Fighting an Average Joe

hey that's some impressive developing ability there Max! And the simulator is looking great so far at least from a GUI point of view. You could potentially be successful in trading too if it interested you enough, you certainly have some skills to bring to the table.

Although you could code your trading very quickly don't assume you have to do this in the beginning, its not necessarily the best thing to do I don't think. I'm not saying that it isn't though!

Thank you!

Yes, you are right: "if it interested you enough"

At the moment trading is interesting for me because it gives me motivation to develop various tools. But, as soon as I see that these tools can help in trading, the intrinsic motivation to trade will come as well

As for the trading style, thanks to the forum, especially to its "newbie" part, I found a cool idea I missed 10 years ago. I knew that the market is moving because of people, not some systems or indicators, but I never got an idea that you should understand whose money you are taking from the table when you win? And who is taking you money when you lose? This is a zero-sum game, you know.

So, this time I'm focused on finding setups where I can clearly see the loser. In case of the Forex market, it's this plethora of newbie traders who are driven by their emotions. It's different from stocks because there are no clear short-term trends, plus there are plenty of noise in the signal. So, the only chance to win is to filter out the noise by sitting in the market for as long as I can. When 99% of traders are trying to profit from the noise itself, it's a good idea to skip the noise, waiting for a clear signal to come.

And, what's more important, is that we can't predict when the signal will appear, and what will be its direction. It's just the same noise at the higher level, if you look at it from a broader perspective. It may happen that, when I'm sure that I caught a signal, good guys who trade on annual charts catch me in the low-level, from their perspective, noise, as well.

Yes, these setups are hard to backtest. It's not about indicators, it's more about manual testing, looking at various parameters outside of the chart: market sentiment, news, etc. So, I'm starting with the easiest part of it - improving rr ratio by doing the opposite of what other traders do. But I don't want to stop there, I want to develop a tool that will finally enable me to backtest stratiegies, using the complete set of available information in the past.

I see that you like the idea and overall look of the simulator. I pay a lot of attention to tiny details, I never release products that aren't polished. They just "work as expected". For users it looks like they are simple and natural, but there is a lot of work on the inside, hundreds of experiments and plenty of code, design and hours thrown away.

For example, in my previous business, where I sold keyword databases, there were about 2,500,000,000 keywords total. I didn't release an online version of the product until I found a way to search through all these keywords with a wild pattern like "contains some string, or a phrase, or a word". And the speed of the optimized algorythm was so amazing that I managed to serve all my 3,000+ customers with all their heavy requests from a single custom-built server for $2,000, sitting at my house on a fiber 100mb home connection.

And their requests weren't like "show me first 100 keywords that contains "web template", for example. It's a trivial task, plain old SQL can do the trick. But, when they searched for "web template", they got several millions of keywords in a fraction of a second into a list which can be sorted, edited, expanded, filtered out by subqueries as you type them, exported, downloaded, etc. Query like "business" that gave about 50,000,000 keywords as a result, took not more than 7 seconds, providing not a "database pointer", but a stand-alone list of keywords out of billions.

I even sold my keyword management engine to my old competitors at the end. I can't reveal their names, but if you know the SEO market, you can look at top 20 keyword research businesses in this niche, 70% of which got my sources and data

So, as you can see, coding my trading isn't an option, which I can easily pass in the very beginning. It's my life and I enjoy every part of the product I develop at the moment, starting from the data storage (I managed to fit 15-year tick data into a format which gives real-time disk read speed, taking just 2 times more space than its 7z archive, to measure its memory use efficiency) and up to order setup interfaces, enabling you to do anything you need with a mouse, not even touching the keyboard.

I see this as like your philosophy of the market and it may be good to do this kind of top-down thinking. You next have to know what your strategy is to make money from it. And then what specific rules/processes you follow to implement the strategy. It will be good to hear how you get on

btw i'm not asking you to spell it out to me, i'm just saying its what you need to clarify to yourself. its not easy to do, it can takes years to do it successfully.

Yes, you are right, it's a philosophy mostly at the moment. Just an idea, as I told initially.

On the other side, I see people who execute it on a regular basis. It means that I can, too. Yes, it will take some time, but there is no built-in personal advantage or disadvantage. Trading is a game that requires no physical abilities which you can't develop if you were born "disadvantaged". It's a game of learning, research and practice. Maybe even some automation on top of that.

On the third side, what other options do I have? Follow some random strategy where I can't find my edge? Where I don't know the source of the money I earn? Where I don't see people practicing it on a regular basis? It's much closer to gambling, I don't like it.

I see the future of me as a developing trader similar to agile software development process. You learn something small, try it, polish, evaluate the results and move to the next level. It's not a "waterfall", where you can plan your future 30 years ahead. It's more like Kaizen, the sequence of incremental improvements, each of which isn't revolutionary.

My first goal, for example, isn't to "win". You can't plan to profit from the very first alpha version of the product.

My first goal is to learn to stay in the "green zone" (aka "all positions profitable") for as long, as possible. As I told previously, I will reward myself not for the amount of profit I take from the market, but for the amount of time I'm sitting in virtual profits, even if these profits will evaporate over time. It alone can't make my future trading system profitable, but it's a big step towards developing a solid trading style.

When I'm sure that I'm able to fight the urge to take small profits, I can invest some more time into finding some solid entry rules. Then I will work on polishing my actions when the price reverses and goes against me, etc.

It's an evolution, not a revolution.

I see the core problem of novice traders: they are trying to become champions from the very first day. But, if you want to become a top boxer, you should not try to kick Oscar De La Hoya on your first training session. It's better to start with some exercises to become fit, then practice to hit and evade hits, then learn about strategy and tactics, etc.

For me "being in a green zone" is an exercise similar to plain old running. You can't skip it, because, without it, even if I will find a perfect setup, I will take profits prematurely, breaking all rules of any trading system.

Nice article you have shared in here. Thanks for sharing it here. Keep sharing such posts in here so that the newbies would learn through it.

Trillion dollar a day markets aren't driven by Average Joe's

If we are talking about "big guys" here, are you sure that they trade on 5-minute timeframes?

As I told previously, any signal is a noise at a higher level.

For me, it's not that important who is moving the trillion dollar a day market. I want to know whose money I can take from the table. I can't compete with world banks, especially at the very beginning

This week I started to trade real money. A small $100 account just to test the idea after simulated trading, then paper trading on a demo account.

So far, so good: +30% in 4 trading days, trading as a robot.

Here are more details and screenshots: https://pastukhov.com/2018/03/17/first-trading-week/

Next week I will try to optimize this trading setup using simulator to practice feeling the market.