough for people to figure out for themselves.
Here's a chart with the orders.
Look at the far left, middle of the graph, and you'll see buy orders above the current price, and sell orders below the current price.
This strategy will catch every huge movement that happens, even if your broker is a thief.
Its weakness is the same as with Fibonacci numbers, as you have to choose the reference point yourself. This means not all entry points are equal.
If you're going to give this a try (do it on a demo first) I recommend doing it for range trading, which means that you ONLY enter your trade when it is hitting a peak or trough anyways.
