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Very simple ES strategy that seems to work
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Very simple ES strategy that seems to work

  #61 (permalink)
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So far best I can tell he is just looking for indicators to solve the market like it's a puzzle.

His focus is on backtesting, and indicators, filters, signals, etc. Not on learning about the market, the relationships, and why it moves.

He is expecting to solve price using price.

Mike

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  #62 (permalink)
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matthew28 View Post
Be careful of adding too many things as in backtesting as you can end up 'curve fitting' the strategy where you have tested and found a lot of indicators all added together to produce the perfect equity curve, but because the future can never be exactly like the past it doesn't work when you try to use it. If testing purely mechanically and you have say three years of back data a good procedure is to back test and optimise a strategy on the first two years of data then forward test on the last year. In theory the results of the two tests should be similar all other things being equal.
But as somebody said, simpler is better. People seem to keep adding indicators and rules to try and avoid losses. You need to accept that there will be losses. Otherwise you add so many rules and indicators that you rarely get a signal to trade so then you add lots of different markets to watch to at least get some trades, then you need more screens and you just end up with information overload and 'paralysis by analysis' as six indicators say buy but one says stay out and you don't know what to do so you do nothing and the market goes up and you get angry that you see the market doing what you expected but you are never on board because you need so much confirmation. At which point you start taking impulse trades just to get a trade on. People tend to go in two ways: scalping usually with a small account so they need to have very small stoplosses so have very small targets and scalp looking for a very high win rate to cover expenses and just to feel good like they can predict the market. Or trading less frequently with small losses and bigger winners and accepting the losses and the losing days. You will never be able to consistently predict what the market is going to do so don't bother trying. You will find lots of trading psychology books talking about the difference between prediction and acceptance of the probability of what you think has a higher chance of happening at that level. Initially that sounds like semantics but prediction involves ego and the requirement to be right but the latter just means that after watching the market for a long time or having back tested you have seen previous examples of this sort of action and you think that if you buy here you can try to target say the other side of the range and only risk a fraction of that distance as a stop. You're not predicting, just trying something that has had a reasonable history of working and has a good risk/reward ratio if it does. Losses are then just a natural part of trading instead of a personal failure in 'knowing' what is happening. Don't underestimate the psychology involved in trading live as opposed to what your backtesting or sim trading says you could make.
Also don't assume that the majority of people on this forum are making lots of money every day and it is just you who is the 'thicko' who can't work it out. Take it slowly and when trading live trade the smallest amount possible. It isn't about making as much as you can, it is always about losing as little as possible and as slowly as possible to give yourself the chance and time to make money later on the good trades.
I've rambled a bit and forgotten what my point was supposed to be when I started.....I'll just push the submit button anyway.

Yeah, I lost my combine account today. It was difficult but I am kind of figuring out how it happened because the same thing has happened to me quite a few times before. So what happened was that price gets rejected trying to brake higher, it goes down four points, but then it gets rejected again trying to go down, it gets rejected twice, and it goes even higher. So, I took a long loss, then a short loss. So now I am trying to figure out how to avoid this.

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  #63 (permalink)
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marketvoyager View Post
Yeah, I lost my combine account today. It was difficult but I am kind of figuring out how it happened because the same thing has happened to me quite a few times before. So what happened was that price gets rejected trying to brake higher, it goes down four points, but then it gets rejected again trying to go down, it gets rejected twice, and it goes even higher. So, I took a long loss, then a short loss. So now I am trying to figure out how to avoid this.

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I was not completely clear that you were in a Combine before this. This is a good thing, and while having a sudden, shocking loss that blows it out is not, itself, that good a thing (), it certainly happens. Now the best thing is to see what weaknesses it exposed and what you can do about them.

My first reaction on seeing your chart was that there were just a whole lot of smallish trades on it. When things go very wrong for me, my charts often look like that, too.

I would say that you probably are trading more than you should, and probably trying for moves that are too small. In other words, some sort of scalping. This sort of trading is way harder than it seems. You might want to cut back on the frequency of your trades and look to take a somewhat longer view. You will find it hard to respond quickly and accurately to very short-term twitches in the market, when you're under pressure to act, and certainly when you've already got a loss. It can be helpful to cut back on the pressure to be right within a very tight timeframe, by expanding the timeframe.

Another thing may the size you are trading. I can't tell exactly from the chart, but I would say that you are using mutlitple contracts, which, if the number is too high for you, means that your leverage may be too high. High leverage means more bang for the buck, but it also means more loss for the buck when you're wrong. I don't know your Combine size, but it is usually a good idea to not use anything like the max available contract size per trade. See how it goes with one or two. Your leeway to survive unprofitable trades may become much larger then.

