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I'm absolutely devastated, don't know where I'm heading now
Well @kevinkdog - I am ashamed to read your lines. I have studied statistics at a university in Switzerland and have some insights. Statistics data are an important factor. But you need to take every sequence time adjusted. Means a starting and an endpoint. There statistics can give a picture - only and exactly over this defined period. Not into the future. POINT. I made many backtests on my strategies. Since 2010.
What makes me here more speechless is that you reference on my "edge and approach" without knowing even one of my threads here on fio. No more comments. Better going back and flip coins - yes?
GFIs1
I'll ignore your sniping and try instead to keep this as a constructive conversation. I hope you agree with that idea.
You say "backtests do NOT give any hint for the future." Then why do you run backtests?
Backtests don't tell you an approach WILL work in the future, but it can give clues that an approach MIGHT work into the future. At least that is how I've always taken them.
Sorry I asked about your strategy development approach- it was a legit question. Sorry I have not read your previous posts.
I disagree with this. Whilst stats cant predict the future, it does provide probabilities. It is futile trying to predict anything, but you can very accurately model a distribution pattern and quantify zones where price is likely to be rejected and where price is likely to return to. So, although not predictive, it certainly provides higher probability forecasting.
OP: There is an old saying about trading systems that basically says "All trading systems work... until they don't" Meaning, markets change they will always change. YOU as the trader must recognize when your system or methodology is no longer working and JUST STOP USING IT! When you do, the fear of loss is gone and you can begin the process of taking a look at WHY it isn't working anymore. Could be a volatility shift, a new algo has kicked in and is moving the markets differently. Whatever it is just doesn't matter. What you need to be doing is taking and HONEST critical look at your trading and figure out what needs to change in order for things to begin going your way again.
For example, lets say its a volatility shift and the markets are moving in bigger swings than normal. The solution? Take smaller positions and use wider stops. Because of the bigger swings most likely the final reward will be near the same if not better because you are less stressed about what is going on in the markets and you can begin to focus on monitoring your trade.
We all trip and fall, its a part of the process of learning and growing as a trader. How you handle the fall is what will determine whether or not you stay down or get back up. As corny as it sounds, it really is just a choice. Take it from someone who falls quite often.
To @kevinkdog - you asked for my strategy development approach and why I am using backtests:
1) My trading is about patterns - that arise on every specific weekday. Just a given situation of previous day (range, direction etc.) and the IB from today (opening 30m) give me a entry/exit TIME for a trade. No history more than 1 day. These patterns work good at least for me as you easily can read in my 2 trading threads (journals).
2) Backtests are done by me to see as a statistic specialist if some trading approach gets results over a long time in history. My findings were: very bad! If you alter the time length for the backtests you get errand results. As a trader I can not wait for the "right" time window - I need to get winners and optimize losers. No other way to survive with the accounts.
To bring it together - trading is not a game but a profession (no one to blame here). By finding new strategies one can get good results. This is why discussions like here on fio are fruitful.
I wish the OP a good hand for the markets - would say best to trade one instrument until knowing it by heart - and propose to have a good money management especially with the stops, letting the market play out when rough moves sets one at the sidelines and reenter just when the storm is over.
Good luck! Good trades! Good results!
@OliverB - here is a simple strategy to make money. It is a system for the DAX. It shows great results on some very special (rare) occasions which can easily be surveyed every day or automatically.
Now my offer is just for you. You can save screen time and you see when the Walzer pattern comes up you just need to push the buttons right. It is a most easy trading system with just a few rules.
I have all written them for you so you can follow when to get in a trade and when to get out - time-wise. You can even read about the fio members that followed those posts in real time. I do not sell anything here - it is just another trading journal by me - GFIs1. On fio. Free for all and easy to follow or even program it. And for intraday trading only. To minimize risk - Risk - RISK. Nothing to hide and with easy results. For you.
You get all the simple to follow rules in the first post of the thread - as well as the results on its way - here:
FOR ALL that are not familiar with my DAX journal - PLEASE READ that one before you ask here.
As the rules in mentioned GFIs1 thread are not allowing a trade on all days - especially in high volatility phases -
I was searching …
Hope to offer here a possibility for your own next steps maybe with a pattern trading system. And if you are good in it share it like me with the public.
Have a great weekend
GFIs1
PS: if you want to know why the thread is no longer updated I tell you that it works until today, is automated and doesn't need to be posted any longer as the results over the years speak for themselves.
Technical analysis is only a tool, a tool that should be used to confirm other stock analysis. If you're using technical analysis is your primary driver for picking trades are going to have a rough go of it sooner or later.
interesting discussions/debates on back-testing....as someone who has spent probably more than most on this endeavour I've come to the conclusion that whilst you "may" find some small edge's these nuggets do fade-out / fade-in over time and are generally not stable.....(Longer term is more stable than shorter-term for algo from my experience) as someone who trades both systems(LT) and discretionary(ST) I know for a fact (see my HSI Scalping Journal) that my discretionary results are WAY WAY better than anything I could have coded in the past (granted I'm not a qualified coder) but I hope you get my point...there are great strides being made in Machine Learning and other AI methods that only the top 0.1% will be able to exploit(see Gregory Zuckerman -" The man who solved the markets" - a story about Renaissance Capital) but it is my conclusion they will never outperform a human who trades with an edge. I head-butted a brick wall for years thinking algo was the solution to trading because I didn't want to do screen time.....but now I only do 60minutes/day on average and I'm done(I'm at 3mins a day for the LT model-clicking buttons)) - I can make more coin in that 1 hour than any algo for the same risk. Granted I can only focus on one market but you get my point.
In summary - Algo is possible but I think it's WAY harder than discretionary..( the opposite hypothesis I started with 25yrs ago)
I am sorry that you are going through such a tough time, and I hope you will find a way to cover this financial loss that you went through.
I agree with you that the luck of a successful system can not last for two years. But, it is not about "luck analysis" rather the fact that traders attribute the success of their operations to their method, and do not give credit to a market that provides positive returns. Can this "luck" last for two years? It can last for five years and ten years, depending on the method. Consider options sellers from 2010 of the ES: in Feb 2018, they eliminated all their gains after eight years of premium collection. In their eyes, "far out of the money" was the safe way to go when volatility was not around. In Feb 2018, "out of the money" was toxic and illiquid.
Let's assume that you had a suitable method, and your risk management was spot on! Then the market changed, and you experience something that you never been through before: extended consecutive losses, wrong signals, and inconsistent wins. At this point, you reduce size. That's it. Keep reducing the size of trades to minimal. What do most do? Change methods, try to recover losses with a different time frame they never traded before, increase size with each trade to cover losses. This mental effort is all an attempt to bring your balance up to think straight. You said here you did not change as a trader, but an effort to trade quickly outside of what your comfort, is the most significant change you have undergone.
Consider long term returns via drawdowns. All traders tell themselves the lie of consistency. In reality, even the best traders go through the ugliest periods. Whether it is the Renaissance Technologies by Jim Simons (Drawdowns 34%) or Bridgewater by Ray Dalio, they all go through tough periods. The periods are more extended than most anticipated.
It's your time to evluate not whether your systems are lacking, instead explore how you behave when the market behaves inconsistently.
If you read this with an open mind, and without the "you don't understand my method," it will open your mind to the fact that we change faster than the markets, and that should not be the case. If you started trading, not knowing what would be your drawdown, how long lackluster periods last, and the appropriate size for all markets swings, it is unlikely trading would be a positive experience.
I sincerely wish you well!
Best,
Matt Z
Optimus Futures
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