Eliminating choppy signals

[TheBramble]

TheBramble,

too bad my serious intended, very first thread on trade2win was hijacked by guy, hopefully these revelations have at leats been useful to somebody other than me.

I was silently hoping for some holy grail answers to my questions, but these insights are too overwhelming ;-)

It happens all the time.

But seriously V, my post #7 was quite serious. If it's not useful that's another matter, but the intention was sound.

If you can learn to go with the flow and get serious when appropriate and enjoy and even participate in the silliness when it goes off tangent, you’ll appreciate far more what gets disclosed in the process. The trick is to realise when it occurs as it’s not often that obvious.

 

[fcta]

It happens all the time.

But seriously V, my post #7 was quite serious. If it's not useful that's another matter, but the intention was sound.

If you can learn to go with the flow and get serious when appropriate and enjoy and even participate in the silliness when it goes off tangent, you’ll appreciate far more what gets disclosed in the process. The trick is to realise when it occurs as it’s not often that obvious.

I am out of here.

What is off tangent?
We are talking of eliminating whipsaws. I bet, I have offered a sound solution to this with proofs, and doctrines on how to go about it.

Like the guy talking about waiting for 2 years for bottoms or tops do not know that, bottoms and tops are fractals of events - and can be viewed in terms of mins, hourly, daily, weekly, monthly, and yearly.

Now anyone who do not know have the right knowledge may think it is silly to even imagine trading based on these fractals of mins, hourly, daily, weekly and yearly market tops and bottoms.

Good bye TheBramble, and stop giving wrong information to people about what you have no knowledge of.

 

[wackypete2]

No shortage of lulz on t2w tonight.

Peter

 

[Valentino104]

That is why u must spread your risks over several markets. you are not clever enough.
it doesn't matter whether you are using catholic ideology or anything else, you must return profits in a good way and control draw downs and greed.
see result.
http://www.marketchaos.co.za/daniel-feeds.htm



You cannot blow your account if you are trading 1-2% of your account, these are insane and false trading concepts put in your mind to make you fearful. It is impossible in most markets unless you enter market at the top of the market cycle or with 20% of your account. That I called ignorant. You need to be knowledgeable on how and why there are false breakout. Most people are not knowledgeable in this regard.

FCTA,

Can you provide underlying details (please keep it explicit and specific) of the system of which the results are provided on market chaos? Would be happy to learn the main drivers/concepts behind it.

thx

 

[TheBramble]

I am out of here.

There IS a God...

Good bye TheBramble, and stop giving wrong information to people about what you have no knowledge of.

Byeeeeeee.

OK. I'll stop giving wrong information to people about what you have no knowledge of.

SWABO. That was the company you swindled. Knew it would come to me.

 

[Valentino104]

There IS a God...



Byeeeeeee.

OK. I'll stop giving wrong information to people about what you have no knowledge of.

SWABO. That was the company you swindled. Knew it would come to me.

Hate to see you leave Bramble, was both fun and interesting to read your posts. Would love to know more in depth about your post #7 in particular.

Let's prey today will be profitable

 

[TheBramble]

fcta was leaving. I was simply wishing him a goodbye.

There's not an awful lot more depth to it. That was the point. You don't need to go deep to decide whether an instrument is trending or not.

 

[Valentino104]

I guess this game is all about building complex and higher walls in the beginning, and later tearing them down and getting back to basics, isn't that the cycle we all go through? Hopefully we learn something useful in the meantime otherwise it's pretty useless ;-)

FCTA did post a link showing pretty impressive results (hitrate >80%, profit factor > 3), if it's an EA I would love to know the trading rules it's based on...but probably these are highly secretive and burried deep in the Saint Peter catacombs...

 

[TheBramble]

I guess this game is all about building complex and higher walls in the beginning, and later tearing them down and getting back to basics, isn't that the cycle we all go through? Hopefully we learn something useful in the meantime otherwise it's pretty useless ;-)

That just about sums it up as neatly and clearly as is possible to do.