Also, they always give you a daily loss limit. You do not want to use theirs, because that is the "blow up" limit; if you hit it, you're done. Take a number about half or two-thirds of theirs and make it your personal loss limit. If you get to it, don't try to trade your way back to a profit -- the fact that you hit it means that something is off that particular day. It may just be that the market is not the kind of market that your method is best at. It may be that something is off with you psychologically. It may mean none of those things, just that you had some losses today. It doesn't matter: if you want to survive to another day, always stop when your personal limit is reached. Take a walk or do something else for a while. Then do your post-mortem on the day, but avoid any temptation to get back in that day....

There is also a max draw-down. You should always know where that is, and if you get anywhere near it, stop and re-assess what you are doing. These limits and rules are there to help you contain your risk, and you need to use them effectively.

I couldn't comment on the indicators and stuff on your chart, since that's a purely individual matter -- much more so than people generally understand. If they help you, they're fine. If not, they're not. But they won't have a lot to do with your success or failure. At most, they can help you see what's happening better. But you could see the same things without them, because the most you can do is see what's actually there. If they showed you something else, you wouldn't want to know it . It's a good freedom to understanding that deeply. Then, by all means, use whatever does help, just know what they can and cannot do for you.

I also can't tell you anything about your explanations of what went wrong with these trades. I don't know your frame of reference, and can't really tell enough from the charts to add anything. Since you had your reasons for your trades, you'll obviously want to look into them. As to your diagnosis, you may be entirely right about all that, but I can't really say. Basically, the amount of trading, and I would say over-trading, is what caught my eye. I would look there to see what you can see.

It's also hard to understand the chart without a horizontal axis to show a timeframe. These trades could have happened over a period of a few minutes (probably too short a timeframe), or over a few hours. On a theoretical basis it may not matter, but in terms of a person's ability to respond well to price developments very quickly, it can make a huge difference. Remember that your enemies are things that complicate your decision-making, which include short timeframes, high leverage, and anything that adds to complexity. I would add purely psychological factors such as nervousness or fear, anxiety about how you're doing (profit & loss), and so on. I don't know if those were factors here also, but they generally come walking around and say "hello" when things aren't going that well otherwise.

All these comments are not at all meant to be discouraging. In fact, it is a good and a very important step to actually enter the arena, and then f--- up. It gives you something concrete to work with. Also, I do not and cannot have any idea how you or anyone else "should" trade. That is really a far more individual matter than people believe. So don't take any of these suggestions as anything but ideas to test out -- use them if they help, drop them if they don't.

I will tell you that having stared at my charts after a bad day, wondering what the hell had gone wrong, I can say that nothing on your chart is all that unusual. Everyone will make some of the same mistakes, although we will also make some that are uniquely our own. Perhaps we need to show our individuality by screwing up in our own way....

Now you can go to work and see what can be adjusted, fixed, discarded, added, done differently or, indeed, what can be done the same. It will not be like anyone else's. I also definitely suggest more posting of charts and discussions of trades. Even if no one else reads what you post, you will have to become more objective in order to post it, and it will help you see it differently.

Again, good luck. Nobody said it was easy. Or if they did, they were wrong....

Bob.

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  #64 (permalink)
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marketvoyager View Post
Yeah, I lost my combine account today.

Always disappointing, but I agree with Bob, above, about that (not to mention about all his other points).

I think a $150k 10-day Combine is going to be absolutely the hardest for you to do, anyway, with the kind of trading you've been discussing - and indeed, it would also be the hardest for many others under many other circumstances, too.

(I really think that when you're eventually ready to involve yourself with another Combine, you'd be far better off trying a $30k or even $50k continuous one - effectively for the same price or less than your recent one - and thereby giving yourself a lot longer to reach a much lower target, with much the same pro rata risk-management.)

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  #65 (permalink)
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Tymbeline View Post
Always disappointing, but I agree with Bob, above, about that (not to mention about all his other points).

I think a $150k 10-day Combine is going to be absolutely the hardest for you to do, anyway, with the kind of trading you've been discussing - and indeed, it would also be the hardest for many others under many other circumstances, too.

(I really think that when you're eventually ready to involve yourself with another Combine, you'd be far better off trying a $30k or even $50k continuous one - effectively for the same price or less than your recent one - and thereby giving yourself a lot longer to reach a much lower target, with much the same pro rata risk-management.)

