Systematic Trend Trading

Trade 32 - locking in 8R

Trade 32 +8R

One of the simplest ways to lose weight is to consume less calories and exercise a little more. One of the simplest ways to make profit from trading is to have wins much larger than losers and accept a lower win rate. Both are very hard sells to humans, not because there isn't a lot of evidence to back up the claims but because we find the claims very hard to believe.

Complexity Bias: Why We Prefer Complicated to Simple
https://www.fs.blog/2018/01/complexity-bias/

Trade 33 stopped

Trade 34 EJ short

Trade 34 stopped

Trade 35 EJ short

Trade 35 stopped

Trade 36 EJ long

'TRUST opens you up to the best of yourself and the best of others. Trust—whether self-trust or trusting others—is, perhaps more than anything, efficient. Without trust so much time is spent managing and questioning and doubting. With trust comes swiftness, lightness, and freedom.'

Whatever system you choose you will have to trust...

Trade 36 stopped

Trade 37 EJ long

“There is no single market secret to discover, no single correct way to trade the markets. Those seeking the one true answer to the markets haven’t even gotten as far as asking the right question, let alone getting the right answer.” - @jackschwager

General Thinking Tools: 9 Mental Models to Solve Difficult Problems

When I came across Charlie Munger’s 1995 Speech, The Psychology of Human Misjudgment, I realized that I could learn more from him than my MBA. So I spent the next few years reading and researching about cognitive biases and how we mislead ourselves. Munger showed me that the world had more to offer than just computer science and business, the two disciplines I’d spent the most time in. He opened up a world of mental models, which is just a fancy schmancy word that means thinking tools that you can use to solve problems.
https://www.fs.blog/wp-content/uploa...king-Tools.png
A mental model is simply a representation of how something works. We cannot keep all of the details of the world in our brains, so we use models to simplify the complex into understandable and organizable chunks. Whether we realize it or not, we then use these models every day to think, decide, and understand our world.
While there are millions of mental models, I want to focus on nine that will help you think through problems better.
1. The Map is not the Territory
The map of reality is not reality. Even the best maps are imperfect. That’s because they are reductions of what they represent. If a map were to represent the territory with perfect fidelity, it would no longer be a reduction and thus would no longer be useful to us. A map can also be a snapshot of a point in time, representing something that no longer exists. This is important to keep in mind as we think through problems and make better decisions.
Read more about The Map is not the Territory
2. Circle of Competence
When ego and not competence drives what we undertake, we have blind spots. If you know what you understand, you know where you have an edge over others. When you are honest about where your knowledge is lacking you know where you are vulnerable and where you can improve. Understanding your circle of competence improves decision making and outcomes.
Read more about Circle of Competence
3. First Principles Thinking
First principles thinking is one of the best ways to reverse-engineer complicated situations and unleash creative possibility. Sometimes called reasoning from first principles, it’s a tool to help clarify complicated problems by separating the underlying ideas or facts from any assumptions based on them. What remain are the essentials. If you know the first principles of something, you can build the rest of your knowledge around them to produce something new.
Read more on First Principles Thinking
4. Thought Experiment
Thought experiments can be defined as “devices of the imagination used to investigate the nature of things.”[1] Many disciplines, such as philosophy and physics, make use of thought experiments to examine what can be known. In doing so, they can open up new avenues for inquiry and exploration. Thought experiments are powerful because they help us learn from our mistakes and avoid future ones. They let us take on the impossible, evaluate the potential consequences of our actions, and re-examine history to make better decisions. They can help us both figure out what we really want, and the best way to get there.
Read more on Thought Experiment
5. Second-Order Thinking
Almost everyone can anticipate the immediate results of their actions. This type of first-order thinking is easy and safe but it’s also a way to ensure you get the same results that everyone else gets. Second-order thinking is thinking farther ahead and thinking holistically. It requires us to not only consider our actions and their immediate consequences, but the subsequent effects of those actions as well. Failing to consider the second and third order effects can unleash disaster.
Read more on Second-Order Thinking
6. Probabilistic Thinking
Probabilistic thinking is essentially trying to estimate, using some tools of math and logic, the likelihood of any specific outcome coming to pass. It is one of the best tools we have to improve the accuracy of our decisions. In a world where each moment is determined by an infinitely complex set of factors, probabilistic thinking helps us identify the most likely outcomes. When we know these our decisions can be more precise and effective.
Read more on Probabilistic Thinking
7. Inversion
Inversion is a powerful tool to improve your thinking because it helps you identify and remove obstacles to success. The root of inversion is “invert,” which means to upend or turn upside down. As a thinking tool, it means approaching a situation from the opposite end of the natural starting point. Most of us tend to think one way about a problem: forward. Inversion allows us to flip the problem around and think backward. Sometimes it’s good to start at the beginning, but it can be more useful to start at the end.
Read more on Inversion
8. Occam’s Razor
Simpler explanations are more likely to be true than complicated ones. This is the essence of Occam’s Razor, a classic principle of logic and problem-solving. Instead of wasting your time trying to disprove complex scenarios, you can make decisions more confidently by basing them on the explanation that has the fewest moving parts.
Read more on Occam’s Razor
9. Hanlon’s Razor
Hard to trace in its origin, Hanlon’s Razor states that we should not attribute to malice that which is more easily explained by stupidity. In a complex world, using this model helps us avoid paranoia and ideology. By not generally assuming that bad results are the fault of a bad actor, we look for options instead of missing opportunities. This model reminds us that people do make mistakes. It demands that we ask if there is another reasonable explanation for the events that have occurred. The explanation most likely to be right is the one that contains the least amount of intent.

Trade 37 - moved to break even

Trade 38 EJ long

Trade 38 & 39 Stopped

Trade 40 EJ short

Results:
Week 1 +4R
Week 2 -14R
Week 3 -2R

... at this point most people would throw away the strategy or make drastic changes. I will be back next week doing exactly the same process.

https://ofdollarsanddata.com/why-win...g-4e7f221f5b84

Why Winners Keep Winning - On Cumulative Advantage and How to Think About Luck

60mm, i like your rigor and honest approach.

the only suggestion i have is to move to a bit higher tf. understanding that it would lower the # of potential entries, could it be possible to expand to other instruments?

green pips as always....

Yes exactly that. M15 is my current preference because it generates enough trades for me to just follow a single pair, having enough available time is obviously important as is dealing with a lot of consecutive losers over a relatively short period. I often trade similarly on H1 and H4 when they better suit my needs and as you say usually increase the number of instruments to make up for the reduced frequency.

The driving force behind this approach is higher risk reward - can you build simple systems around that edge and what are the pitfalls. Not running the system for a long enough period, unfavourable markets conditions and wrong position sizing are the big 3 that will kill systems like this.

Except for extremely thin markets, charts are not self-fulfilling. Reason -- as little as 3% of trading volume in futures and forex is driven by chart traders. In futures and forex, 60%-plus of volume from HFT/algos operations based on numeric schemes. Per Barclay Hedge, 90% of large spec traders are purely systematic (and that excludes any use of charts). Peter Brandt.