On The Contrary – Part 1

contrarian

Nice to see you here, at the first of the “What If…” challenges.

As you know, Dr. Tumbili is now handling the Model T Forex Trading System, operating it flawlessly. A+ to our friend… I’m really impressed!

But – and, remember, there’s always a “but” – a not-so-friendly guy called Mr. Market has been kicking our friend you know where. The monkey keeps being happy, of course, “but” (once again) my Italian blood started boiling for him!

What on Earth could I do to ease Dr. Tumbili’s sufferings?

I thought of a couple of ways to tackle the issue:

  1. Convince Mr. Market to go easy on the monkey;
  2. Convince myself to radically experiment with the Model T, and maybe avoid some of Dr. Tumbili’s pain.

The first alternative was totally meaningless. Mr. Market is deaf, blind… and probably hates monkeys!

The second, though, would carry with it lots of fun. I love challenges!

And here it goes: my first “what if…”!

 

What If We Think “Contrarian”?

“Wow… what does that mean?” – you ask.

To tell you the truth, I don’t know yet. But I’m thinking:

  1. On the Model T, more than 2/3 of our trades are losers;
  2. The 1/3 of winners, though, have to be long… very long winners.

So, follow me on the crazy thoughts:

  • What if we cut the winners SHORT, and we INVERT the losers, keeping all the other parameters untouched?

“What? Wait a second… Whaaaat?!? – you say.

Exactly… what a great idea! Let’s become total contrarians – and I mean TOTAL, 100% contrarians!

“But, but… what d’you mean by… Whaaaaat?!?

Yes, YES… THAT’S IT! We’ll invert signals!

  • Every time the Model T gives us a “BUY Signal”, we “SELL”;
  • And every time it gives us a “SELL Signal”, we “BUY”!

Simple as that!

We’ll be Contrarians!

I can feel it in the air. At this very moment, every single Banker who made an honorable carrier out of Trading Forex for the last 50 years, is soooo proud of us!

We’re probably trashing his life… or so he thinks! “But”, on the contrary, we might be giving back some of the creativity robots stole from him just before retirement. You’re welcome, Mr. Banker!

OK. Give me a minute, and I’ll get back to you with the backtests. I’m excited… very excited! See you in two minutes, two seconds…

 

This Made Me Sick!

I’m back, and yes… this made me sick to the stomach!

Here’s what happened. This “contrarian” thing started as a joke, became an intuition, and all of a sudden it ended up as a test.

The whole idea was to have a bit of fun laughing at a marginally better result if, and only if, being “contrarian” would’ve paid off a little bit!

Actually, after a little more than two minutes and two seconds, I finished the first part of my test: the Month of January 2013.

Just take a look at what happened:

Results2013Contrarian_Jan_General

Results2013Contrarian_Jan_Monthly

Results2013Contrarian_Jan_Weekly

Results2013Contrarian_Jan_Daily1

Results2013Contrarian_Jan_Daily2

 

Exactly: 7.9% PROFIT!

For the same period, the Model T produced a disappointing 11.5% LOSS!

Amazing! This basically means that, if confirmed, the stupidest assumption you could possibly come up with can be a lot better than a carefully designed Forex Trading System!

This is “Mr. Market” at its best, mocking traders big, big time!

And there’s more. The results above are for a Risk Exposure = 1.25%. If we had left the 2% Risk Exposure of 2012, the Contrarian would’ve produced 12.8% profit, reaching $304,865.33 on Jan’31, 2013! Yes, I said “twelve-point-eight-percent-profit”!…

Am I the only one feeling sick around here?

It’s like the chickens are revolting all over again…

I’ll continue exploring the subject. I have to prove that I’m not a total idiot, developing a great system, calling it Model T, inventing a super-monkey-trader, constructing robots, blah, blah, blah… to discover, at the end, that inverting signals just for fun, is much, MUCH better than non-inverting them!…

I’m disgusted. So long nice people, see you at the next post.

Thanks for watching…

 

Comments

  1. Bro!

    With regard to “What if”?
    I’d written a nice little piece but, it disappeared just as I was posting it.
    I felt sick! Really sick! There was no money riding on it but Bro, but, I felt sick!

    Concerning “contrarian(ism)” . . . That’s my middle name, come to think of it, its my first name, my last name and it’s the name that I want chiseled on my headstone (when I’m dead that is).

    You want “contrarian(ism)”? Talk to me YEAH! Talk to me! Are you talkin’ t’ me?

    You could hardly believe what I’m about to say but, truly, I’d been thinking EXACTLY what you’ve just been talking about.
    I don’t think it’s because I know anything about trading, I just thought about it, but, of course I would, that’s me!

    Re-invent the wheel Bro!
    See the shot, take your stance, grip the club with authority (remembering the correct location for the trigger finger), trust your swing, and let her gooooooooooooo!
    No Fear!!!

    You know what? My belly never lied to me in my life!!!

    Vivid, creative, thinking! Just one thing though . . . Do a wee favour for me . . .

    Don’t put that “BADASS” blue 911 Porshe on your new wheels.

    You know how freakin’ cool my white (No! Whitish) Fiat Palio would look with original, Italian designed “New Wheels”.

    You know it makes sense!

    • Ivan, dear Ivan!

      What the heck?!? I was just talking on the phone with a really nice but painstakingly serious fellow, and you know how it is… You have the screen in front of you, and for no particular reason, you start playing with that mouse… go up and down, click here and there while the conversation goes on, and on, and on, and on… and BANG!!! Here comes Ivan with one of his prolific jewels!!… lol…

      I started laughing on top of a very serious issue, perpetrated from the other side of the phone on my delicate psyche… and I simply couldn’t stop!!

      I’m ashamed now. Nothing good will come out of there. The guy will either get deeply offended… or, worse, much worse… he’ll think he’s FUNNY!!

      Ivan, please… please… refrain yourself. Or at least send me an alert note!!…

      Let’s roam around on a whitish Palio… Cool!!

      Saluti carissimi…

  2. And so it continues . . . . “What if”? eh? eh?

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