Hold and hope strategy

Hold and hope

What would you do if you were a signal provider? You make money only if you are profitable, right? Offering signals is a business like any other and the final purpose of any business is profit. Your personal profit. Forex is a very lucrative business but also a very risky one. Drawdown periods simply can’t be avoided and those who lack balls of steel are unable to go over them. But let’s return to our signal providers. Some of them are aware that huge profits can’t be sustained, they just want to make a quick buck while others are naive and inexperienced. After all, there are only two states in forex: up and down. Anyone can toss a coin and pretend he’s a forex expert. Huge profits can be achieved over a short period of time because forex is not exactly gambling. An experienced trader can have an edge against the market.

And here is the supreme argument: The odds in a coin flip are always 50/50 which means than even after 2000 trials the odds are still 50/50. No matter how long you repeat the experiment, the outcome would still be 50/50. But good systems show nice profits after 2000 trades which means that at some points odds are not always 50/50 when it comes about trading.

Ok, enough of this, what would you do if you were a signal provider willing to make money and knowing that the subscribers won’t wait for months to see some profits in their accounts? It’s easy: open a trade or more, set a huge stop loss and tiny take profit and wait. As the market retraces trades will be closed for profit..until it retraces no more. But if you are lucky this style of trading can be profitable for a few months, enough to cash some bucks from naive subscribers..

Here is my experiment:

Phase 1: Open trades near support/resistance levels and close them when the market turns against me. So far, this is normal trading. But I couldn’t make more than 3% per month trading like this while my target was 100% every month!

Phase 2: Open a trade near support/resistance levels, set a tiny take profit and a very huge stop loss..then hold and pray.

My experiment

My experiment

 

Nice right? Well, take a closer look. It isn’t updated since September 9 and now it’s September 29. Why? Because it crashed!

So before throwing your money out the window please, please, for your own sake ask your signal provider the following:

1. What is the maximum stop loss and average take profit?
2. What is the maximum number of open positions at the same time?

If he changes the rules on the fly, don’t hesitate to unsubscribe.