FAQ Is There a Strategy or System that I should Use and where Can I Find it?

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StockOpSys

Newbie
5 0
A system or strategy has alot to do with what your goals are in trading.

You're never going to find a shortage of methodologies to trade but until you define your objectives and match them to you personality then, IMO, you're spinning your wheels.

Warren Buffett and George Soros are amazing investors/traders that achieve staggering results due to their unique approach to the markets - value investing for Buffett and Soros' Theory of Reflexivity - which is attributed to having their trading approach match their own personality and beliefs about the market.

You trade your beliefs, not the market. Your system/strategy is how you define your criteria (what you trade) and then measure the criteria for your trade (buying, trade management, and selling).

Buffett can't invest like Soros and vice versa just like I can't daytrade like Marty Schwartz but can swing trade more like a cross between Dave Landry and William O'Neil.

My personal beliefs are that there is always a trend somewhere in the market, that the market is in trading range for the last decade and is not prone to a Buy & Hold strategy in the long-term at this moment in time, making money in the market should be easy and you make it easy by having a highly defined set of criteria to be met before entering any position, that controlling risk is the most important thing that you can do to avoid big losses, that avoiding huge drawdowns allows you to keep making money consistently, its better to make small consistent returns that wild gyrations in your equity curve as it leads to greater returns over the long-term, and there are a few others but you get the idea.

Figure out what you believe about the market to be true for yourself and then build an approach around it. Then, practice putting that system/strategy into productive use in the market, observe yourself, observe your results, take lots of notes, seek improvement in the application of your approach along with seeking improvement in the execution of it, and never give up.
 

Commodity_Trader

Junior member
43 2
u can trade "ANY" ideas about market ,as long as u know the fact that entry points is not important and most important thing is exit points.so with this in mind there is no preference of elliot wave to any oscilator based strategy or... . as long as u can cut your losses short and let your profits run almost "EVERY" system or idea is tadeable
 
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WR1

Active member
206 9
what happens if you stuff you re entry on every trade?
average down ?
loose ?

if your stopped out every trade as you stuffed the entry, whats the point of an exit?

besides entry always comes before exit
unless your walking backwards

get the entry at least nr right and you make something - a good exit just means more

personally as i see more nonsense in the market - its risk 1st (stop)
then entry
then exit

the statement that the exits more important than entry has to be one of the silliest banded around
much like risk on risk off - another i really don't like
the markets are always damn risky
 

Commodity_Trader

Junior member
43 2
what happens if you stuff you re entry on every trade?
average down ?
loose ?

if your stopped out every trade as you stuffed the entry, whats the point of an exit?

besides entry always comes before exit
unless your walking backwards

get the entry at least nr right and you make something - a good exit just means more

personally as i see more nonsense in the market - its risk 1st (stop)
then entry
then exit

the statement that the exits more important than entry has to be one of the silliest banded around
much like risk on risk off - another i really don't like
the markets are always damn risky
the top traders win rate is less than 40 % , sometimes even less than 40 % .so it means that even a best system entry point is valid "LESS" than random ! which is 50 %.
as in the book named " trade your way to financial freedom" one of future top traders (i think ed seykota) had an experiment which entered market by throwing a coin (toss)! but trailed s.l and had clear exits and he was sucessful .
even in my own trading my entries is not much more better than random ( and i think there is no one who claims that have best entries, what matters is exit points (sl + profit taking ) . i think it is not silly .
 

D70

Established member
839 195
the top traders win rate is less than 40 % , sometimes even less than 40 % .so it means that even a best system entry point is valid "LESS" than random ! which is 50 %.
as in the book named " trade your way to financial freedom" one of future top traders (i think ed seykota) had an experiment which entered market by throwing a coin (toss)! but trailed s.l and had clear exits and he was sucessful .
even in my own trading my entries is not much more better than random ( and i think there is no one who claims that have best entries, what matters is exit points (sl + profit taking ) . i think it is not silly .
It's circa 40% because they are trying to hit greater than 1 to 1, risk to reward no?
 

Commodity_Trader

Junior member
43 2
It's circa 40% because they are trying to hit greater than 1 to 1, risk to reward no?
if hit rate is 40 % and in real world even much more less . especially in trend following hit rate is near 20- 30 % .(cuz statistically markets are range 70 % of time and have trend only 30 % of times) .the key is that in that 30% of times they have profits much more than they loose in that 70 % . for example in each loss trade they loose "R" but in each profit trade they gain "6*R". so (0.3*6*R) - ( 0.7*R )
would result in a positive expectancy .

the reason i say the best entries are not much more better than random is in this fact that 70 % of times market is in range bound mode .
 

Babyblush

Active member
132 4
Certainly there are strategies listed on web and you may find the one which suits your trading and portfolio and start trading with it. First always test on demo and then try it in live if profitable.
 
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alphadude

Established member
566 165
agree with babyblush; there are profitable strategies on books / web.

of course you will need to do some tweaking to make it work for you.
 

Babyblush

Active member
132 4
@alphadude,

Yes traders need to look into the websites properly for finding the suitable strategy according to their trading style.
 