That one was the continuous, I paid one dollar for that, now I will have to risk for the next one, and I will not get bigger than the $50k. Its a disappointment because now it will be harder to pass, unless I trade one to two lots. Then, if I get funded, it will be more stress since the max daily loss is three times lower compared to my daily goals. I wish you could upgrade once funded. As for that trade, yes I was kind of scalping for two-three points, but I did not fallow my own rules.

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  #66 (permalink)
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marketvoyager View Post
That one was the continuous

Got it - sorry: I was thinking of your previous one.


marketvoyager View Post
I will not get bigger than the $50k. Its a disappointment because now it will be harder to pass, unless I trade one to two lots. Then, if I get funded, it will be more stress since the max daily loss is three times lower compared to my daily goals.

Well, they're pro rata: the daily loss limit is one third of the target, for all Combines above $30k.

And the maximum permitted drawdown is actually proportionally wider with the $50k Combine (at two-thirds of the target) than it is with the $100k and $150k Combines (for both of which it's only half the target).

For myself, I wouldn't do a Combine until I'd collated and analysed the results of 200-300 trades on my own, using the same risk-management (or stricter) and satisfying myself that I had a genuine and reliable positive expectancy adequate to pass the thing, barring gross accidents.

I see a Combine more as a place for "proving" than for "testing/researching" - but that's individual perspective, granted.


marketvoyager View Post
I wish you could upgrade once funded.

You can in a sense, according to the scaling plan. The number of lots you can trade builds up with your profit, and anyway TST is flexible about that: if they're satisfied with your risk-management, they'll "negotiate" to some extent.

There are certainly one or two "anomalies", for all that, though: the number of lots one can trade appears to be the same for ES at $12.50 per tick as it is for NQ and YM, each at only $5 per tick.

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marketvoyager View Post
Yeah, I lost my combine account today. It was difficult but I am kind of figuring out how it happened because the same thing has happened to me quite a few times before. So what happened was that price gets rejected trying to brake higher, it goes down four points, but then it gets rejected again trying to go down, it gets rejected twice, and it goes even higher. So, I took a long loss, then a short loss. So now I am trying to figure out how to avoid this.

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So why didn't you start a journal to document how you were trading your combine? Did you trade the combine using the strat you had at the beginning of this thread?

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  #68 (permalink)
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tturner86 View Post
So why didn't you start a journal to document how you were trading your combine? Did you trade the combine using the strat you had at the beginning of this thread?

It is quite exhausting for me to document each and every trade, specially since I am wrong so many times. However, I do mentally record an explanation and analysis for both good and bad trades. I understand that this is no substitute for a good journal, but until I get a definitive strategy, I will avoid it.

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marketvoyager View Post
It is quite exhausting for me to document each and every trade, specially since I am wrong so many times. However, I do mentally record an explanation and analysis for both good and bad trades. I understand that this is no substitute for a good journal, but until I get a definitive strategy, I will avoid it.

Learning how to evaluate yourself is the best step forward for you. That will help you far more then trying to find a new method, indicator, etc.

Mentally recording stuff is useless. You will never remember all the details and nuances of what was going on while you trade.

I would get a screencapture software and record your charts and dom and talk during your trading to record what you are seeing and what you are doing. That way you can review it later.

An example: I am long the ES 2090, it looks like a range day and I am buying the bottom of the range. I took my entry because of XYZ. I exited for a loss when price continued down.

Then later you can go back and understand why you were doing something.

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marketvoyager View Post
It is quite exhausting for me to document each and every trade, specially since I am wrong so many times. However, I do mentally record an explanation and analysis for both good and bad trades. I understand that this is no substitute for a good journal, but until I get a definitive strategy, I will avoid it.

That should be a clear hint that you are (a) overtrading, (b) scalping, (c) have no clue.

The name of this game is survival. Everything you are doing right now is acting like you are trying to solve a puzzle. The problem is, you are missing about 1 million pieces and don't even know it.

You need to slow everything down. Stop looking at indicators. Learn about the market and why it moves. Hint: it has nothing to do with an indicator.

The only remote chance you have of making this work is if you stop being so stubborn and start listening to people giving you advice. Then you need to re-plan your strategy knowing that you have YEARS of work ahead of you before you even get to the same place that the people replying to you are at, and likely years more before you are profitable.

If you disagree with this or think you are the exception, then you would be far better off just quitting now. Save yourself a lot of time and money. So far, you've demonstrated you are not cut out to be a trader. Don't take it so personally, most people aren't. The smart ones are the ones that realize it early, before they've lost so much time and money.

Mike

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Need help?
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