A Day Trading System

A day trading system

 

A Day Trading System

There are hundreds of money making opportunities online to take your pick from. From blogging courses to horse racing systems and Amazon seller programs to spread betting systems. Also many day trading systems.

As we all know, some of these opportunities are total winners… others not so.

Here’s the funny thing though. When it comes to a financial trading systems how can you possibly buy a losing one?

If you were doing exactly as the system rules advised and over a reasonable time frame of use or testing it was losing you money, you could just do the opposite of the rules to make money.

Although this approach probably won’t work with longer term trend trading as they are proven and less random due to the time frame.

It is quite possible though that the idea has got potential with many of these crappy forex systems that are floating around online… or maybe not so crappy after all?

When I spoke to the author of the little acorns horse racing system, he made a very valid and intelligent point. If you tried backing the selections that his system Little Acorns produced, you’d be unable to make a long term profit.

So it gave me the idea that doing the opposite of what a losing system is suggesting could turn the same system into a profitable one.

 

So why won’t this strategy work with long term trend trading?

Well it might, but as mentioned, because of the long term nature of the trades. The whole idea of longer term trend trading is to smooth out volatility and reduce trading the shorter term and far more unpredictable price movements. Also it’s likely to be too tricky to realistically test.

These long term trades can last for 2,4,10 years and more. So when do you decide that the system is not profitable? After 1 year, 3, 10?

It’s just far too complicated and time consuming to consider. Also I think there will be too many variables to make it a viable option. It’s confusing me trying to think about it!

 

A Day Trading System

But… if you were day trading, turning a losing spread betting system into a winning one might just work, and work well with a decent staking plan.

I think you could achieve some great results over various trading time frames, 2 minutes, 5 minutes, 15. Or maybe even a single day trade on binary using higher or lower.

 

A strategy that is worth testing

I really fail to see how some of these day traders really have any edge when trading the markets in such a small time frame like 1 or 2 minutes. More to the point, are the movements that day traders are trying to trade in these minute windows even systematic at all? Are the movements likely to more random?

If the price movements in these minute time frames can be considered random then could you randomly pick winning trades?

The theory is there. So you could test it like this…

Let’s say that you take note of 8 minutes of price movements. At each minute interval you make a note of whether the price was higher or lower than the last price. So you will have something looking like this. H H H L H L H L [H = higher L = Lower]

From there you could then test how often that exact sequence of higher and lower repeats itself exactly and immediately in the next 8 minutes?

So you may generate something that looks like this

HLHLLLHH

LHLHHLLH

HHLHHHHH

And so on…

The System rules may operate something like this.

Record 8 minutes of price movements every minute.

H H H L H L H L

On the ninth minute you place a bet of one point using binary at minimum odds of evens that the market will be higher.

You’ll be placing the bets using the Fibonacci sequence for 8 bets.

If the first bet is lower and you lose you then place 2 points on your next selection that the price will be higher. If that loses your next bet will be 3 points that the price will be higher… and so on. You stop at a winner or after a maximum of 8 losing bets.

Winning system

It’s like random v random

If you didn’t manage to make a profit after a few months of testing you could then try it the opposite way round. So instead of copying the last 8 results you simply do the opposite. L L L H L H L H

Once you hit a winner you record another 8 minutes of price action and repeat.

One trade a day system.

You could test this out by recording the price of the DOW or FTSE as an example for eight days and then place the same or the opposite bets and monitor results.

It’s all about the odds though

As long as the odds are in your favor you could make a profit. You are just trying to make a point every sequence.

 

It’s pretty simple really. 

You could test this type of strategy out on anything you fancied really; football over 2.5 goals, racing favorite’s winning sequence, or even live black jack.

It is some good food for thought if you are considering day trading or even developing your own system.

So just to recap, you do the opposite of what losing systems tell you to do.

Maybe there is some smart trader/programmer that could design something that could test the theory?

Anyway… test, test, test. It’s not going to cost you anything other than a few minutes of your time every day.