3:30pm CDT -
Should be obvious to all but I've been in a rut. Ya think?! I haven't made many live trades of late and spend most of my time, when I'm at my desk, looking at charts with infinite combinations of settings, indicators, and such. It takes time to find a needle in a haystack, or so I tell myself. My expectations have certainly become inversely proportional to the time/years I've spent in this endeavor. Every time I think of a new trading idea, scroll through charts, and record some results in Excel I run into unacceptable results. I like to do this first before deciding to invest the time to "code" the strat but I honestly haven't coded much of anything this year besides a handful of indicators.
I need to get out of my routine. A start at that was today where I decided to revisit some past strategies I have coded. I randomly picked a few and guessed at some settings and what instruments to run them on. The third one in (coded 4.5 years ago), using NQ, produced the below. Sure it's only 2 ticks gross profit per trade average but that's just with my "guesses" at settings. Maybe there's something here? Or somewhere else in my archives, with my lowered expectations...
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You have a lot of data compiled over the years. What you could do if you're up for it, is do a full scale analysis of what you've done to date:
ReplyDelete1)Run comparisons of all your coded methods against 1, 3,5, and 10 years of data to get a correlation grade for each year for each method.
2) See if there is a cycle for solutions to repeat after X years.
3) Is there a "season" for certain solutions- such as certain times of the year or business environment being better for some coded methods over others.
4) Check to see if there is some telltale sign at the start of the year that reveals which coded solution(s) will dominate for that year.
You can code these of have someone code up a system to cross compare all your methods to see if you can harvest some valuable insights.
@Sandy Personally, I'm a firm believer in systematic discretionary trading, as the human mind is at this point in time vastly superior to computers/AI in detecting recurring complex patterns.
DeleteThat said, I have to give credit to algol's where it is due. No one can deny the phenomenal returns made by Renaissance Technologies fabled Medallion Fund year after year spanning nearly 3 decades. They clearly know what they are doing.
I can't really take the naysayers seriously when many of them also say the market is a pure random walk and successful short term trading of any kind is impossible.
I think it just depends of your equipment and acquired skills.
MBA has made it clear he prefers algo systems to discretionary so I think it would be in his interest to explore it to the fullest to see if there is anything of value that may have been overlooked during his studies. If nothing is found, it can serve as the motivation for a whole new discretionary analysis track to be taken.
The continuous search of profit in the short term through practices like trading is to be avoided with respect to religious morality
ReplyDeleteHTTP://SITES.GOOGLE.COM/SITE/TRADINGONLINEAMORALPROBLEM/
@R That article was clearly written by someone who already had a "concluded judgement" before any analysis was done.
DeleteThe first mistake is trying to group all short term trading under the same umbrella of motivations/reasons that is supposed to apply to everyone. People trade for different reasons using different methods and is NOT pure speculation by all.
Trading is a market place and if making money off prices changes is wrong, then all retail stores that buy wholesale and sell retail share the same guilt.
Of course if there's a discussion to made on "job morality" then they should inquire of working for fast food chains when that enables the poor treatment of livestock, or for any company that makes or uses plastic packaging for its long term pollution problems. How about defense company employees for all the death toys being built? Which jobs are completely without a moral problem somewhere in the chain? Or perhaps this article is generic and just tailored to address all of the above at various times? =)
Hey, guys:
ReplyDeleteMaking money in the stock market is hard. I don't think some indicators or some systems are critical for the success of trading. As matter fact, I think they are useless. I still don't use charts to trade today. I feel like trading stock is similar to playing poker. It's a mind game. We stay calm no matter what happens. We manage the risks by positioning trading size properly. We always learn from the past mistakes...... Anyway, my 2cents.
Until you implement a daily stop loss that you stick to and stick to one strategy and do it over and over again, I doubt you will ever be successful. You are like a kid in the candy store - wanting EVERYTHING, and you lose everything. Making money day trading is a very boring job. It's about doing the same thing over and over and manage risk like crazy. So far from what I have observed, you do not have a firm daily stop, where you stop trading no matter what. You also like to change your trading strategy way too often. You are still on the quest of finding that holy grail. Good luck to that. Your grail quest will only make you broke.
