andyw91182
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Hi All,
I’m hoping for some advice or guidance from any experienced traders out there.
I have been trading now for roughly two years, with the first six months behaving like a leaf in the wind attempting to catch moves using trend lines, channels, wedges and the like. This was done with literally zero backtesting although a discipline to remain committed to the initial stops/targets set. Unsurprisingly I suffered losses, although by sticking to a relatively small stake size I managed to maintain my account.
Roughly 18 months ago I began backtesting the S&P500 and UK100 cash markets from June 2020 on a one-hour chart, tracking each hour from 8am until 4pm initially using a combination of the 200ma, the 50ma and the closing price of the previous trading day. This wasn't to necessarily backtest a strategy, but rather build a catalogue of what happened given a range of variables. These were:
1. The price in relation to the close of the 9pm bar the previous trading day.
2. The price in relation to the 50ma.
3. The price in relation to the 200ma and the slope of the 200ma (indicating an upward/downward trend or a neutral market).
4. Whether the previous bar is positive or negative.
And subsequently included:
5. Which of the above (close price, 50ma, 200ma) the price is closest to.
6. Whether the index is in a sell/buy status based on a recent bar close above/below a previous high/low of a seven or more-bar move.
I tracked what would have happened had I taken long positions with arbitrary stops/targets at each hour (for example, a long with a 20pt stop and 40pt target) and similarly what would have happened had I taken shorts. I then took all the positive outcomes with an expected margin of >7% and where the combination of variables occurred at least 50 times (preferably >100) and created a spreadsheet outlining the expected daily outcome of all the profitable strategies had I taken these positions. This then gave the expected outcome for each day and also how often and how significant the drawdown periods were.
As mentioned above not all filters were added at the same time. I have only in the last six months included where the price was closest to and also the sell/buy status as additional filters which has helped refine the strategies somewhat.
Using this technique I’ve just had my first positive quarter. However, my account is only small (~£3k) although this has grown from £700 since I started fully implementing the strategies in July 2023. I made the classic mistake early in 2023 of having a stake size equivalent to ~4% of the account at a time when the strategies weren’t really mature enough, which resulted in near catastrophic losses in what I now realise was simply an ordinary if slightly larger than normal drawdown period.
Given my account size I am clearly a long way off the stage where I can begin withdrawing any cash, which is obviously my goal. My current scaling approach is to never risk >2% per trade but to increase my position size by 25% at the point where I reach an average drawdown (account size permitting) which my backtesting has shown happens roughly every two months. This should mean the next expected larger cash drawdown is covered by the larger expected gains before the drawdown happens.
I’m really interested to know what any experienced and profitable traders make of my strategy and scaling approach, and if there is any advice on where to go next. I have worked solidly for the last two years of my life making a real focussed effort in trading, spending 10hrs+ each day backtesting this and numerous other now redundant techniques and am keen to see some financial results, although I am aware that the most important elements to profitable trading are following a process and remaining disciplined - but I can’t deny the stress of money is starting to loom it’s ugly head and anything to accelerate the process would be welcomed!
Thanks for reading,
Andy
I’m hoping for some advice or guidance from any experienced traders out there.
I have been trading now for roughly two years, with the first six months behaving like a leaf in the wind attempting to catch moves using trend lines, channels, wedges and the like. This was done with literally zero backtesting although a discipline to remain committed to the initial stops/targets set. Unsurprisingly I suffered losses, although by sticking to a relatively small stake size I managed to maintain my account.
Roughly 18 months ago I began backtesting the S&P500 and UK100 cash markets from June 2020 on a one-hour chart, tracking each hour from 8am until 4pm initially using a combination of the 200ma, the 50ma and the closing price of the previous trading day. This wasn't to necessarily backtest a strategy, but rather build a catalogue of what happened given a range of variables. These were:
1. The price in relation to the close of the 9pm bar the previous trading day.
2. The price in relation to the 50ma.
3. The price in relation to the 200ma and the slope of the 200ma (indicating an upward/downward trend or a neutral market).
4. Whether the previous bar is positive or negative.
And subsequently included:
5. Which of the above (close price, 50ma, 200ma) the price is closest to.
6. Whether the index is in a sell/buy status based on a recent bar close above/below a previous high/low of a seven or more-bar move.
I tracked what would have happened had I taken long positions with arbitrary stops/targets at each hour (for example, a long with a 20pt stop and 40pt target) and similarly what would have happened had I taken shorts. I then took all the positive outcomes with an expected margin of >7% and where the combination of variables occurred at least 50 times (preferably >100) and created a spreadsheet outlining the expected daily outcome of all the profitable strategies had I taken these positions. This then gave the expected outcome for each day and also how often and how significant the drawdown periods were.
As mentioned above not all filters were added at the same time. I have only in the last six months included where the price was closest to and also the sell/buy status as additional filters which has helped refine the strategies somewhat.
Using this technique I’ve just had my first positive quarter. However, my account is only small (~£3k) although this has grown from £700 since I started fully implementing the strategies in July 2023. I made the classic mistake early in 2023 of having a stake size equivalent to ~4% of the account at a time when the strategies weren’t really mature enough, which resulted in near catastrophic losses in what I now realise was simply an ordinary if slightly larger than normal drawdown period.
Given my account size I am clearly a long way off the stage where I can begin withdrawing any cash, which is obviously my goal. My current scaling approach is to never risk >2% per trade but to increase my position size by 25% at the point where I reach an average drawdown (account size permitting) which my backtesting has shown happens roughly every two months. This should mean the next expected larger cash drawdown is covered by the larger expected gains before the drawdown happens.
I’m really interested to know what any experienced and profitable traders make of my strategy and scaling approach, and if there is any advice on where to go next. I have worked solidly for the last two years of my life making a real focussed effort in trading, spending 10hrs+ each day backtesting this and numerous other now redundant techniques and am keen to see some financial results, although I am aware that the most important elements to profitable trading are following a process and remaining disciplined - but I can’t deny the stress of money is starting to loom it’s ugly head and anything to accelerate the process would be welcomed!
Thanks for reading,
Andy
