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Suggestions On My Journey
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Suggestions On My Journey

  #1 (permalink)
Learn to swim
Salt Lake City, Utah
 
Futures Experience: Intermediate
Platform: NinjaTrader, Tradestation
Favorite Futures: Forex
 
Posts: 72 since Feb 2011
Thanks: 274 given, 36 received

Suggestions On My Journey

Hi All,
I've been a registered member now for 391 days and this is my first post. I've read the board off and on during this period and find the conversations insightful and thought-provoking. A big thank you to Mike!
Here is my current predicament and I was hoping for some thoughts and suggestions at this stage. I am currently at a point in which I am doubting my approaches. I have tried so many things with nothing that seems wildly successful. I have read countless books regarding many subjects including psychology(which is commonly disregarded)-authors such as Martin Pring, Perry Kaufman, John Murphy, Brett Steenbarger, Mark Douglas, Van Tharp....and the list goes on. I have spent approximately 3500 hours in SIM on both NinjaTrader and Tradestation(currently) developing my own strategies and indicators. I have tried discretionary trading with journals and with no consistency moved to mechanical trading and have developed approximately 100 strategies, all thoroughly backtested and documented. I have an IT background and pride myself in being thorough, which I have tried to do to the best of my ability. I am aware that oneself is usually the worst enemy so I am asking for your help. To get down to the nitty gritty, I have not backtested a strategy that has greater than approximately a 1.4 profit factor (this DOES factor in commissions) with a 50% win rate (within reason here, of course that rate can be much higher if one implements unreasonably small stop losses or profit targets). I would not classify this as really profitable and this leads me to the question: am I missing something or is this game not profitable? Thanks in advance for any help.

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  #2 (permalink)
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  #3 (permalink)
Site Administrator
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It is not profitable for most people, but most people also jump from one system to another, one indicator to another, one trading room to another, always looking for someone else to make them profitable and never accepting responsibility for their trading and their decisions.

It is not clear from your post if you are discretionary or automated. If automated, I suggest abandoning that and learning to be a profitable discretionary trader first.

I have written extensively about all this in this thread:
https://futures.io/elite-circle/11125-ask-any-trading-question.html

(hundreds of posts from me)

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

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  #4 (permalink)
Learn to swim
Salt Lake City, Utah
 
Futures Experience: Intermediate
Platform: NinjaTrader, Tradestation
Favorite Futures: Forex
 
Posts: 72 since Feb 2011
Thanks: 274 given, 36 received

Thanks for the suggestion. I will give it serious consideration. As brief background; I traded discretionary in live SIM for 1 year (full time). I journal-ed and recorded everything. I was not consistently profitable. Then three things came to mind: #1 It seems that a lot of the struggle with discretionary trading and consistency comes from following ones system #2 I had no previous backtests to show me whether the strategies I was trying were successful in the past #3 I cannot trade or watch the computer 24 hours a day(forex markets) so therefore I would miss opportunities. The solution to the problems above seemed, to me, to be mechanical trading. This led me down the road of coding many systems and which is where I stand now.

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  #5 (permalink)
Elite Member
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Nicolas11's Avatar
 
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Hi,


SammyD View Post
#1 It seems that a lot of the struggle with discretionary trading and consistency comes from following ones system

For sure. I think that you have to follow your discretionary system. You should understand its logic, be comfortable with it. It shall suit your personality. Of course, it does not prevent from inspiring from other traders' method, but it could not be a copy/paste. It has to be adapted to who you are and what you believe in.


SammyD View Post
#2 I had no previous backtests to show me whether the strategies I was trying were successful in the past

What do you mean by backtest? Do you mean computer backtest? By definition, most of discretionary systems could not really be coded and backtested. However, they could be manually tested on bar-by-bar replay and SIM, even if the psychological side is not the same as in live trading with actual money.


SammyD View Post
#3 I cannot trade or watch the computer 24 hours a day(forex markets) so therefore I would miss opportunities.

Of course. But this is not an issue. If you think of all the markets (futures, stocks, FOREX, etc.), everybody is missing thousands of opportunities per day. The game is rather to take benefit of the available and best opportunities and forget the others.

In my opinion.

Nicolas

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  #6 (permalink)
Learn to swim
Salt Lake City, Utah
 
Futures Experience: Intermediate
Platform: NinjaTrader, Tradestation
Favorite Futures: Forex
 
Posts: 72 since Feb 2011
Thanks: 274 given, 36 received

Thanks Nicolas. I should probably clarify my prior post. I was trying to discretionarily trade my own strategies but the focus was always on trying to execute the rules of the strategy to the best of my ability. System trading combats this in the fact that it trades the rules consistently all of the time in a split second.

As to your second statement, yes you are exactly correct regarding a computer backtest. By definition, discretionary trading is not precluded by a backtest and therefore I had no expectations if my strategy would possibly profit over time or not.

Thirdly, I am not truly worried about trading each and every opportunity but I am concerned about missing a prime opportunity that only lines up once every few days in a swing-trading strategy.

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  #7 (permalink)
Elite Member
near Paris, France
 
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Nicolas11's Avatar
 
Posts: 1,070 since Aug 2011
Thanks: 2,232 given, 1,729 received

Hi,


SammyD View Post
Thanks Nicolas. I should probably clarify my prior post. I was trying to discretionarily trade my own strategies but the focus was always on trying to execute the rules of the strategy to the best of my ability. System trading combats this in the fact that it trades the rules consistently all of the time in a split second.

