SCOTT WELSH TRADING BLOG

Using Losing to Our Advantage?

Using Losing to Our Advantage

June 2, 2021

How does the market know?

How does the market know to lose every trade when we’re starting out with a brand-new strategy?

Last year during my top 3 finish in the Contest, the first three months were losers.

This year, I started a new account and it immediately took two losing trades.

The market is always against me at the start.

Poor me.

Well, the facts would say otherwise. Not everything loses at first.

But what did I expect exactly?

If I start an account that tries to follow the trend and has a winning percentage of 50% or less, what will logically happen?

Of course a robot with a low winning percentage probably won’t win.

And isn’t this true for just about everything?

How would we do playing our very first pro tennis tournament? Would we win?

Or get shelled?

What would our first sales pitch go like? Our first interview? Our first date?

It was almost always go badly.

Everybody falls the first time.

To get upset when my strategy doesn’t make a million dollars right out of the gate is nonsensical.

I should know better.

But do I?

Here’s a possible solution.

Knowing that a strategy might lose right off the bat, why not use that?

Why not wait for a losing streak and start then?

Sounds brilliant!

Looking at the new Master Trend strategy I talked about live at the Festival of Traders last night, the data said that the average losing streak is 3 trades.

Great, I’ll use that.

Starting in 2017 trading 1 lot each time, the GBPJPY Festival Master Trend chart creates $29,134 of hypothetical profit.

What if I wait for the losing streak I know is coming and don’t turn the robot on until AFTER that 3-trade losing streak?

If I do that –if I wait– the same robot produces…

$25,493.

About four thousand dollars less.

My bright idea didn’t turn losing into an advantage at all. By trying to hypothetically avoid the losing, I’ve instead avoided profit.

The best plan would be to just get started and let what happens happen.

After all, tricks are for kids.

But what if I came up with a better trick?

Subscribe to the Newsletter to find out what the trick is.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.