Unconventional Trading Strategies

In our search for THE trading strategy, I guess many of us have come across dozens of more conventional trading strategies that made use of:

• technical indicators (ADX, MACD, Stochastics etc)


• price action


• support and resistance lines


• candlestick patterns (doji, harami, evening star etc)


• chart patterns (double top, flags, pendants, cup and handle etc)

As I got more acquainted with expert advisors (EA), I was exposed to some trading strategies, which I termed as "unconventional" trading strategies. Basically,  in unconventional trading strategies, they don't use any of the things listed above! So allow me to share some of the unconventional trading strategies that I have come across.

Correlation Trading

In correlation trading, people trade base on the relationship between the same or different trading instruments. I ever heard a course out there teaching people to buy a currency and sell another highly-correlated currency. Supposedly, this will cancel the effect of the currency price fluctuations and the profits will come from the swap. Not a bad idea...one don't have to care about which direction is the currency moving (aka non-directional trading) - provided the 2 currency pairs are REALLY moving in correlation, that is... But my this friend got a hell lot of problem...

Trading mean reversion

My encounter with the PID EA taught me the concept of mean reversion. The main idea is that there is a high chance that price will move back to the average price (more details at investopedia). Interestingly, Dr Brett has the statistics to show that "a disciplined trader can make a living simply trading this pattern".


Gambling and information theory applied to trading

A online buddy introduced this concept to me recently. I have not really dwell into this yet. Basically, some genius managed to represent gambling concepts mathematically such that the parameters can be manipulated and optimization can be done. Another genius applied this to trading. One such application is in Kelly Betting, that applies to money management.


Trading based on probability or other mathematical models

The Hedgecow EA trades base on a such a probability model. The high level concept is that it is highly unlikely to consistent lose for too many trades. So when there is a lose trade, we will increase lot size for the next trade. More details can be found here.

Disclaimer: I am not recommending any EA here. I am just illustrating some novel trading concepts that I have learnt from some of the EAs that I come across. In fact, PID caused many to get margin calls last year.