ReplyDeleteMBA, just my 2cents of advice. Maybe you already know this. Backtest will never give same result with real trading. It's like comparing demo trade with real money. The culprit is only 1 thing. Slippage! Open trade, slippage. Cut loss, slippage. Take profit, you guessed it, slippage! Dont underestimate slippage. Algos trader create slippage for their own benefit. Now slippage is not a by product of market. It is artificially created by algos and market maker to make money.
ReplyDeleteThanks, good to hear from you all!
ReplyDeleteSoulfire, that would be quite the project! I don't have the ability to do this or the time but appreciate the idea. I've never found any seasonal correlation that shows when it is best to trade various strats. Perhaps if I had more strats in the ags or livestock I might see something there?
Sandy, thanks for medium.com link. Some good stuff there.
R, your link does not work but no matter. I am not religious and have no moral issues with trading. Soulfire, right on!!
Baby Sun, "useless" for your chart-free method no doubt. Saw your recent post showing 71% return YTD. Congrats. That is impressive. Where do I sign-up to learn your method? ;)
JumboBobo, sounds like you speak from experience. Where do I go to see your trading results? I don't want to assume you are wildly successful.
Sith, know that very well re: backtest vs. real trading.
Hey MBA - I agree with BOBO ... finding that "holy grail" is addictive, time consuming and your risk of ruin is high. You're not an investment company with unlimited trading capital and money to throw at systems. I have stated this before but I have been trading for 17 years with 2 being profitable. I rank in the top 2% of retail traders in capital for the firm I trade with. Trading is extraordinarily difficult.
ReplyDeleteI gave up trying to build something by looking at static charts (I will expound) and then run my stats against them. Most of us started out looking at charts and thinking how easy it was going to be. My 2 cents, stop looking at static charts they will lure you into thinking "what if" scenarios. The engineering side of your brain could be your enemy.
I also stated previously that if a trader thinks $250K (I did NOT add an extra zero by mistake) is enough to make money and pay their bills they're wrong. This is a very expensive GAME (realistically speaking) with very low barriers to entry ... that is one of the reasons that so many fail.
Good luck moving forward. I take each trading day as it is with no expectations. As I stated previously, if a new trader asked me about an indicator or a system I would tell them this...throw all of them away, ask their broker to send the cash proceeds from their account and find something else to do. Life is precious. Your time should be precious.
"I gave up trying to build something by looking at static charts (I will expound).........stop looking at static charts they will lure you into thinking "what if" scenarios."
ReplyDeleteI'm interested in getting more than your "2 cents"...lol. What approach would you take if you ignored your advice of finding something else to do?
Hi James, first thing ... I am nowhere near the intelligence level of most of the traders I have interacted with over the last 17+ years. I have been an investor since I was 18 ... I am now 50 (yikes!). I have a finance degree which means nothing in the trading world.
DeleteSince I started trading back in 2000 (I was in John Carter's first class in Los Angeles ... wow WTF) I know of one person that is still trading and doing pretty well. He is also a "common person" without mensa level intelligence. I have met hundreds along the way that have moved on. They're gone and so are their accounts.
What I have seen are people that are really motivated and super smart that get bogged down in systems (their own or purchased ones) or wild discretionary trading without risk being accounted for. I trade with 1 lot per $50K. I am crazy sensitive about risk.
So, approach. I mentioned to MBA that static charts leads to "what if" scenarios and with an engineering perspective that might be problematic. I have met people from engineering professions, doctors and pilots etc that are smart but have a really tough time trading. I don't know what it is.
I was trained to look at charts in real time. I did the same thing that most other traders did at first...I looked at static charts and then started adding things or having someone design my thoughts. I am not smart enough to learn code, nor do I want to. This really changed things for me. Real time charts to me (and the way I was trained) is not "play back mode" from a chart vendor. It is getting up in the morning and watching charts (without trading or watching L2 or a trading Dom etc) and watching charts and watching charts until a trader wants to jump off a bridge. It really opened up my eyes.
I also approached the mental side of trading with much more emphasis than most. This includes risk management (having a feel for when to add to a trade, trade "thin" or not at all). I have worked with three trading coaches. I have worked with 2 professional gamblers. I have worked with 5 or so psychologists and a few psychiatrists (yes, I am on 2 meds per day that are prescribed). I think I have every trading psychology book there is (most of them suck). I think the mental side of trading is more important than most traders want to admit. It is even more important when trading small accounts. The mental side is also expensive and time consuming. It changed my trading.
