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Finally Turning the Corner, tha "its 80% Psychology" thing...


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Finally Turning the Corner, tha "its 80% Psychology" thing...

  #181 (permalink)
 TropicalTrader 
Vancouver Canada
 
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jburke75 View Post
Well said, find what works for you. For me it is algo trading. I could never stare at a screen and trade actively. Not for me.

Well, if you spend a couple years on that, and don't find an edge, just know that the style I trade (FT71 inspired) could be implemented in the first 2 hours of the NY session (when avg 60% of the RTH session volume takes place) and then you'd have the rest of the day free to do what you like.

Just saying because I spent a couple years creating automated systems and testing them. Each time I put them on a live demo for a few months the backtested results did not hold true.. Not that its impossible, its just a very challenging field, you're literally up against the brightest minds. This year, some of the most remarkable quant firms like Renaissance did very crappy. Meanwhile FT has been trading his same method for 15 years.. Food for thought..

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  #182 (permalink)
 
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 FastNCurious 
saint louis MO
 
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TropicalTrader View Post
Well, if you spend a couple years on that, and don't find an edge, just know that the style I trade (FT71 inspired) could be implemented in the first 2 hours of the NY session (when avg 60% of the RTH session volume takes place) and then you'd have the rest of the day free to do what you like.

Just saying because I spent a couple years creating automated systems and testing them. Each time I put them on a live demo for a few months the backtested results did not hold true.. Not that its impossible, its just a very challenging field, you're literally up against the brightest minds. This year, some of the most remarkable quant firms like Renaissance did very crappy. Meanwhile FT has been trading his same method for 15 years.. Food for thought..

is this strategy automated or are you watching the screen for those two hours placing trades?

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  #183 (permalink)
 
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 bobwest 
Western Florida
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jburke75 View Post
Well said, find what works for you. For me it is algo trading. I could never stare at a screen and trade actively. Not for me.

And I couldn't trade any other way.

Just running a program that traded for me would drive me bonkers. I would be wanting to grab the controls and do it myself.

Just shows that everyone is different, and there's something for everyone.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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  #184 (permalink)
lightsun47
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bobwest View Post
And I couldn't trade any other way.

Just running a program that traded for me would drive me bonkers. I would be wanting to grab the controls and do it myself.

Just shows that everyone is different, and there's something for everyone.

Bob.

And..... that IS the reason we have doctors, lawyers, engineers, plumbers, fashion designers, computer technicians, bank managers, pilots, actors, contractors and so on with different mindset and mentality with different interests in life.

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  #185 (permalink)
 joe s 
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I wish I could have the computer trade for me but I would never be able to trust it

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  #186 (permalink)
 
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 FastNCurious 
saint louis MO
 
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I find it much easier to trust a proven strategy that has worked in the past than my own intuition that changes from day to day. Especially once in a trade when the emotions run high. That being said I see how some might do very well following a trading plan each and every day. I just know I can easily throw out my plan and start over trading. A systems approach helps my psychology of trading immensely.


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  #187 (permalink)
 TropicalTrader 
Vancouver Canada
 
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jburke75 View Post
is this strategy automated or are you watching the screen for those two hours placing trades?

I don't use automated strategies. I usually trade in the first 3-4 hours of the RTH session (starts at 6:30 PST, 9:30 EST) and then take a break and come back for the last 90 minutes or so.


jburke75 View Post
I find it much easier to trust a proven strategy that has worked in the past than my own intuition that changes from day to day. Especially once in a trade when the emotions run high. That being said I see how some might do very well following a trading plan each and every day. I just know I can easily throw out my plan and start over trading. A systems approach helps my psychology of trading immensely.

It's quite difficult imo to find what you are looking for because the market is constantly changing, so many different types of days, high volatility, low, medium, or low for most the session and then high at the end like on Friday. If your strategy stays the same it will have periods of negative variance. Like the last couple months the volatility is massive while a few years ago it was tiny. So this means you will have to adjust your strategy and now you're meddling with it. Or what happens when your strategy loses 10x in a row and you have it on a live account? Are you going to go back to the drawing board or let it play out? What if after 100 trades its breakeven minus all the commissions?

An older version of me thought the same way you are because I didn't have the discipline. Now I do. It's been a battle and its taken years but you could do it faster by doing a serious cost/benefit analysis. What is costing you to not have discipline? Your confidence, your ability to create an income as a trader, having to do dayjobs, etc.. You might want to start taking it a lot more seriously sooner... I wish I had..

1 great technique I discovered is that if you get a futures account with a great broker like Edgeclear (FT71's brokerage) and use the Rithmic data feed, you can have your account freeze if you hit a certain loss limit in a day, example 2%.. That way your bad days are limited and you wont blow up your account in a day. This type of forced discipline was a great step for getting my monkey in check.. That along with dropping the need to make money fast and focus on retraining your brain to run a marathon instead of a sprint can go a long way. Discpline is a huge factor in confidence which is the way to manage the fear which makes you veer off course..

