Trading Accuracy?

This is a discussion on Trading Accuracy? within the Forex forums, part of the Markets category; Gone. Because according to some - this was a silly question to begin with. ------------------------ 1) How do you define ...

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Old Dec 9, 2004, 11:58pm   #1
 
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Trading Accuracy?

Gone. Because according to some - this was a silly question to begin with.
------------------------


1) How do you define “accuracy” in your trading of the Forex?

Many people trade the Forex and many people talk about “successful trades”, but what I’d like to find out here is what do you consider to be the critical components of a “successful trade”.

Is it as easy as simply saying: “One that makes money”? Or, would you say that if you did not lose money on the trade, that it was "accurate"?

How do you "define" accuracy, or does accuracy even matter in trading the Forex?

Best Regards,
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Last edited by 7thSignalTrader; Dec 15, 2004 at 7:38pm.
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Old Dec 12, 2004, 1:33pm   #2
 
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and a merry christmas to you too , drippy.


vector, in my opinion, a successful trade is one where you followed your trading plan to the letter. whether it made money or not is irrelevant. if you have devised and tested a method, then the only way to be successful with that method is to trade it according to the rules.

hope this helps.

FC
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Old Dec 13, 2004, 9:09pm   #3
 
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I don't know vector, why don't you us what YOU think delivers REAL accuracy.....(and que music....)

Last edited by rosemary999; Dec 13, 2004 at 9:44pm.
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Old Dec 13, 2004, 11:29pm   #4
 
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"Forget trading for accuracy .. trade for expectancy"
-- Ed Seykota
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Old Dec 14, 2004, 9:18pm   #5
 
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Consolidated Response

7thSignalTrader started this thread Gone. But, I'll leave it in hopes that it helps those who were not silly.
---------------------------


FetteredChinos:

“vector, in my opinion, a successful trade is one where you followed your trading plan to the letter. whether it made money or not is irrelevant.”
---------------

Hmmm. So, even if I zero out my entire account balance and lose the shirt off my back – the trade was still a success, just as long as I followed my plan to the letter?


GammaJammer:

“I'd define it as one where you had a trade idea that fitted your trading plan, executed it in efficient manner, and achieved the desired outcome (i.e. there was money to be made on the trade and you took out as much money as was reasonably possible).”
--------------

Ok - sounds like a very reasonable thing to me – especially the part about maximizing. This sounds like it is all based on a trading “idea” that was generated in the first place. Does this mean then that “Decision Support” for a trade is based on “ideas”?


“1) Basic trade idea was not sound. (e.g. trade based on some assumption about the fundamental picture that is obviously flawed.)”
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Ouch! I used to do a lot of that before I understood the concept of DSS (Decision Support Systems). A lot of money is wasted in the market, I hallucinate, because of the human trait that we display called the “assumptive urge”. We make “assumptions” based on observations, not fully realizing in that moment that we are in fact “human”, and the impact that our humanness will have on both the object of our observation and in logical sequence any “decision” that we make subsequent to our analysis.

In other words, because we are human, we will make variant observations even when the object under observation has not changed. This can only lead to variant “decisions” – which then lead to variant outcomes. Thus, the need for a DSS becomes even more critical in trading as it filters out any possible human variants from the decision making process.


“2) Poor execution. (e.g. procrastination when trade opportunity is identfied results in inferior entry point)”
---------------

Solved by DSS.


“3) Money management rules not properly adhered to. (e.g. trailing stops not set properly, profit taken on whole position too early etc)”
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Well, is there not a distinction between Money Management and Trade Management? Money Management is 100% under the traders control because it only applies to pre-trade “decisions”. Whereas, Trade Management is not 100% under the traders control, because it applies to post-entry “decisions”.

So, the trailing stop, and exiting too early issues, would therefore fall under Post-Entry Trade Management. Anything that cannot be 100% controlled by the trader cannot also be a Money Management issue. Selecting the Initial Cost-Basis as a percentage of total account balance pre-trade is a Money Management task.