I used to think it would be great to help bods avoid that 'wasted' phase until another member recently pointed out to me that same point you raise, that we perhaps learn something useful (or even vital?) in the process of that apparently useless exercise. Which led me to take a view that it’s probably impossible to offer any useful advice to anyone unless it is of the most basic and simple nature.

FCTA did post a link showing pretty impressive results (hitrate >80%, profit factor > 3), if it's an EA I would love to know the trading rules it's based on...but probably these are highly secretive and burried deep in the Saint Peter catacombs...

Didn’t look at the link as I know the fellow, but if your journey takes you in that direction, do let us know how you get on.

 

[wackypete2]

FCTA did post a link showing pretty impressive results (hitrate >80%, profit factor > 3), if it's an EA I would love to know the trading rules it's based on...but probably these are highly secretive and burried deep in the Saint Peter catacombs...

The link shows the he's had a draw down of 50% so far. Can you live with losing 1/2 your money before getting back into profit?

Peter

 

[TheBramble]

The link shows the he's had a draw down of 50% so far.

Don't worry. He can do much better than that. This guy can do negative drawdown, ask SWABO.

 

[Valentino104]

Peter,

pls fill me in on what is meant by that statistic; is it the cumulative loss at the deepest point? Or is it investment? I have googled but a clear definition is hard to find, personally I look at hitrate, profit factor, cons loses and return so far.

By the way, stats are not very clear as cons losers is said to be 2 while I see 4 on top of the list to start with from a quick inspection... How would such a (low) number translate in this huge drawdown?

Bramble,

what direction do you mean? I have no clue what's the strategy underlying the results, so I wouldn't know what direction it is but would be highly surprised if my journey takes me to namibia ;-)

Am really just in the learning phases, so pls allow me to question even things most basic to you guys...

Thanks!

 

[TheBramble]

Bramble,

what direction do you mean?

Speaking figuratively. I meant if you decided to use his system.

 

[Valentino104]

Bramble,

was having another thought on our earlier discussion, and there's an even more neat summing up of the phenomenon; to allow everybody his/her own learning curve. There are no shortcuts here I think, and we'll all need to go through this process I guess.

Still, somehow the acceptance of the idea that what one's doing has been done at least a thousand times before by somebody on this globe, should result in a more efficient learning process by accepting some side steps are just not useful, I hope??

To elaborate on that, could you visualise setting up your strategy of looking at the bars before entry by means of a trend strength indicator? There must be some governing principle defining your entries, which you have internalised in the meantime rather than in a trading system?

Barry

 

[TheBramble]

To elaborate on that, could you visualise setting up your strategy of looking at the bars before entry by means of a trend strength indicator? There must be some governing principle defining your entries, which you have internalised in the meantime rather than in a trading system?

If I've internalised it then it's not necessarily going to be something I could easily elaborate on even though I would in principle be quite happy to do so.

I look at price action.

If it’s going up, and it’s been going up for a bit and the longer TFs have a directional bias and the shorter TFs are showing continued long intent, I’ll be looking to get in on a Long at best value.

As for ‘trend strength indicator’ there are a dozen variations of these to my knowledge, but why not just stick an MA on your chart. Seriously. Linear Weighted seem to work well for many traders as that tracks the price a little more sensibly, but don’t make the period so short as to make it unusable.

A 200 period will give you a broader view of which side to trade and keep you out of whipsaws if you only trade well away from it. But experiemtn with a period that works best for you. There really is no shame in just taking the middle third of any trend. The aim of the game is to make money – not be spot on in picking tops and bottoms.

I don’t any longer use any of this stuff, but only because I like the clarity price action all by itself provides. I find lines and curves tend to draw me to make conclusions about what ‘effect’ they will have on the price, when of course, they are simply a reflection of the price. But to refer back to your earlier excellent point, I’m not sure I would be looking just at price action all by itself now if I hadn’t gone through the process of using the other inds I mention.

