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KJ Trading Systems Kevin Davey - Ask Me Anything (AMA)
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KJ Trading Systems Kevin Davey - Ask Me Anything (AMA)

  #251 (permalink)
Trading for Fun
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kevinkdog View Post
Thanks for the comment and questions. You are stuck in "no man's land" - you are afraid to let go of your current method, yet you feel a pull to do things differently.

I can tell you that the way you are currently trading is nearly impossible to test, given all the nuances with your current approach.

To be successful with algorithms, you have to be able to program every part of the strategy. It does not sound like you can do that now. You also have to program a lot of strategies (because most turn out to be junk). Then, to test manually is cumbersome, and really a non-starter. You'll never really get traction.



So, my advice - stick with your current trading method if it is working. If it is not, then maybe make a clean break and try something else, like algorithmic with proper development and testing. Don;t try to keep the old, and add the new. I don't see it working.

Thank you kevinkdog for the response, Good advice and simple.

Your advice is the same thing I have been thinking about over the last month or two. It is a bit of thinking of circles, but part of this trading business, I am learning is make good decisions about going forward, before losing alot of time.

You nailed my current situation with accuracy. At least I now know my where my challenges are and have some suggestions on a path forward. And most important, at least I have a path forward on the right way to properly develop and test a trading strategy. I guess I fear letting go of existing trading approach, is because that's all I know during my past 3 years of trading (off and on).

I think I am having a hard time with grasping from your recent webinar that it sometimes take testing 100 to 200 trading ideas before find 1 system to move forward with live. This sounds a bit overwhelming and stare blank face in confusion to someone like me who has been watching price action only the past 2 years on the chart.

What is your suggestions or comments to the trader with the blank face thinking "I have to program and test over 100 trading ideas, before finding 1 or 2 to go live with" ?

Thanks,


Last edited by goodoboy; February 11th, 2017 at 12:49 PM.
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  #252 (permalink)
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goodoboy View Post
Thank you kevinkdog for the response, Good advice and simple.

Your advice is the same thing I have been thinking about over the last month or two. It is a bit of thinking of circles, but part of this trading business, I am learning is make good decisions about going forward, before losing alot of time.

You nailed my current situation with accuracy. At least I now know my where my challenges are and have some suggestions on a path forward. And most important, at least I have a path forward on the right way to properly develop and test a trading strategy. I guess I fear letting go of existing trading approach, is because that's all I know during my past 3 years of trading (off and on).

I think I am having a hard time with grasping from your recent webinar that it sometimes take testing 100 to 200 trading ideas before find 1 system to move forward with live. This sounds a bit overwhelming and stare blank face in confusion to someone like me who has been watching price action only the past 2 years on the chart.

What is your suggestions or comments to the trader with the blank face thinking "I have to program and test over 100 trading ideas, before finding 1 or 2 to go live with" ?

Thanks,

Well, I can say that most people don't believe it. Many people are stuck in this mode of "trading should be easy, just look at all the people journalling their success, or tweeting their daily profits, or smashing it day after day running a trading room..." It just CAN'T be as hard as Kevin says.

It gets depressing seeing all the people supposedly having trading success, when you are struggling. But you have to constantly remind yourself that trading is REALLY hard, and that most people fail at this.

Maybe it is not as hard for some people. But it is still hard for me, and maybe that is because I take a lot of steps to prevent mistakes, I have pretty high performance standards, and I try to be careful in developing strategies. Or maybe it is because I am doing things the hard and wrong way. I don't know.

It is hard to accept that trading is really a lot harder than you initially thought, and that maybe the approach you are doing now (whatever approach that may be) is likely never going to work. Ask yourself this: "how do I know (insert your trading approach) actually works?" Most people have no proof their approach works, just the sweet words of some "guru" that says he is not allowed to share actual trading results, or some such bs.

That realization is hard pill to swallow, as is the persistence you need to really succeed, the frustration you have to overcome, etc. You are trying to become world class at trading, and just like a champion athlete, you need a certain type of personality to succeed, even if you have the skills and some luck.

Hope this helps!

Kevin

Feel free to send me an e-mail if you want to take this conversation offline, I'll be glad to help...

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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  #253 (permalink)
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kevinkdog View Post
In general, based on how I develop systems, I consider it good to have return/drawdown ratios of 2.0 (meaning if you want 50% annual return, you have to endure 25% drawdowns along the way). That is the benchmark in my own trading.


SMCJB View Post
Before my October draw down I was at 1.45x, and as of Friday night I'm at 1.62x and optimistic about getting to 2.0x soon.

