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Use your brain! Mechanical indicator-based systems don't work
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Use your brain! Mechanical indicator-based systems don't work

  #11 (permalink)
Trade with the flow
Paris, France
 
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Big Mike View Post
Now I think you are more of a swing trader. So obviously the longer you hold a position, the more risk, and the more a longer term trend (bull/bear) would have a direct impact.

When you say "the market changed" I am left thinking your strategy was curve fitted.

If you're a scalper only in for a few minutes then you might not care what the market is doing.

Here's an example:

for a while we'd trend during the last hour.. if we broke the first hour's range there was a good chance of closing away from it. So I wrote a strategy that would enter on a breakout of an opening range and hold til close. Really simple and it doubt it was curve fitted cause I just used RSI to verify trend (above 50 take longs only and below 50 take shorts only).

That worked for a while and I made money on it. Then over the past 2-3 months something really strange happened. In the last 30-60 minutes we'd have a massive reversal. That killed my system! So then I thought maybe these last hour traders knew something I didn't. so I wrote a system on that. well it hasn't held up either but that may be because of the vacation slowdown I don't know.

Now this is an example of a price action strategy that wasn't relying on indicators (the first one, the 2nd one used an MACD but not of price). So the overall market direction can have an effect on your trade if you're holding til close.

Curve fitting is always a risk which is why I try to avoid optimizing period. I'll try some obvious values like for an sma 10, 20, 50 but I'm not going to test 10-50 and find that this week 37 is best.

So back to my comment about markets changing.. I believe if you trade off price (and volume) you'll slowly adapt to the changing markets without even knowing it. If you have a mechanical system it can't adapt like that unless you re-optimize all the time and that's not a viable solution.

Let's say the market is routinely moving 6-8 pts so you use a profit target of 4. Then you notice that the market rarely goes more than 4 without major reversals. So you lower your PT to 2 or 3. This was actually the case for me. Before the summer I was getting trades greater than 4 pts on ES. Over the last few months I'm happy if I get 1-2. I adapted my trading. this is what I'm talking about. There was a period of several weeks where I'd enter at the close and exit pre-market and was making 4 pts overnight. That was great, but then it started not working out. No programming, no indicators, no backtesting, just me observing and going with what I feel.

BTW I'm wrote a new strategy to do this and I added some extra criteria and the only thing i optimized is 1 moving average period just to keep me going with the longer trend. I'm forward testing it and we'll see how it holds up, too early to tell so far. What's weird is it only works on one tick chart size. Whenever I see that I'm always suspicious but then again I've been trading this tick chart manually for 5+ months now so maybe it's not a coincidence that it works on my tick chart. This is what I'm talking about. TRADING! Learning to see price. Watching patterns repeat over and over until it becomes instinctive. I think Jeff Castille is really good at this and I'm learning a lot from him. He's doing great work in his "All you need" thread which I encourage everyone to check out. It's a great example of using a couple indicators but still trading off price.

https://futures.io/general-discussion/560-all-you-need.html

Another example let's say you review your trades and you find that the afternoon is not as profitable as the morning. You can stop trading afternoons. Later you notice Monday's suck. So you skip monday's. Or you notice ES is following CL so you profit from that but then it stops so you don't count on it. If you have a really simple strategy you may never notice these little changes going on, it all depends on what you're doing.

Someone posted in a blog that the baltic ice index often leads the S&P. Google it and you'll see these claims. it has turned down for a while now and so they believe the S&P is headed down. So I pulled up a chart longer term. It worked for a period but prior to that there were some failures. And that could be the case now. The people shorting the S&P because of the Baltic Dry Index is going down could be in for a surprise.

the markets are constantly changing. In market wizards II one of the wizards forget his name noticed when one ETF moved up another would follow and he was bagging that one every day. Martin Schwartz in Pit Bull found a correllation between bonds & the S&P and made a ton of dough. But it didn't last forever.

