I have reviewed all my trades from earlier on, although I think the sample size is not large enough yet for me to draw conclusions on making changes, I noticed that out of 15 trades, I had 6 winners. Some observations that I have:
1) Out of the 6 winners, after the entry bar, the maximum retracement against my entry point was only 10 ticks.
2) After prices moved in my favor by my 1R, moving stop to breakeven has no impact on the 6 winners.
Current sample size is still small and I will continue to collect data on the above before I implement any changes.
After trading my method for a while, abielt a short while, I have some feelings about my current system of trading. It trades really infrequently and in fact, although its supposed to be a trend following system, most of the time, I am left out of large moves made while trying to wait for a point to get on. Also, my initial stop losses are frequently hit for the full 1R loss which makes me keep wondering if there's a better entry point to enter the trend.
I will be stopping trading for the rest of the week to backtest some modifications on my trading system. In particular, after looking at Perry's trading system using range bars, I was thinking of incorporating ranges bars in my trading system. After making the modifications, I want to achieve the following:
1) The system should be able to get on major trends early, as opposed to now when my system miss the bulk of the movement.
2) To choose a point of entry where the momentum of prices are moving fast in the direction such that if I am entering using a two lot system, I can take one lot off at a profit after a few ticks and move the second lot to breakeven and hang on for the rest of the ride.
3) To step up on the frequency of trading. Personally, I feel that this is a debatable point, but my way of thinking is that if trading is a probability game then if the system itself has more samples everyday, it increases the likelihood that we will end up in net profit most days.
I feel that there is a fine line between trying to make a great system and chasing the holy grail and I definitely hope that my expectations are not so unreasonable as to be construed as chasing the holy grail.
Hi pple, I havn't been posting in my journal for a long time. Previously, I took some time off to develop and backtest a system. I decided to switch to trading Singapore market as the timing is more in line with my hours. After some testing, I managed to come up with a strategy that has a relatively smooth equity curve and I implemented it for 2 months letting it auto-trade, but the results were dismal. I investigated and realised that there was too much slippage entering with market orders at the start of a bar and now have to go back to the drawing board, but I feel lost and seriously worry that I am putting my efforts in the wrong direction...I often hear so many conflicting advice from everyone that I really don't know what to put my effort towards...should I continue backtesting and fitting various indicators on the charts? Should I try to trade discretionary? But trading discretionary has always posed a question to me, I am not sure how am I supposed to be exercising my discretion, shouldn't my decisions be based on either a) price or b) indicators or c) volume, all of which can be backtested, what am I trying to develop if I try to trade discretionary. I did speak to a guy who is quite profitable trading futures on SGX, but when I try to ask him in detail why did he enter or exit into trades, he says that it is mostly by feel. Am I trying to develop some kind of feeling for trading? Should that be the goal?
Some people say that simple systems do not work...and some people say that try to keep it simple, don't over complicate matters...Sorry for the rambling, I feel that I am so lost, I don't even know what question to ask anymore.
I think your market slippage issue is a well known problem amongst algo traders. Why else would there be firms who relocate next to exchanges to have the lowest latency possible in order to frontrun other algos?
As for advice, let me ask you this question: How long have you been focused on developping/backtesting your system? Perhaps you're developing tunnelvision and need to step back and reconsider your situation. Mistakes happen, especially with code. Perhaps minor adjustments will allow you to reverse the effects. Maybe it's your indicators. Whatever it is, I think that that's not what you should look into right now. You sound distressed and your state of mind is probably restricting your lucidity. Take some time off and do something that will take you off of this topic. Your subconscious won't stop thinking about the problems that you face and that's all you need to regain clarity over the situation. This is what people mean when they say "Give it time".
When you regain a neutral state over this matter. Go back through all your methods. Act as if you knew absolutely nothing about markets and trading and begin questioning each of your steps. In other terms; unlearn. This is a stage where you clean up and get rid of things that hinder you. Look at each indicator and ask yourself if this is making money for you. If not, remove it. You can always bring it back later, but try working from scratch and rebuilding, as necessary.
The cleanup is not only done on your technical analysis. It has to be applied to how you view the markets and your position in it. Go through all the "common sense" talk that goes through your head. What do you tell yourself, that once rationalized, don't make any sense? Think about what you think. I'll say it again. Think about what you think, because it can easily cloud your judgment, specially when trades go against you. If you win over your mind, the battle is halfway won. If your mind losses and negativity takes over, the battle will be a bitch to win.
Here's a tip: Cover your eyes with your hands and think in your head that once your hands have covered your eyes, your eyes have been swapped with a new pair of eyes. Now open your new eyes and look again at your problems and don't forget that you are now looking at your problems with a new pair of eyes. From someone else, perhaps. And these eyes allow you to see things differently, as if you were someone else.
Once you believe this, you will have an easier time seeing your problems from new angles and solutions should appear more easily.
The following user says Thank You to JustinIsHere for this post:
once a while , a chart is a good reference for your own review later.
that will check your if your thinking (writing) and reality (chart) is linking together.
You'll develop a feel after about 2 or 3 years minimum, and after a lots of mistakes.
I will advise you to avoid indicators but you'll not want to follow this advice as you may think they are beatiful ;
I can type here 3 long pages of advice but I think it will be waste of YoUR time
I switched to US market 3 years ago..and you'll know why sooner or later...