Simple trading strategies....should you use them???

jagtrading

Newbie
4 0
Hi guys,

I'm new to trading and have been experimenting. My favorite indicator is bollinger band and I have developed a simple strategy when I trade when the MA crosses the BB and set a stop-loss and take-profit. Are simple strategies like this useless in live accounts or are they ok?? Is it a good idea to trade simple strategies?? Is this even a simple strategy or am I mistaken???

thanks for replies.
 

0007

Senior member
2,376 663
Hi guys,

I'm new to trading and have been experimenting. My favorite indicator is bollinger band and I have developed a simple strategy when I trade when the MA crosses the BB and set a stop-loss and take-profit. Are simple strategies like this useless in live accounts or are they ok?? Is it a good idea to trade simple strategies?? Is this even a simple strategy or am I mistaken???

thanks for replies.


As a general principle simple strategies are better than complicated ones if they do the job IMHO. (Google Occam's Razor for an intellectual discussion of the philosophy). Having been down the route of complicated and complex strategies I came to the conclusion in trading that simplicity in everything enables my meagre brainpower to concentrate on what's important – the trading! Whether your Bollinger/MA crossover works or not is another matter but it appears that many successful traders do not use particularly sophisticated systems. If you are a technical trader then you need to acquire the ability to interpret a chart – a very simple principle that requires a good measure of skill to turn into profits. Indicators can help but they are only a tool and you do need to understand how to use them efficiently.
 

drtro

Active member
216 21
I've tried to Google it but I couldn't find the article. It was a series of backtesting various simple methods such as MA crossovers, RSI, bollinger bands, etc. I believe it was a .pdf link to some University study on writing algorithms in finance and it was in one of the sections. A lot were 45-55% successful and yielded less than 4% in returns. You'd just be better off buying a total market ETF and holding it for a year.

I use EMAs and StochRSI, but I don't trade off of them.
 

Pat494

Legendary member
14,617 1,581
Your problem is that those that can profitably trade won't tell ( would you ) and those that can't tell a load of *****.

Of course keeping in mind that there is a 95% failure rate. Worse odds than being in a WW2 U-boat.
 
M

member275544

0 0
Hi guys,

I'm new to trading and have been experimenting. My favorite indicator is bollinger band and I have developed a simple strategy when I trade when the MA crosses the BB and set a stop-loss and take-profit. Are simple strategies like this useless in live accounts or are they ok?? Is it a good idea to trade simple strategies?? Is this even a simple strategy or am I mistaken???

thanks for replies.

Have you backtested this? Either electronically or manually, spend time on reassuring yourself. I'd agree with 0007 though, simple is good, and this is simple.

If you don't backtest this, and then you get a series of losses you will immediately think its no good. Had you backtested this on a good sample and a long enough back test period, then you will have much more confidence to ride out periods of drawdown and will know that statistically you have an edge.

It doesn't mean your results will match but you have a much better chance..
 
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0007

Senior member
2,376 663
Your problem is that those that can profitably trade won't tell ( would you ) and those that can't tell a load of *****.

Of course keeping in mind that there is a 95% failure rate. Worse odds than being in a WW2 U-boat.


That's an interesting view and I don't know how true it is. I suspect that any really profitable and rich traders unless they are very philanthropic, just can't be bothered to tell the rest of the world how to do it. But think back to the Turtles experiment: one very simple trading method – resulting in many disparate performances. To me this indicates that it's the trader himself who is key to everything.
 
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trendie

Legendary member
6,879 1,429
Hi guys,

I'm new to trading and have been experimenting. My favorite indicator is bollinger band and I have developed a simple strategy when I trade when the MA crosses the BB and set a stop-loss and take-profit. Are simple strategies like this useless in live accounts or are they ok?? Is it a good idea to trade simple strategies?? Is this even a simple strategy or am I mistaken???

thanks for replies.

If it's a simple strategy, it should be fairly easy to do backtests and verify for yourself if it works or not.
Make sure you haven't just over-optimised the settings, by running backtests with slightly different settings, just to ensure you have some semblence of robustness.
see if you get good results across a different set of instruments, eg, indices, forex, stocks.
See what kind of results you get if trading a basket of instruments to smooth out any spikes.
Note the returns relative to drawdowns, to get an idea of how much stomach-churning you should be prepared for!
If the graph goes up consistently, that should give you sufficient feedback as to whether it's any good.

Then, trade it real-time. That's when the fun starts.
Good luck!
 

drtro

Active member
216 21
Your problem is that those that can profitably trade won't tell ( would you ) and those that can't tell a load of *****.

Of course keeping in mind that there is a 95% failure rate. Worse odds than being in a WW2 U-boat.

This is also a load of **** told by people who don't know ****. There is no credible study proving a 95% failure rate.
 

trendie

Legendary member
6,879 1,429
This is also a load of **** told by people who don't know ****. There is no credible study proving a 95% failure rate.

On the "T2W under attack" thread (or something similar) there was a link to 3 docs about the spread-bet brokerages and how they function. (Monkeys in Markets)

They, the brokers, supposedly have a 90-90-90 rule.
That is, 90% of retail traders will lose 90% of their money in 90 days.

The docs were more about the uphill struggle retail traders will have with SB companies, but that 90-90-90 thing stuck with me.

It could be scare-mongering by the authors, and it is a catchy meme, but they think it reflects the experiences of the brokers, and why their business model is what it is. (actually, its about how brokerages take the other side of 90% of traders positions, and only 10% of traders positions being actively hedged. That is, the brokers expect 90% will lose and see no need to hedge as eventually the trade will close at a loss.)

so, there! ;)
 

NVP

Legendary member
37,785 2,107
Hi guys,

I'm new to trading and have been experimenting. My favorite indicator is bollinger band and I have developed a simple strategy when I trade when the MA crosses the BB and set a stop-loss and take-profit. Are simple strategies like this useless in live accounts or are they ok?? Is it a good idea to trade simple strategies?? Is this even a simple strategy or am I mistaken???

thanks for replies.

do what you want dude............if it works do it (y)
 

hjg

Junior member
29 2
Hi guys,

I'm new to trading and have been experimenting. My favorite indicator is bollinger band and I have developed a simple strategy when I trade when the MA crosses the BB and set a stop-loss and take-profit. Are simple strategies like this useless in live accounts or are they ok?? Is it a good idea to trade simple strategies?? Is this even a simple strategy or am I mistaken???

thanks for replies.

You can never go wrong with simple. Complicated strategies end up complicating your success too. All the best.
 

hjg

Junior member
29 2
Your problem is that those that can profitably trade won't tell ( would you ) and those that can't tell a load of *****.

Of course keeping in mind that there is a 95% failure rate. Worse odds than being in a WW2 U-boat.

What do you mean?
 
 
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