Successful trading system

herr said:
Ok, but I cannot wait seven years. It is a lot !
Something shorter ?

I think a year is adequate for a single stock. Out of 250 days, if you are right in 100 and wrong in 150, you will have, according to my strategy:
Click to expand...

Perhaps I did not communicate clearly. I used five years of data to backtest. It took a couple of weeks of development to get it ready for prototyping.

Total Time from idea to now!
  1. Computer Simulation: 2 weeks
  2. Prototyping: 5 months
  3. Pre-Production: 1 month
  4. Production: ongoing, but 3 months so far.

Six and a half months from beginning simulation to full production fits in your time frame of one year. However, you should consider all the steps.
 
HowardCohodas said:
Perhaps I did not communicate clearly. I used five years of data to backtest. It took a couple of weeks of development to get it ready for prototyping.

Total Time from idea to now!
  1. Computer Simulation: 2 weeks
  2. Prototyping: 5 months
  3. Pre-Production: 1 month
  4. Production: ongoing, but 3 months so far.

Six and a half months from beginning simulation to full production fits in your time frame of one year. However, you should consider all the steps.
Click to expand...

Prototyping is trading without clicking "Submit" to an order ? Only to see the price at you would have entered a trade ?
 
herr, if you're looking for certainties, something that will continue to work in the future, or someone to tell you after X amount of trades it works, you aren't going to find it. There are no certainties in this business. Find a system, backtest if you like. Forward test it for a while (i.e. imagine you had entered the trade and manage it how you would). Then try with small amounts as suggested to see if you can do it when money is at stake.

How do you know the strategy will continue working. You don't! But you should know your strategy well enough, so that you notice if it is not performing as expected, or know your market well enough to see that it is changing, and then you adjust and adapt.
 
herr said:
Prototyping is trading without clicking "Submit" to an order ? Only to see the price at you would have entered a trade ?
Click to expand...

Prototyping is paper trading. See step 2 in my qualification process in the post where I expanded the detail
 
Shakone said:
herr, if you're looking for certainties, something that will continue to work in the future, or someone to tell you after X amount of trades it works, you aren't going to find it. There are no certainties in this business. Find a system, backtest if you like. Forward test it for a while (i.e. imagine you had entered the trade and manage it how you would). Then try with small amounts as suggested to see if you can do it when money is at stake.

How do you know the strategy will continue working. You don't! But you should know your strategy well enough, so that you notice if it is not performing as expected, or know your market well enough to see that it is changing, and then you adjust and adapt.
Click to expand...

Shakone, I know that you will never have 100 % certainty. But the best traders in the world succeed because they "knew" in a certain way that their strategy would continue working. Trading is not the casino.
 
herr said:
Shakone, I know that you will never have 100 % certainty. But the best traders in the world succeed because they "knew" in a certain way that their strategy would continue working. Trading is not the casino.
Click to expand...

The trader is part of the trading system. A trading system is successful if the strategy has a positive expectation, the trader has a successful money management strategy and the trader has a method for understanding when the trading strategy is not effective.
 
Last edited:
HowardCohodas said:
The trader is part of the trading system. A trading system is successful if the strategy has a positive expectation, the trader has a a successful money management strategy and the trader has a method for understanding when the trading strategy is not effective.
Click to expand...

If you throw a coin 200 times, you will probably have 92 "fronts" and 108 "backs" (I don't know how to say it correctly in English), something near to 100-100. If you continue doing that for another 200 times, you will probably obtain again something similar to 100-100.

But in trading is different. The coin has a physical structure where always the probabilities for each side will be 50-50. In trading it doesn't exist that physical structure. You can test a method where you are profitable, but then trade it with bad results.
 
herr said:
But in trading is different. The coin has a physical structure where always the probabilities for each side will be 50-50. In trading it doesn't exist that physical structure. You can test a method where you are profitable, but then trade it with bad results.
Click to expand...

I think we are in violent agreement.
 
As far as I'm concerned there is no such as holy grail on trading what ever kind of product. You will have losing trades. Period! It is all come back to us, the human, the trader, the trigger to have whether it is a losing trades or a winning trades.

Sometimes people do rush things up hoping to get a huge profit from new things they discover in life but they don't know about the traps, the difficulties inside it that can makes us really down and losing faith of what we first believe to be a great opportunity.

There is nothing simple and easy about trading. The key is you! If you can learn to accept to lose then you are in first step to works your trading technique to be better. But, there also many different thing you should know, learn and experienced. Thing such as how to analyse the market, what kind of strategy works for you, how you manage your equities and the most important thing to learn is how to learn and manage your own trading psychology.

And one thing to remember that trading itself is a journey. A journey without ends, a journey of learning and practicing that will consume your time, effort and money. So if you just think about this and you decided that this is not for you... then by all means, just quit it now. Save your time, hard works and capital because trading isn't for everyone.