Tyger

Junior member
20 1
There are thousands of websites and companies offering trading systems with seemingly fantastic profit opportunities. None of these are real. For two reasons:

1). If you discovered how to make geese lay golden eggs, would you really tell anyone?

2). The market is, in mathematical terms, a Complex Adaptive System (CAS) (see Wiki) which means that if anyone starts making excessive profits then the market will adapt. In a nutshell, if you find that buying IBM at the open consistently makes profit, then before long the people from whom you bought the shares will stop selling them to you because they consistently make a loss.

Thus the only way ahead is:

Option 1. Insider knowledge/other illegal means

Option 2. Practice discretionary/intuitive trading until you develop sufficient expertise to be able to compete (est 10,000 – 15,000 hours work – see Matthew Syed’s book, Bounce). I actually think it would be quicker to become a golf pro or tennis pro.

Option 3. Develop your own trading ideas and test them (using Excel). Creativity and original thought are already there as part of the brain's toolbox. Using these tools you can compete without getting a science PhD or spending 15,000 hours watching charts.

So what should you do?

1. Think of a novel idea.

2. Test it to see if it works (I use Excel to test trading ideas/strategies). If it doesn't, go back to step 1.

3. Paper trade it to check you haven’t made a mistake.

4. Start live trading small amounts to check it works in real life.

5. Gradually increase your position size.

6. Provided that your position size remains a tiny portion of total market volume, then you can avoid the feedback loops inherent in Complex Adaptive Systems (see next page). So, keep it small – trade multiple stocks/futures (which will provide some robustness anyway) and don’t tell anyone else what you’re doing!
 

neil

Legendary member
5,167 744
sound advice often falls on deaf ears on T2W

There are thousands of websites and companies offering trading systems with seemingly fantastic profit opportunities. None of these are real. For two reasons:

1). If you discovered how to make geese lay golden eggs, would you really tell anyone?

2). The market is, in mathematical terms, a Complex Adaptive System (CAS) (see Wiki) which means that if anyone starts making excessive profits then the market will adapt. In a nutshell, if you find that buying IBM at the open consistently makes profit, then before long the people from whom you bought the shares will stop selling them to you because they consistently make a loss.

Thus the only way ahead is:

Option 1. Insider knowledge/other illegal means

Option 2. Practice discretionary/intuitive trading until you develop sufficient expertise to be able to compete (est 10,000 – 15,000 hours work – see Matthew Syed’s book, Bounce). I actually think it would be quicker to become a golf pro or tennis pro.

Option 3. Develop your own trading ideas and test them (using Excel). Creativity and original thought are already there as part of the brain's toolbox. Using these tools you can compete without getting a science PhD or spending 15,000 hours watching charts.

So what should you do?

1. Think of a novel idea.

2. Test it to see if it works (I use Excel to test trading ideas/strategies). If it doesn't, go back to step 1.

3. Paper trade it to check you haven’t made a mistake.

4. Start live trading small amounts to check it works in real life.

5. Gradually increase your position size.

6. Provided that your position size remains a tiny portion of total market volume, then you can avoid the feedback loops inherent in Complex Adaptive Systems (see next page). So, keep it small – trade multiple stocks/futures (which will provide some robustness anyway) and don’t tell anyone else what you’re doing!
Bet the usual gang of pudding heads, seeking wealth seeking opportunities for sale, will ignore your sound advice. But sound advice nonetheless and kudos to you for trying to keep the stupid from the jaws of sharks,
 

richieforex

Member
60 5
Traders often look for the holy grail, there isn't one!!

The problem traders face is that they do not realise it is themselves to blame.

There are many strategies that are profitable but it is often the user trying to implement them that is the problem.
 

Mat_Corp

Junior member
12 1
Of course you can find strategies searching in web. But first you need to test them in demo account, and choose which one is better for you.
 

AdrianGA

Newbie
7 2
This question reminds me of one that I've come across so many times:

"Which style of martial arts is the best?"

Well, my usual response to that question would be "What kind of person are you?"

Trading is an art in its own right and there is no "best" way to do it, you simply have to find a way that makes money for you based on your ability to read the market, spot opportunities and hold your nerve once you place that trade.

I've been trading professionally for almost two years now and have tried many different approaches, some of which have been more successful than others. This game isn't easy by any means and a lot of traders make the mistake of focusing only on fundamentals or technicals. That's all good and well as a starting point, but neither will make you a profitable trader. Sentiment is also a huge factor in this game because humans are by large irrational beings, and we all know how quickly sentiment can change especially when big fundamental or political issues play a role (look at how Greece has been holding the world markets hostage even though it's only 0.5% of the global economy) . And finally, you need to have a good understanding of who you are as a person in order to adjust your trading style according to your personality and willingness to take risk.

One of the big things that I still with struggle in my trading career is to act upon my gut feelings because I often try to rationalize why I want to do a trade, and more often than not it has caused me to either lose money or miss out on a trade. Never underestimate the importance of instincts in trading, but do keep in mind that your instincts only become more accurate after you have traded for a while. So keep that in mind as you progress in your career/journey.

Use YouTube and read financial sites as well as forums to learn from the pros and test all the techniques and tips they have to offer, but above all else you need to focus on what works best for YOU.

Apply the principle of "adopt what is useful, reject what is useless, add what is uniquely yours."