We’ve quietly rolled out an exciting new feature for Gen3 AutoTraders: "Contra Trading."
Contra Trading allows you to AutoTrade the complete opposite of a system that you think will do poorly. When the system goes long, you will go short; and vice versa. Note that the system vendor will not know whether you are trading “with” or “against” him.
This feature is currently available on all Gen3 AutoTrade Brokers’ Demo / Simulation accounts (for example: OpenECry Demo accounts, BulldogFX Demo accounts, IFX Demo accounts, Gain Capital Demo accounts). We plan on rolling it out to live non-sim accounts shortly, after some real-world feedback. So if you are currently using a demo account, I encourage you to play with the feature and let us know what you think.
How to use it
To use it, just subscribe to a system as normal. When you set up AutoTrading for that system, at the point you choose the trading system you want to autotrade, a new checkbox will be presented to you asking if you want to “contra trade” the system. In other words, you can enable contra trading on a system by system basis. You can trade with systems you think will perform well, and trade against systems you think will tank… all in the same brokerage account.
I’d be very interested in starting a discussion on this forum about what kind of system profiles one should look for as a contra trading candidate. I have a few opinions of my own, but before I share them, let me encourage C2 users to contribute their own ideas.
As always, new features mean new… er… opportunities for constructive feedback. Please report bugs, unexpected weirdness, etc. to me.
Oh, and by the way, yes - this feature works perfectly fine with the “Trade Status” Control Panel. As you may recall, this is yet another Gen3 innovation which lets you manually adjust and add stops and profit targets (and increase and decrease positions) for systems you are AutoTrading.
- Matthew
Matthew,
You’re introducing gambling feature. Reversing of random signals won’t make a magic. Usually random entry based system will stay unprofitable after reversing its signals. E.g. simple system: if close price less than open price then buy at market at next open. Close the position at next day at market. if you change the buy to short the system still be unprofitable.
Eu
No one is suggesting you should trade the opposite of a system that is essentially random. I’m suggesting, rather, that, if one can figure out the profile of a system that is likely to tank, then taking the opposite side might be interesting.
Here’s an example for you. Let’s say you see a system that has done well recently, and has attracted some attention on the site and some subscribers.
Let’s say you suspect the system vendor is really not a very good trader, or is psychologically weak. Might not that system make a good candidate to “contra” trade? I don’t know for sure, but I think it’s an interesting idea: if you think a vendor will likely fall prey to fear and greed (the twin evils of speculation) then you can try to short his vices.
In any case, the feature is available to those who want to try it. I’m not suggesting it is magical and fool-proof. But I think it can be a useful tool in a C2 Trader’s arsenal.
sigh
This is not one of your shining moments, MK.
I’m curious why you think this is not fascinating. I’m actually jazzed to use it in a live account.
No one is suggesting you should trade the opposite of a system that is essentially random.
System that isn’t essentially random will be:
a) Profitable/flat
or b) the system will have consistent negative stats (sharpe, PF, etc) on long history. It’s obvious that the kind of stats doesn’t exists at C2, because it’s similar profitable system just by simple reversing of signals.
if one can figure out the profile of a system that is likely to tank, then taking the opposite side might be interesting.
I don’t think so. In general it’ll be betting on an even. You can gamble on Feds announcements with the same results.
Let’s say you suspect the system vendor is really not a very good trader, or is psychologically weak. Might not that system make a good candidate to “contra” trade?
Nope. It works in poker where you can push weak player by outbetting + bluff. It won’t work with trading system because the system results depends from market (external events) and not from the system trader psychology. Good example is pink pig/6sigma systems on C2. It was clear that the systems will blow up, but nobody knew major answer - when.
In any case, the feature is available to those who want to try it. I’m not suggesting it is magical and fool-proof. But I think it can be a useful tool in a C2 Trader’s arsenal.
The problem is that it’s very known fallacy (reversing of signals makes a system profitable. It doesn’t work in long term) and you just give an opportunity to gamble with the feature.