Maybe the solution is to just say "screw it!" and scalp for ticks and ignore everything else. I'm not being sarcastic, I'm being very serious. That's what I'm working on now. And hopefully loose this "swing trader" reptuation while I'm at it!!!

Thanks for the comments everyone, great stuff. Keep'em coming and I'll share more. I figure if I humiliate myself enough in public then I'll stop doing stupid things.


Last edited by cunparis; September 6th, 2009 at 01:27 PM.
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  #12 (permalink)
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Awesome Thead!

Great thread cunparis. I've spent a large amount of time trying to design a trading system based off multiple indicators. I would tweak the indicators, add one here, subtract one there, change an input, etc, etc, etc. Finally I pulled all the indicators off my chart. I have since added OBV just to confirm price action but for the most part my chart is naked and I love it. I finally feel like I can "see" price movement. I'm still very much in my rookie stage of trading with this way but I don't see myself ever going back to an indicator overloaded chart.

Good trading.

Blz


Last edited by Blz17; September 6th, 2009 at 02:57 PM.
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  #13 (permalink)
Trade with the flow
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Listen to Blz guys. He says he is a beginner but he's advanced as far as I'm concerned. He's posting his charts and trades in the All you need thread. really simple stuff and he's nailing it. Take a look and see how simple it can be.

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  #14 (permalink)
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cunparis,

I disagree with you 100%

Indicators are great. I highly recommend everyone embrace them. Forget S/R, it's quack nonsense.

I have been trading for many years and I can tell you S/R is meaningless and it just doesn't work.

Indicators however, are the key to trading.

Here is my point. If I am successful with indicators, this is what your post sounds like to me. Indicators are just that. They INDICATE WHAT HAS HAPPENED.

Curtis Faith is a fraud cunparis. And for your information, one of the turtles is trading the system still to this day and is a billionaire. (he exposed Faith for what he really is.)

The only take away I got from WOTT was the position sizing. The rest you can fill in the blank with.

I can tell you with absolute certainty that the TF will reach 622 (probably 628) by Friday. Absolute certainty means over 94%, with 6% chance of not getting there.

You take ANY indicator that provides a 1:1 profit factor, and I can filter it and make money with it CONSISTANTLY.

The key piece to the puzzle you have failed to see, but I can assure you it is not the indicator to blame.

I hope I have insulted some, and inspired others. Keep on keeping on, it's there if you want it badly enough...

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  #15 (permalink)
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t2w,

I think this may be a more appropriate avatar for you.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Mike

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Need help?
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  #16 (permalink)
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trade2win i base all my trading on s/r all of it 100% of my entrie decission falls back to what is the past extreem s/r/zones and whats it the current s/r zone then i enter my trade and i make thousands of dollars every day for a few years now,yes i swap indicators out and even the good ones i find i dont need after a couple of months using them as my eyes starts seeing what they are showing me on the chart but everything falls back to s/r in the end...sharky

KILLING THE MARKETS DAILY
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  #17 (permalink)
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I like that avatar. guess it suits me too. have to agree with trade2win. but that doesn't include the S/R lines. I believe market respects certain levels. indicators can be a great help (if you have the right ones), wouldn't trade without them. makes life a lot easier.

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  #18 (permalink)
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Silvester17 View Post
I like that avatar. guess it suits me too.

hehe, nah I don't think it suits you, I guess t2w just reminds me of TRO a bit, "drastic times call for drastic measures" type thing, I felt he was trying to prove a point by going to the extreme.

I'd love to see a discussion on this topic so feel free to let 'er rip, just keep it civil...

Mike

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

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #19 (permalink)
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i posted my reply at gios

didnt know if i would get deleted here thats why i posted i there

and yes its civil

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  #20 (permalink)
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gio5959 View Post
i posted my reply at gios

didnt know if i would get deleted here thats why i posted i there

and yes its civil

Why would it be deleted? I only delete or edit a post when there is childish name calling, which yours was not. (I read it already and agree with it).

Mike

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

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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