@gumdr0p full disclosure, the numbers I quoted last month were incorrect. My spreadsheet was incorrectly referencing minimum account balance and not the drawdown, as such the correct ratio's were lower. Thankfully after a strong week I can say that as of close Friday, after 27 weeks of trading, my return/drawdown ratio is now 1.83 based upon closed trades.

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  #254 (permalink)
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From another thread...


No BS is right. Never seen anybody do anything as open as @kevinkdog did here.
My already high opinion of Kevin, was elevated to almost atmospheric levels when I saw this last week.

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  #255 (permalink)
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SMCJB View Post
From another thread...


No BS is right. Never seen anybody do anything as open as @kevinkdog did here.
My already high opinion of Kevin, was elevated to almost atmospheric levels when I saw this last week.

This is true....also can't forget that Kevin is a super nice guy on top of it!

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  #256 (permalink)
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Hello Kevin,

I am still kind of new to ATS development and study.

Is there any truth per your opinion regarding the big algo trading firms finding retail traders algo and stealing their
algo strategy from them. Something like machine learning or something? Does this apply to 1- 3 trading contracts algos?

Thanks for you input.

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  #257 (permalink)
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goodoboy View Post
Hello Kevin,

I am still kind of new to ATS development and study.

Is there any truth per your opinion regarding the big algo trading firms finding retail traders algo and stealing their
algo strategy from them. Something like machine learning or something? Does this apply to 1- 3 trading contracts algos?

Thanks for you input.

Thanks for the question!!!

I think retail traders are worried about that, but I doubt big firms care about us little guys. If anything they'd spend their time trying to steal strategies from other big firms, I'd think. And 90% of people probably have worthless strats anyhow.

Really, if you are trading any algo, it probably can be easily stolen. Think of all the groups (brokers, trading platforms, exchange, phish groups, people that fix your PC) that see your orders or strategies... while they might not steal them, all those are potential weak points that could be compromised.

So I always assume my strats could be stolen, and plan accordingly...

If you have any questions please send me a Private Message or use the futures.io "Ask Me Anything" thread
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  #258 (permalink)
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kevinkdog View Post

Really, if you are trading any algo, it probably can be easily stolen. Think of all the groups (brokers, trading platforms, exchange, phish groups, people that fix your PC) that see your orders or strategies... while they might not steal them, all those are potential weak points that could be compromised.

So I always assume my strats could be stolen, and plan accordingly...

Hi Kevin

I've often wondered about this - I think it's reasonable to assume that any strategy written on a trading platform and that may be viewed by the platform organization (e.g. when you send your own logs and settings to support) could be stolen.

How would a broker or exchange go about doing that though? Aren't your entries and exits all they can see?


Also, this brings issues about theft of IP into the discussion. Wouldn't anyone who steals IP be liable to prosecution?

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  #259 (permalink)
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kevinkdog View Post
And 90% of people probably have worthless strats anyhow.

Might be closer to 99%...

@goodoboy:
Another problem when you are looking at these type of strategies is quite simply scale. Even if someone returned 100% plus on his account trading 2-3 contracts, if the strategy can't scale with size a big institution will be wasting their time trying to reverse-engineer it. They would be much better off trying to find their own strategies that effectively use their capital.

Now, if someone had a strategy that scaled well it is another matter entirely. However, tend to be longer-term in nature (assuming you are not front-running) and a lot of them share the same characteristics. So, the pros probably already have a good idea of what you are doing...

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  #260 (permalink)
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xplorer View Post
Hi Kevin

I've often wondered about this - I think it's reasonable to assume that any strategy written on a trading platform and that may be viewed by the platform organization (e.g. when you send your own logs and settings to support) could be stolen.

How would a broker or exchange go about doing that though? Aren't your entries and exits all they can see?


Also, this brings issues about theft of IP into the discussion. Wouldn't anyone who steals IP be liable to prosecution?

Not Kevin, but the answer is probably still relevant.

Any reputable broker/bank would have a policy in place regarding personal trading. Of course enforcing this policy against individuals may not always be easy, but in the current environment of "information sharing", i.e. FATCA, CRS and whatever else will be dreamt up next, you never know how risky it would be trading on the side. In the absence of such a policy, and I may be mistaken, but I believe someone could trade along a broker client as long as they are not front-running.

In my previous post I mentioned scale - unless your strategy scales well, it may not represent an efficient use of the broker's time or capital to employ your strategy. If it scales well, then things may be different, but how sure are you that a) you truly have something unique or b) that your super-strategy is not a risk management nightmare that no brokerage / institution / professional would touch?

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