 

[Valentino104]

If I've internalised it then it's not necessarily going to be something I could easily elaborate on even though I would in principle be quite happy to do so.

I look at price action.

If it’s going up, and it’s been going up for a bit and the longer TFs have a directional bias and the shorter TFs are showing continued long intent, I’ll be looking to get in on a Long at best value.

As for ‘trend strength indicator’ there are a dozen variations of these to my knowledge, but why not just stick an MA on your chart. Seriously. Linear Weighted seem to work well for many traders as that tracks the price a little more sensibly, but don’t make the period so short as to make it unusable.

A 200 period will give you a broader view of which side to trade and keep you out of whipsaws if you only trade well away from it. But experiemtn with a period that works best for you. There really is no shame in just taking the middle third of any trend. The aim of the game is to make money – not be spot on in picking tops and bottoms.

I don’t any longer use any of this stuff, but only because I like the clarity price action all by itself provides. I find lines and curves tend to draw me to make conclusions about what ‘effect’ they will have on the price, when of course, they are simply a reflection of the price. But to refer back to your earlier excellent point, I’m not sure I would be looking just at price action all by itself now if I hadn’t gone through the process of using the other inds I mention.

Bramble,

how do you feel about pnf charts for visualising price action then? Taking out the time dimension and with reversal size as a filter of insignificant moves, i have become a real fan in a short time to grasp significant moves. However,

I now work with short MAs but will give your suggestion a try to use some longer periods, the short MAs are sort of a legacy I've retained from an earlier strategy and there's no particular reason for me to hang on to them. Wat I've tried already, is to get confirmation from weekly TF (I trade on EOD data) but this does not improve results significantly

 

[wackypete2]

The % drawdown shown is the largest loss of equity at some point - a peak to trough decline. For example if at some point the account equity was $100,000 then FROM THAT POINT a 50% drawdown means losses took the account equity to $50,000. In other words you would have lost 1/2 of what you had.
Accordingly, the higher the draw down figure in the statistics, the more likely the account is to go bust at some point.

Peter

 

[Pi3141]

Hi there,

Not looking to stir things up here, but just wanted to comment on The Bramble's earlier comment about indicators being ineffective. This generalisation is perhaps unjust because there are traders that use a combination of indicators as part of their trading system, and they are consistently profitable.

I think the problem with a lot of new traders (I include myself in this category) is that they often misinterpret what indicators are actually telling them. Or rather, what they think the indicator is telling them is over and above what the indicator is actually telling them.

I'll give an example from my own experience. I used to use the Parabolic SAR as part of my trading system. My rules were simply, if price is above the PSAR then price is indicating an uptrend, and conversely if price were below then it's in a downtrend. The reason why I used the PSAR was simply because I wanted some kind of filter to go long or short. But, it wasn't until I actually started thinking about how the indicator works, that I started to realise what a big mistake I had made. The PSAR works by simply plotting a spot where the last swing high/low is on the chart. If price were to move past this spot then it will reverse and repaint the PSAR spot to the opposite swing high/low. That's it. It doesn't do anything else. Therefore, the assumption that when price is above the PSAR it's in an uptrend was completely my own. The indicator doesn't actually tell whether price is in trend or not, rather, I had imposed this assumption onto the indicator itself.

Another prime example is the 200EMA. Some traders will determine whether price is in an uptrend or downtrend based on whether price is above or below the 200EMA. But this all depends on what TF you are trading. For example, if you are trading on 1min TF then traders need to realise that the 200EMA only refers to the 200 1min bars before it. Nothing more. A trend is defined as a series of higher highs or lower lows. Price can make an uptrend even if it were below the 200EMA. So again, assumptions from the trader are being imposed onto the indicator without any real justification behind it.