Eu
I think it’s an interesting option or tool for the Forex Market systems subscribers. I know there are some Forex Brokerage firms out there who have made a lot of money taking on the other side of the trade against their own clients. All it takes is poor money management on the part of the trader and the house (banks/brokerage firms) always win in the long run. Many of the Forex systems here on C2 have a life span of less than 2 months so you can see the reasoning. I would guess 80 to 95% fail. The only problem is lack of money management works both ways in the short run and capital can be lost as easily as it can be made. So you would really need time and a lot of capital to get the same kinds of returns that the firms that trade against their clients do. So with that said, in the short run it’s going to be just as difficult to make money doing the opposite as it is to follow a systems signals.
in part, because there is a constant stream of newbie traders who think that success must lie by doing the opposite of a losing system. The entire idea is little better than throwing craps, not based on sound trading fundamentals.
Systems often lose due to the fact that trading costs eat them alive or bad money management. Many of the bad traders wield leverage like a toddler wields a gun. Someone who loses via bad money management may give a contratrader a sudden gain, but it is just as likely to give them a huge loss when a bad system trips over a big win, and wipe them out.
Systemizing this kind of reckless behavior sounds like a recipe for disaster.
Hah… this is funny!! The “Costanza Method” of trading comes to life here on C2!!
Maybe it will work; maybe it won’t. I guess it will depend on the trading system.
I doubt that it will work very often, though. Like Ross says, lots of times systems are big losers due to trading costs eating them alive.
Personally, I have played around a little with this idea in my backtesting. Many moons ago, I remember taking the very worst systems my optimization runs turned up (trying to find those systems whose trades were mostly losers as opposed to those that overtraded and lost lots of money due to trading costs) and reversing the signals to see if I came up with anything worth trading. I never found any systems that I would even think about putting money behind doing this. (I knew this approach wasn’t supposed to work when I tried it, but I do prefer to rely on empirical results rather than on conventional wisdom.) However, in my limited experience at least, the conventional wisdom held true, and this approach was a complete dead end.
In addition, these backtests (in-sample and out-of-sample) had a lot more history behind them than most, if not all, of the active systems on C2.
I find it entirely possible that someone may have a “talent” for finding things to buy that will go down and/or finding things to sell that will go up. I also find it reasonable to assume such a person is posting their predictions on this site.
If I accept such person exists then it follows that someone who knows what they are doing can make money taking the opposite side.
Finding a reliable system to short is not as easy as finding one that blew up though!
There are many systems here that are guaranteed to blow up the way they are going, but still many of them have a positive expectation and will make money if used with proper money management.
Also you can’t just stick a minus in front of the standard statistics to figure out how good a shorted system would be. You have to use common sense, the site is not set up for finding bad systems. A big problem is the equity of a “good” bad system goes down and that eventually forces the system to change and/or the person with the “talent” to quit.
I insist it’s possible though.
I think there is kind of an irony to this. As long as I have observed and been a part of this web site. I don't think I have observed anybody here getting rich. It just feels like we are throwing in the towel. So there is no money to be made with these signals, 'lets bet against them'. It sounds like something my Grandson would think of.
I would ask the administrator to fix some of the glaring problems with the web site, instead of adding more glitchs.
"The entire idea is little better than throwing craps"
The real crap shoot could be trying to pick the winners, since up to 90% of all systems fail.
What do you suppose would happen if someone blindly took the next 20 new systems, and traded them together as one.
I can see it now…
System developer fails at attempt of a system on C2 and then changes the name to “Opposite trades system” and then tries to tank it and advertise- This system will make you money- do the opposite of it.
I wouldn’t even be suprised to see some poorly done systems listed on the Featured systems list
let the fun begin
My advise to the public: avoid this whole opposite thing- stick to what works- following a proven system on C2 that has proven itself
It is good that C2 has a lot of different features so that everyone can trade in the way he or she wishes. That some people think that it is not wise to use this feature, is irrelevant. That these people are probably right is also irrelevant. No one is forced to use this feature. What other persons may or may not do with it, is simply not their business and not their responsibility. That some C2 clients want it, is enough reason to implement it. It is not C2’s task to judge the wisdom of a particular trading strategy.