Last thing I want to say is that Dr. Andrew Menaker made a comment in a talk that its very difficult for us humans to trade a defined setup over and over like a robot, because there are times when we don't have a good feeling about it, or there is conflicting information. That's why having a process of questions that you ask is very powerful. Its the same in Poker, you can't play the same way every time you get certain cards, maybe you get pocket kings and then an ace comes on the flop with 4 people betting and raising before you, still like those kings?

With that being said, it is possible. I have 1 setup I discovered which I could potentially automate that could be long-term profitable if I adjusted the renko bricks for the volatilty every day or 2.. However I have a much higher hit rate with it when I look at the context, is there anything in the way of this trade? if its a long signal, is there a nice target higher? etc..

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  #188 (permalink)
Kuuluud
Revali, EE
 
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While I agree with most of the discussion, I would like to explore the other side of the automation and why most people do not do it. Dr. Andrew Menaker is right, it is very difficult for us humans to trade a defined setup over and over like a robot. Why would you not like do automate it, if you have a profitable trading strategy? I can think of few reasons.

The bitter truth is, most traders continuously deviate from their own trading strategy. They might not do it day-to-day basis, but enough to variation to kick in. So while back-testing would wield negative results, by changing the entry/exit parameters, they deviate from their strategy. And vice versa.
Curve fitting and unrealistic fills are also big problem. Everyone can tweak their automation parameters enough to get a ideal strategy for past x month.

I started learning about automation and back-testing when one of my trading buddies pointed out to me that most people who do price action or order flow trading can not verify that they are trading the same strategy they are teaching you. They almost always at some point deviate from their own rules and therefore is no real structure to their trades. Sometimes they trade the X setup, sometimes they don't. There is no objective way to test out the strategies. Most losing trades are subjectively dismantled and analyzed after the trade without a real objectivity to it.

I think this has been the biggest struggle to me as a trader. How do I know if my strategy is profitable?
This is the main reason I took up coding and started back/forward-testing. This is also the reason why I have seen so many of my strategies fail. While I might be novice in coding, at least I can now read code I paid for, understand the structure and I am able to change/optimize the code in the future.

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  #189 (permalink)
 
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 speck 
Kharkiv, Ukraine
 
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Kuuluud View Post
While I agree with most of the discussion, I would like to explore the other side of the automation and why most people do not do it. Dr. Andrew Menaker is right, it is very difficult for us humans to trade a defined setup over and over like a robot. Why would you not like do automate it, if you have a profitable trading strategy? I can think of few reasons.

The bitter truth is, most traders continuously deviate from their own trading strategy. They might not do it day-to-day basis, but enough to variation to kick in. So while back-testing would wield negative results, by changing the entry/exit parameters, they deviate from their strategy. And vice versa.
Curve fitting and unrealistic fills are also big problem. Everyone can tweak their automation parameters enough to get a ideal strategy for past x month.

I started learning about automation and back-testing when one of my trading buddies pointed out to me that most people who do price action or order flow trading can not verify that they are trading the same strategy they are teaching you. They almost always at some point deviate from their own rules and therefore is no real structure to their trades. Sometimes they trade the X setup, sometimes they don't. There is no objective way to test out the strategies. Most losing trades are subjectively dismantled and analyzed after the trade without a real objectivity to it.

I think this has been the biggest struggle to me as a trader. How do I know if my strategy is profitable?
This is the main reason I took up coding and started back/forward-testing. This is also the reason why I have seen so many of my strategies fail. While I might be novice in coding, at least I can now read code I paid for, understand the structure and I am able to change/optimize the code in the future.

It might not sit well with others, but I'd claim that things like 'strategy' and 'setup' don't belong with discretionary trading at all which is at its core about listening to the market and adapting to it, rather than thrusting your beliefs (even in statistical disguise) on it. Just my humble opinion.

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  #190 (permalink)
 TropicalTrader 
Vancouver Canada
 
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Kuuluud View Post
.

I think this has been the biggest struggle to me as a trader. How do I know if my strategy is profitable?
This is the main reason I took up coding and started back/forward-testing. This is also the reason why I have seen so many of my strategies fail. While I might be novice in coding, at least I can now read code I paid for, understand the structure and I am able to change/optimize the code in the future.

Forward testing.. Let it run for 200 trades live on Sim. Then subtract 1 tick from each trade to account for possible slippage. That should give you a good idea how your automated system is doing.. If it needs to be adjusted based on volatility find a math based way to do that, example 5 day average daily range. Run it during specific time periods when you think it will be most effective.

---

For those trading manually, make a spreadsheet and log every single trade. My columns look like this: (going horizontalally but easier to share like this)

Long or Short
Trade Idea
Result (in points)
Type (1 good trade, good result, 2 good trade bad result, 3 bad trade bad result, 4 bad trade, good result **bad trade = missed key info, impulsive, didnt wait for a proper retrace, forgot something, etc)
Tilt Free (yes or no, was there negative emotion involved)
Did as Planned (yes or no according to the trade idea)
Entry Rating (1-10)
Exit Rating (1-10)
Open Positions (how many lots open at one time)
Total Lots (from open of that trade idea to its close, how many lots)
Comments/Mistakes

By logging your manual trades, you can be objective about your performance. You can do this right after the trade closes or while you're waiting for it to play out.

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