So what does all this mean then? Well, I think there's no harm in using indicators, so long as you don't fall in to the trap of interpreting indicators the wrong way and deriving information that is above and beyond what the indicator is actually telling you (you see this countless times in the forexfactory forum). It was only until very recently that I realised this point, and I couldn't believe how stupid I was for failing to realise it sooner (I come a philosophy degree background, where skepticism and coherent thought are run of the mill). Technical indicators do work if you know how to use then properly, and I have seen BBMAC use them profitably.

 

[Valentino104]

Hi there,

Not looking to stir things up here, but just wanted to comment on The Bramble's earlier comment about indicators being ineffective. This generalisation is perhaps unjust because there are traders that use a combination of indicators as part of their trading system, and they are consistently profitable.

I think the problem with a lot of new traders (I include myself in this category) is that they often misinterpret what indicators are actually telling them. Or rather, what they think the indicator is telling them is over and above what the indicator is actually telling them.

I'll give an example from my own experience. I used to use the Parabolic SAR as part of my trading system. My rules were simply, if price is above the PSAR then price is indicating an uptrend, and conversely if price were below then it's in a downtrend. The reason why I used the PSAR was simply because I wanted some kind of filter to go long or short. But, it wasn't until I actually started thinking about how the indicator works, that I started to realise what a big mistake I had made. The PSAR works by simply plotting a spot where the last swing high/low is on the chart. If price were to move past this spot then it will reverse and repaint the PSAR spot to the opposite swing high/low. That's it. It doesn't do anything else. Therefore, the assumption that when price is above the PSAR it's in an uptrend was completely my own. The indicator doesn't actually tell whether price is in trend or not, rather, I had imposed this assumption onto the indicator itself.

Another prime example is the 200EMA. Some traders will determine whether price is in an uptrend or downtrend based on whether price is above or below the 200EMA. But this all depends on what TF you are trading. For example, if you are trading on 1min TF then traders need to realise that the 200EMA only refers to the 200 1min bars before it. Nothing more. A trend is defined as a series of higher highs or lower lows. Price can make an uptrend even if it were below the 200EMA. So again, assumptions from the trader are being imposed onto the indicator without any real justification behind it.

So what does all this mean then? Well, I think there's no harm in using indicators, so long as you don't fall in to the trap of interpreting indicators the wrong way and deriving information that is above and beyond what the indicator is actually telling you (you see this countless times in the forexfactory forum). It was only until very recently that I realised this point, and I couldn't believe how stupid I was for failing to realise it sooner (I come a philosophy degree background, where skepticism and coherent thought are run of the mill). Technical indicators do work if you know how to use then properly, and I have seen BBMAC use them profitably.

Useful contribution Pi, perhaps in our mental process we first think an ever more complex solution / indicator is required, and by doing so we make things overly comlicated hence we jump to an easy conclusion as some sort of way out ... The indicator is what it is and doing it's job, conclusions are often our own interpretation and filled with our judgment as you say.

But getting back to the initial topic of the thread, how do you precisely evade the false signals in choppy markets and what indicators do you use for that? And how did your realisation of the true nature of indicators impact your trading? The realisation that eg the EMA200 is just an average over the past 200 bars, doesn't really give you a clear advice/signal but may rather lead to dropping it all together (which us back into the Brambles argument... ;-)

thanks for sharing your thoughts

 

[Valentino104]

The % drawdown shown is the largest loss of equity at some point - a peak to trough decline. For example if at some point the account equity was $100,000 then FROM THAT POINT a 50% drawdown means losses took the account equity to $50,000. In other words you would have lost 1/2 of what you had.
Accordingly, the higher the draw down figure in the statistics, the more likely the account is to go bust at some point.

Peter

Thanks Pete, indeed having second look at the equity curve I now see it's initially flat, then drops severely with the max drawdown (didn't this guy claim to be in control over his losing trades??) and finally starts to rise. By the way, going through the list I see again 6 cons losers, so the statistics saying there are only 2 must be a little flawed.

I'll include drawdown in my trading analysis from now in, useful!