Building a Profit Model that contains: No. of trades over a specified period of time into the future, Cost Basis per trade, Gross P/L per trade, Net P/L per trade, running Trade Balance, Pip Value per trade, K-Value (lot sizing) per trade, and a running Balance Total – are all Money Management issues. Those things are all based on Starting Account Balance, a Fixed % Cost Basis, and an Average % Net Gain factor (pips expected per trade). These are all Money Management type issues because they all go to the heart of what the trader expects to gain in revenues over a specified period of time.

By the time one enters the trade – the Money Management tasks are completed. This is why there is so much confusion about the distinctions between Money and Trade Management. Trade Management cannot exist unless there is a system to manage.


“Not a great deal different to FC but I suspect I have a more discretionary approach to my trading and as such can't always be so certain when, or under what circumstances I am going to trade.”
------------------

Yes – I understand. I think your level of “certainty” prior to any trade that you make can be drastically changed when you start to deploy a true DSS to your trading routine. A good DSS should come complete with a Probability factor that should give you the “certainty” you are looking for, one way or the other.


“In addition my aim is to leave at least part of the position open with a trailing stop, so I can't always talk about accuracy in terms of exactly how much I take out of the market on a given trade.”
-----------------

Yes – sounds like a great idea – locking in some “profit” (I call it revenue – same thing) while leaving a trailer behind just in case the close price move beyond your original expectations. I see that as a good practice, especially when one is not sure about where the structural limits exist for any given trade. However, if you could know those structural price limitations before you entered the trade, you might be inclined to allow the entire cost-basis to move into the limit area before exiting and therefore maximizing your per trade potential.


“I think consistency is far more important than accuracy personally.”
----------------

I’d rather be accurate than consistent any day of the week -

If I am accurate and my targets are by design plentiful in nature, then by definition “consistency” will logically follow. But, if I am not accurate to designed targets that are plentiful in nature, I can be consistently headed in the wrong direction. Accuracy must therefore, encompass consistency.

In other words, consistency is within the domain of Accuracy. I can be consistent and not accurate at the same time. However, it is much harder to be accurate and not consistent simultaneously – in fact, it is mathematically impossible.

Great post!


Rosemarry999:

“I don't know vector, why don't you us what YOU think delivers REAL accuracy.....(and que music....)”
-----------------

How am I doing thus far? Learn anything yet?


DonaldDuke:

"Forget trading for accuracy .. trade for expectancy"
-------------------

Read it – don’t agree with all of it – for the above reasons given to GammaJammer.

If I lack accuracy, then my Predictive Model will reflect that. If my model is built only on the resolution of historical and empirical data points that track to high levels of accuracy – then that will be reflected in the outcome of the model.

My expectancy (and you make a very good point) is based in what, therefore?

The expectancy has to have a premise in order to be consistent with fact (historical fact). So, long before I can get to expectancy, I have to first develop a premise which is based on some kind of model AND that model (if it is to be a good model) should have at its core, the highest level of accuracy available to it.

So, in a sense you are right (I think) in that when you trade – you do indeed trade for expectancy – however, that expectancy was already based on some inherent resolution of accuracy in the model you used to make the trading decision in the first place.

So, I don’t think that the trader wishes to forget accuracy – I think the trader wishes to “ride the wave” of accuracy already embedded into their trading model.

Great responses by all!
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Last edited by 7thSignalTrader; Dec 15, 2004 at 7:39pm.
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Old Dec 14, 2004, 11:37pm   #6
 
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tv, correct.


in that case it is not a case that your trading wasnt accurate. more that you system devision (is that a word?) and/or backtesting was flawed..

thats just how i took the question anyway.

besides, who isnt trading according to some degree of plan or method anyway?



its late and my brain hurts..

roll on xmas dinner #4 on friday..


good posts though TV. very thought provoking

fc
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Old Dec 15, 2004, 9:20pm   #7
 
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tv
How am I doing thus far? Learn anything yet?

r999
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Old Dec 15, 2004, 9:42pm   #8
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Quote:
Originally Posted by rosemary999
I don't know vector, why don't you us what YOU think delivers REAL accuracy.....(and que music....)