If a subscriber wants to trade the opposite of a system, he or she can do that anyway with manual trading. With or without this new feature. The only difference is that this feature makes it more convenient for autotraders. So the argument that a contrarian strategy won’t work is besides the point, because it does not address why specifically autotraders should not be allowed to apply this strategy.
Also, this feature is not fundamentally different from the old and undisputed feature to adjust trade sizes by setting the scale at x%. Now x is allowed to be negative. Obviously other C2 clients have no say in whether I set x at .50 or .25, and similarly they should not interfere when someone desires to set x at -.50.
Hi Jules. Will you please ask Mathew to fix your 71% ingnore rating. I know it is very incorrect. Hopefully by fixing yours he will fix mine. Thanks Rick Haines
I’m not so sure that I am more influential than anyone else… I asked it already weeks ago when my ignore % suddenly jumped to 24%. Hope this doesn’t sound arrogant
MK-
What a concept, and one that will actually enable subscribers to actually make money.
Imagine if you randomly picked 10 systems and found reverse-trading made most (up to 90%) profitable.
And then you "studied" systems to pick 10 YOU thought would tank and again most were profitable (up to 90%).
WAY more advantageous than trying to find that needle in the haystack.
Gambling? Come on. Putting money into any of these systems is virtual gambling as it is!
Sorry, but the truth sometimes hurts.
G
[LINKSYSTEM_30763562]
HEY ROSS, BY THE END OF THIS YEAR I WILL BE DRIVING MOST TO BE SIGNED UP WITH MY SYSTEMS, ROTFLMAO
and reversing the signals to see if I came up with anything worth trading. I never found any systems that I would even think about putting money behind doing this.
me as well 
However, the kind of research might show you where you can loose money. In general it wasn’t wasting of time from my side, because I tested personally the fallacy of golden goose of opposite/reverse trading lol
Also, this feature is not fundamentally different from the old and undisputed feature to adjust trade sizes by setting the scale at x%. Now x is allowed to be negative. Obviously other C2 clients have no say in whether I set x at .50 or .25, and similarly they should not interfere when someone desires to set x at -.50.
It’s different from my experience. When you stay with positive scale with a system that have positive expectation for its outcome you might reduce your loses by scaling less than 1:1. When you start to use negative scaling e.g. opposite trading you might increase your looses. I gave an example of the kind of system above. If you trade it opposite your looses triple. Go figure why
It is good that C2 has a lot of different features so that everyone can trade in the way he or she wishes.
Sure. However the opposite trading feature is profanation and pure gambling imho. However, who cares? lol
Eu
P.S. I accept freedom of will
Actually, some of us suggested this very feature more than a year ago. The simple logic behind this is statistics, most systems simply lose money. (yes, mine too) Thus if you do the opposite of it, you make money. Just do a test, pick 10 systems randomly and see what happens. I did the test, and checked the first 10 systems starting with the letter “a” that actually traded. The result is this:
3 broke even, 4 went down to zero or close to it, 2 went up 30%, 1 went down 50%.
Had I put even money behind this 10 systems, before commission, I would be up 35%…Commissions would probably take out another 10% at least. So the numbers are on your side, but keep in mind, that you are shorting, thus the maximum on a winner can be only doubling your money, and if you pick a good system (bad for you), that can multiply and you need 2-3 full losers to make it even…
One more thing, you might don’t want more than 1 system from the same vendor to make it trully random…
Also, a vendor might wonder why there are suddenly so many subscribers to his losing system and changes his strategy, but I don’t expect many people actually trying this feature…
HEY ROSS, BY THE END OF THIS YEAR I WILL BE DRIVING MOST TO BE SIGNED UP WITH MY SYSTEMS, ROTFLMAO
You seem to forget, after driving your preliminary system into the ground, you said K C Elite was your Epiphany. However, it seems also to have plummeted…
I suppose there might be value in doing the opposite of your systems…
Way to go, you have been here awhile, and have a ranking of 77/1000. You might not make your promised top 10, but you are closing in on the bottom 10…
