The OP presented a trading strategy he was working on the first couple of pages of this thread. He was having some theoretical success with it, and I guess came here for some validation. He was quickly informed his method would never work and to abandon it, which apparently he did in favor of watching some recommended essential 4 year old videos. So when he started this thread he was doing something he felt showed promise, but was persuaded to stop. Now, once all the videos have been watched, what is the recommended best next step ?
Be Patient and Trade Smart
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I agree with that. I would add, the simpler the better. It just takes time, doing the same thing every day, in this case looking at the same workspace layout and information, and over time things become more and more obvious. Constantly changing things adds confusion, adding indicators and other cool looking stuff adds confusion, increasing the probability of conflicting information/signals which leads to hesitation.
The less we know about how the market's work, the more complicated the 'explanation' or approach seems to be. The more screen time / experience, the simpler things can be. Simple does work, but it takes an investment of time using a consistent approach to develop competence.
Be Patient and Trade Smart
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I can plead guilty at a high level here. Tonight I'm not sure if I have removed more colour from my screens or from my face. One of us is paler but less embarrassed, the others are less pretty but easier to see through. We'll see if it makes a positive difference.
It relates well to the Fibs discussion, there is a balance to be found between sophistication of understanding and efficiency of execution. It is not an easy balance to find, unwarranted complexity definitely increases hesitation.
As an aside I thought more about your question regarding Fib use and consistency and realised that it should help more than I allow. If I was mechanically rigorous in application it should keep me out of bad trades just as much as it gets me into good ones.
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I would also look at becoming scientific in your approach, time and experience is only as good as the knowledge gained from it. You need to document what you do, what you expect and what occurred, then review this to see where you are improving and where you need further improvement.
Keeping a trading journal that only talks about your feelings and wins/losses will not assist you to improve your technique if what you are missing is an edge. You have to be able to analyse the journal data and conclude if your different entries/trades offer profitability, or if a discernible pattern of losses is apparent (like maybe your stop is too tight and the original trade premise was still correct).
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@marketvoyager, I made a fairly critical post, and I want to moderate it a bit.
Let me just correct myself here. I was exasperated by the fact that you keep swinging back and forth without seemingly have a serious commitment to anything. When I remembered how confused I was at one stage, I also remembered how I did the same thing, as I went first one way, then another, whenever I encountered another person's opinion. So let me apologize for that. All this can be confusing, and not just to a "beginner."
Let me start over. I still think that, if you are to get anywhere, you will have to get out of the habit of -- as I see it -- floating in an indeterminate theoretical cloud without getting down to doing anything. You will learn almost nothing from just reading and thinking and even testing, on a purely theoretical level. You must get your hands dirty and do something. Nothing is ever accomplished, anywhere, without that. Yes, you need to be ready, but you can spend way too much time getting ready, and nothing will happen.
So my advice is still to stop getting ready, and take some step that is actually doing something. It's up to you what it will be; I can't say what someone else should do. But try something, and have something at stake so it's not just more thumb-twiddling. Note, that it could actually be more testing, if it's the serious and real kind of testing that puts an hypothesis to the test and gets an actionable result. Or, get into a Combine or start an account and put an idea into practice and see if it works; then correct it if it doesn't, but stay in the real world. It might work or it might not, but you won't know without making an attempt....
I will bow out now, at least pretty much, and I hope you will think about this in some way that helps you, even if you don't agree.
And still, good luck. I do hope you succeed at this.
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True, and I think I am, I am participating on a test with orders, not quite real level but also not quite sim. So far it seems that if I fallow some simple rules, I am ok. Once I break one simple one, I don't make it.
For instance, today I made a good run of seven points. Before that I was up on risk and lost with six lots. Then committed to make it back with three and did it. Then I shorted a falling wedge, but price down was rejected and I did not get out at break even, got out at over a point and gave back big. Missed the slow move up because I had to go. So there's that.
Right now I think one of the missing pieces is to find a way to measure market bias and sentiment, daily, from pro's, in a consistent way. Then every couple of minutes to hours. One way I found is to add the mentioned targets of two guys, then calculate a weighted average. Today it was down six points and they where both wrong. Another possibility is delta change to price change. Good measure at times like today when price was going down but delta was slightly increasing at times. I need another broader measure. However I am again drifting towards another variable. So far the best way is to just watch SPX price action and expect moves based on bollinger.
Two things I have not perfected are the patience to wait for a setup, patience to hold (today I made some progress), but also the ability to cut the bad trade. As for edge, its not there and I suspect only hard work and experience, as you said, in participation, might get me somewhere.
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.
Last edited by matthew28; November 4th, 2015 at 05:13 AM.
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