Rosemary... why do you bother even responding ....It's easy to bash, criticize, ridicule and make fun of people what people write here; just read your orginal post and you'll see what I mean. If don't like what people write why not just ignore them and go about your Rosemerry way.
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Old Dec 15, 2004, 10:07pm   #9
 
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thank you , I will and wish both youself and vt a merry and ridicule free christmas!
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Old Dec 15, 2004, 10:12pm   #10
 
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Uneducable

7thSignalTrader started this thread Rose,

Then I would say that if you cannot learn from a 266% net gain - then you can't learn much at all. Your loss becomes someone else's gain when you end up on the wrong side of a 300 mph bullet train moving north.

Such arrogance - for people so clueless. This site is bizarre. Somebody walks through the door, gives you something you did not have before that has the potential of making you a billionaire (certainly a millionaire), and all you can do is find a way to blow your opportunity to bits.

Years ago, my very first college Physics Professor, Mr. Paul Hewitt once spoke these words to me:

“There is nothing less common in the entire universe, than common sense.”

Boy – was he dead-on “accurate” with that statement.
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Old Dec 16, 2004, 1:35am   #11
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If DWT1020 'convincingly' stays around after TradeVector has gone - I will put up the bar tab at the Chandos - Xmas Party 2005.

Last edited by TheBramble; Dec 16, 2004 at 1:42am.
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Old Dec 16, 2004, 3:03am   #12
 
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To All:

7thSignalTrader started this thread I’ve looked at his post, read his drivel, and was memorized by the brilliant accuracy of his trade journal (hardly) and I have to ask this question: Does anybody ever learn anything from this guy?

I mean his loss rate and lose percentage per, is quite staggering to me. I would find another business, I my trading was that sporadic and off target. I could not last for long in the Forex trading with a record like that. I’m just curious as to whether or not other have learned anything and if so, what have you learned from such a dreary record?
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Old Dec 16, 2004, 3:24am   #13
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TheBramble,

I can hang around after VT leaves but I don't usually offer much input on boards. I stumbled upon this site while doing a google search for something Forex related. I happened upon VT's first post and since I'm more of a two heads are better than one thinker I thought it would be interesting to watch his trades....So I tend to be a reader and lurker... I find it helps me keep a more open mind if observe the charts and markets as Others are seeing them.. That's why I was interested to see VT's profiles as he seemed to have an interesting take on trading... Too bad he's decided against posting this profiles.

I usually hang out at Moneytec as they have a pretty good MetaTrader thread and I'm considering using it for the automatic trailing stops. Living in the USA it's difficult to trade the Euro session and I hate having my trade go with me for a while and then retrace hitting my S/L while sleeping...I'm hoping MT will solve this issue.


As for the X-mas party.. The Chandos is a little far for me to come..but thanks for the invite..

d
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Old Dec 16, 2004, 3:47am   #14
 
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Ooops? (not really!)

7thSignalTrader started this thread The Bramble, does not have a Trade Journal.

But, of course he does not have a trade journal. Why else would he be so comfortable at criticizing others for what they do. But, it was nice to see him defend the fact that he did not have a journal and therefore he has no record to defend.

I just wanted him to admit that he produces nothing, but always finds a way to attack others. I knew he had no journal – any 7 year old could clearly see that his name is not there in the journals section. I just wanted to know if he would actually defend something like that. It tells me a lot about him.

Very typical.

You are on the clock Bramble – I’m expecting a 20 trade acceptance from you – do not run and hide. You started this mess – I’m just going to stick around long enough to clean it up.
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Old Dec 16, 2004, 7:34am   #15
 
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TV, you dont know anyone called Albert by chance?
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