As Big Mike asked above, could you clarify if you are a discretionary trader, an automated trader, or else? It is still unclear to me, sorry. From your posts, I understand that you were a discretionary trader and that you built an automated system to improve execution consistency. Is my understanding correct? If yes, it would mean that your discretionary system could be coded. I am afraid that, in such case, the system is rather simple / rigid, so probably not very successful for a discretionary style. I may be wrong, of course.


SammyD View Post
Thirdly, I am not truly worried about trading each and every opportunity but I am concerned about missing a prime opportunity that only lines up once every few days in a swing-trading strategy.

I see. Your system has a high R:R ratio, but a low %win. Correct? It illustrates that system shall fit personality. Personally, I would prefer many small gains than a big gain from time to time. Because it helps for confidence and I would be afraid to miss "the" trade. So I look more in the direction of a mix of scalp and swing. But everybody is different!

Good luck for your trading,

Nicolas

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  #8 (permalink)
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SammyD View Post
Hi All,
I've been a registered member now for 391 days and this is my first post. I've read the board off and on during this period and find the conversations insightful and thought-provoking. A big thank you to Mike!
Here is my current predicament and I was hoping for some thoughts and suggestions at this stage. I am currently at a point in which I am doubting my approaches. I have tried so many things with nothing that seems wildly successful. I have read countless books regarding many subjects including psychology(which is commonly disregarded)-authors such as Martin Pring, Perry Kaufman, John Murphy, Brett Steenbarger, Mark Douglas, Van Tharp....and the list goes on. I have spent approximately 3500 hours in SIM on both NinjaTrader and Tradestation(currently) developing my own strategies and indicators. I have tried discretionary trading with journals and with no consistency moved to mechanical trading and have developed approximately 100 strategies, all thoroughly backtested and documented. I have an IT background and pride myself in being thorough, which I have tried to do to the best of my ability. I am aware that oneself is usually the worst enemy so I am asking for your help. To get down to the nitty gritty, I have not backtested a strategy that has greater than approximately a 1.4 profit factor (this DOES factor in commissions) with a 50% win rate (within reason here, of course that rate can be much higher if one implements unreasonably small stop losses or profit targets). I would not classify this as really profitable and this leads me to the question: am I missing something or is this game not profitable? Thanks in advance for any help.

Hi Sammy,

couple of brief and simple suggestion if I may:

- stop reading trading books, you've probably did enough already
- stop coding and backtesting strategies OR implementing strategies of others
- try to be consistently profitable in discretionary trading first
- pick up one or two pairs and watch them for couple of day. Just watch.
- select a timeframe you'll be comfortable with in respect with your schedule. You can select higher timeframe as it would be easier for you to adjust size in Forex.
- do not worry about missing opportunities. Markets are always there and Forex is liquid most of the time anyway.
- after you select the timeframe, develop a simple trading plan / strategy for discretionary trading. Trend following (like Ichimoku) would work well in higher timeframes on Forex.
- understand, that there is no holly grail, no magic indicator or system. You probably know already, that big part of consistently profitable trading is trade / risk management.
- as soon as you are comfortable with your system, timeframe and trade management, start trading. Start small.

Good luck

Rani

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  #9 (permalink)
Learn to swim
Salt Lake City, Utah
 
Futures Experience: Intermediate
Platform: NinjaTrader, Tradestation
Favorite Futures: Forex
 
Posts: 72 since Feb 2011
Thanks: 274 given, 36 received

Thanks everyone for the responses. I am grateful because these are matters that I cannot discern from my own viewpoint. Also, Mike, I am in the midst of reading the link you suggested.

Nicolas, you are correct, I typically have a 3:1 RR at about 40-45%win. This has not always been the case but has come about from insights that commission costs will eat me alive if I go smaller.

Rani, your points are well taken.

I am currently an automated trader and have been discretionary in the past. Here are some examples of strategies/systems I've tried: different timeframes (5m, 15m, 60m, day) with various techniques such as MA crossovers,CCI, use of MAs for support/resistance, pivot points, multiple MAs stacked in succession, divergences of indicators, range bars,levels of support and resistance based on previous highs/lows, pullback entries, waves (mostly Bressert influenced), flag patterns, MACD, Keltner bands, Fibs-daily, PSARs, candle series counts. This is by no means a complete list but I don't want to cure insomnia :-) I've traded many of the above in a discretionary manner and have coded many of them as well. I have exaustively tested many stop implementations from trailing, swing highs/lows, ATR, fixed, PSAR, etc. To give a better idea, this is an example of my most recent strategy/system which is pretty straightforward:

Triple timeframe: 5 minute, hour, daily
Entry:
5 minute timeframe used exclusively for entry only
Entry limited to specific time of day
Measurement of daily trend taken from SMA on daily chart and direction must be confirmed by "position" taken from PSAR
Slopes of specific MAs are calculated from both hourly and daily charts to indicate strength of trend

Exit:
Swing highs/lows are identified hourly and are used for stops with the option of adding a buffer zone for extra leeway
Drop dead stop is used as well if swing high/low exceeds maximum risk tolerance

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  #10 (permalink)
Elite Member
Hamburg, Germany
 
Futures Experience: Intermediate
Platform: Ninja Trader, MT4, MT5
Favorite Futures: Forex
 
Posts: 2 since Feb 2012
Thanks: 1 given, 1 received


Much has been written, I think you have not found "YOUR" way.
One thinks too much about others ....

I promisse... if you found your way you will win 90% of your trades!

My Best

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