Just my 2 cent....:)
 
herr said:
I can tell you my strategy. I have no problems in giving it:

Minute 16 (9.46 ET) I enter a trade. I always enter at the same time. It is my only trade of the day, I like to do ONE trade and I use the same stock everyday. The criteria to enter the trade is simple:

I look the MACD (60,30,9). If it is positive, I buy. If it is neagtive, I sell. Exit points are:
Stop loss: -0.45%
Target: +1.55%

It´s that. My results this month are negative:

1-Nov.. Stopped
2-Nov.. Stopped
3-Nov.. Stopped

Many stops in a row, can happen ? The point is psychology. You end the day thinking in that you are going to be stopped always.
Click to expand...

MACD is lagging indicator.

So you go ahead and use it, anyway, knowing that it is giving you lagging information.

You trade exactly on the 16th minute.

Do you, really, think that the market will do what you want at exactly the same time every day?

Someone has been giving you false ideas on what is discipline.

Forgive me, that is not discipline, it is woodenheadedness.

Repeating a chart pattern may be possible but I doubt if anyone has an argument for entering a trade on exactly the same minute of every day and being right once in every three, just to stay even.
 
Splitlink said:
MACD is lagging indicator.

So you go ahead and use it, anyway, knowing that it is giving you lagging information.

You trade exactly on the 16th minute.

Do you, really, think that the market will do what you want at exactly the same time every day?

Someone has been giving you false ideas on what is discipline.

Forgive me, that is not discipline, it is woodenheadedness.

Repeating a chart pattern may be possible but I doubt if anyone has an argument for entering a trade on exactly the same minute of every day and being right once in every three, just to stay even.
Click to expand...

MACD is a lagging indicator, OK.
Do you know any indicator that tells me what is going to happen in the next hour ?
 
herr said:
MACD is a lagging indicator, OK.
Do you know any indicator that tells me what is going to happen in the next hour ?
Click to expand...

There is not an indicator that will do that. In any case, to compound the problems of indicators, apart from picking a good one, you have to, then, calculate the proper average to use it on.

The books told you right about following the trend. Lots of us do that. However getting into a trend should be done when you see that the trend has established itself and, then, looking for a countertrend which ( unless you are expert, you do not enter) and entering with the trend when the countertrend dies out.

This is nothing to do with rules and regs. It is practice and opportunity.

You can, however, be quite sure that it will not happen at exactly the same time every day which is the main reason why you are doomed to failure.
 
Splitlink said:
There is not an indicator that will do that. In any case, to compound the problems of indicators, apart from picking a good one, you have to, then, calculate the proper average to use it on.

The books told you right about following the trend. Lots of us do that. However getting into a trend should be done when you see that the trend has established itself and, then, looking for a countertrend which ( unless you are expert, you do not enter) and entering with the trend when the countertrend dies out.

This is nothing to do with rules and regs. It is practice and opportunity.

You can, however, be quite sure that it will not happen at exactly the same time every day which is the main reason why you are doomed to failure.
Click to expand...

There you can be wrong too.
 
herr said:
If you throw a coin 200 times, you will probably have 92 "fronts" and 108 "backs" (I don't know how to say it correctly in English), something near to 100-100. If you continue doing that for another 200 times, you will probably obtain again something similar to 100-100.

But in trading is different. The coin has a physical structure where always the probabilities for each side will be 50-50. In trading it doesn't exist that physical structure. You can test a method where you are profitable, but then trade it with bad results.
Click to expand...

There is another problem :) Sorry! At least, one that I have.

If a coin has a 50-50 chance of winning does that mean 50% on a lesser number of tosses?



You only did three trades and you lost heart. I would not be much different, either, if I traded with that philosophy. Do you, really, believe that entering a trade on the 16th minute every day, will make you a profit in 200 days? I think that trading needs more than that. If you lost money by the 50th trade, would you have the guts to continue trading until the end? This is the problem that I have with too much backtesting, perhaps I'm wrong about that. It is an opinion.

I think that backtesting need not go further back than a month.
 
Splitlink said:
There is another problem :) Sorry! At least, one that I have.

If a coin has a 50-50 chance of winning does that mean 50% on a lesser number of tosses?



You only did three trades and you lost heart. I would not be much different, either, if I traded with that philosophy. Do you, really, believe that entering a trade on the 16th minute every day, will make you a profit in 200 days? I think that trading needs more than that. If you lost money by the 50th trade, would you have the guts to continue trading until the end? This is the problem that I have with too much backtesting, perhaps I'm wrong about that. It is an opinion.

I think that backtesting need not go further back than a month.
Click to expand...

I did 5 trades. One target and four stops. My stop with this model was -10%. Now I think the same as you. Discipline is not to be a robot.
 
herr said:
I did 5 trades. One target and four stops. My stop with this model was -10%. Now I think the same as you. Discipline is not to be a robot.
Click to expand...

Do you find that to be a statistically significant sample size?
 
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