I trade with renko charts that are pretty basic and a moving average. That is what I have used for over 6 years and am very comfortable with them. I enter most of my positions "systematically" (entering into positions has always been a weak point for me) and exit with a measured target. I know when I enter a trade where I want it to go and that is where the exit is placed. It is NOT a standard increment of some number of ticks etc ... it is measured and changes based on the cycles I am encountering during that time frame. I have a win/loss that is around 60%. During compressed cycles I tend to do poorly. I have worked tirelessly and am skilled at my exits.
I like MBA's site for one reason ... he seems really honest. A trader friend told me about his site several years ago during a low point in my career. That's the truth. I have traded for 17 years, have 2 really solid years of profit and 3 years of what I call breakeven. I don't live with my parents and have large living expenses due to where my wife and I live and I like cars. I like trading but the fun and excitement is completely gone. I do not live for trading.
The last thing I will say is too many people that get into trading blindly believe what vendors and other unscrupulous "people" in this industry tell them. It's real easy ... ask them for their audited trading records.
Anon, thank you for such a thorough response! Most of what you wrote mimics my own experiences 11+ years into my journey...particularly the 6th paragraph (meds and all...). The mental side of trading is sorely undervalued and neglected. When I realized (a good 8 years in to my journey) that the "Holy Grail" is finding one of many *slight* chart edges and working it diligently with "Simplicity + Military Execution + Money Management + Emotional Stability" everything changed.
ReplyDeleteNow I'm at a stage where I've been able to make a bit of money consistently over the last 18 months but face the challenge of leveraging that edge with sufficient capital to make it worth my while.
I'd love to casually converse some more via e-mail if you are open to that.
P.S. I also agree re: MBA's site.
I couldn't agree with annon's assessment more. I had many losing years until I woke the f*** up and understood that systems/holy grail didn't matter. Risk management was the key. I found a future broker that has daily risk lock up. I set it up and told my broker to not recognize any communication from me other than via phone. Yes, when I wrote an email to him to raise my limit after I got stop out, he was instructed to not recognize the email. I used a phone calling blocking app on my phone. My broker has 3 numbers (2 1-800 ones). I blocked them all. The password for the app was super random, and I gave it to my best friend. The only way for me to unlock it is to get it from my friend during after hours. With this "system", I can not lose more than my daily stop sets up to be. I know that all this sounds crazy. It's all because that I do not trust myself. Yes, the mental part of trading is far more important than the mechanical part. You can be disciplined for months, but one day...you argue with your girlfriend or wife or you wake up late due to whatever or whatever happens in your life that throws you off your bearing just a little bit, you lose that discipline for ONE day. BOOM. Your account is down 10% or worse because you revenge trade for a day without daily stop. NO MORE! This is why I don't think MBA will ever be successful because by reading his blog for years, I have NEVER heard he mentioned about his daily stop. Not once. Without that daily stop, I don't think anyone can be successful. I mean...in all trading firms, they got a compliance/risk officer that monitors every trader's account in real time during trading hours. When he feels that a trader is trading out of bound of his way of trading, he LOCKS up that trader's account for the day. Do you ever ask yourself WHO IS YOUR RISK OFFICER?!
ReplyDeleteOne of the best comment I read this year. In trading you can't even trust yourself. No matter how strong we are, there's time we will breaking down. This reminds me of any other addiction like gambling, drugs, smokes, alcohol. We need other to help us and we need to help others.
DeleteI think the easiest path is to make automatic trading with no interference whatsoever. Or if it's difficult to make robot, hire someone to trade for us.
Another good discussion, I believe those with a bearish bias would have had a decent to great year, (biased) myself included. There's a history of intelligent/famous stock traders who have thrived and failed in various market conditions. I commend anon for having the mental fortitude for trading with only 1 lot for every 50k... I think I’ve gone as big as 22 lot with 50k, my thirst for risk is evident. MBA is respected because he has a record of showing and sharing his success/failure, opinions are like the wind, but sharing your real time thoughts and trades is true vulnerability and real and serves as a record. Every one who knows how to parallel park can give their opinion on how to do it… I pay more attention to those who have the courage to show how it’s done.
ReplyDeletethis guy, Mark Sachs, also got trading fever but how he deals with it made an interesting story
ReplyDeletehttps://www.tradingschools.org/reviews/rightline-trading/