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Diversified Trend Trading Approach

  • #2,261
  • Oct 10, 2017 8:11am Oct 10, 2017 8:11am
[quote=Gamod;10374124]
Quoting Ramadas
{quote} Ah the 64000 dollar q - who are we and why are we here https://www.youtube.com/watch?v=N7JAkM57uIo
Top Track G It takes me back :-)

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  • #2,262
  • Oct 10, 2017 8:22am Oct 10, 2017 8:22am
[quote=Copernicus;10374160][quote=Gamod;10374124]{quote} Top Track G It takes me back :-)

So at least 2 ppl here with good taste in music lol
In detegere possumus omnes mortui sunt
  • #2,263
  • Oct 10, 2017 8:25am Oct 10, 2017 8:25am
[quote=Gamod;10374240][quote=Copernicus;10374160]
Quoting Gamod
{quote} Top Track G It takes me back :-) So at least 2 ppl here with good taste in music lol
Hehehehe....watch the oldies come out of the woodwork. Them's fighting words :-)

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  • #2,264
  • Oct 11, 2017 12:20am Oct 11, 2017 12:20am
Copernicus wrote this elsewhere.......
"No mate. I am as stupid as you. It's just different to what you may be used to. The way I treat new concepts is to first simply have a quick read. What this does is hopefully reconfigure the brain to be more receptive on the second read....and so on and so forth. As mentioned many times before...it has little to do with intelligence and more to do with getting rid of the baggage that binds us. That brain of yours can be your best friend if used with coherent thought process or worst enemy if you simply let it do it's thing. The intro to the primer attempts to alter the mindset before you tackle the problem. Once you can get through the barrier....the light bulbs light up with your experience acquired already and then you can see clearly what is facing us in this market and how to exploit it. Cheers C"

C. Just love this, it is so true, so real.. experienced this many times in my live.... coming back to problems after a year, after three years enlight me often ... some of the stuff have to translate to my mother language, weighting every word, writing this down......
This why spend lot of time translate different authors

Thank you mate...

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  • #2,265
  • Edited 1:08am Oct 11, 2017 12:57am | Edited 1:08am
Quoting BlackNapkins
Copernicus wrote this elsewhere....... "No mate. I am as stupid as you. It's just different to what you may be used to. The way I treat new concepts is to first simply have a quick read. What this does is hopefully reconfigure the brain to be more receptive on the second read....and so on and so forth. As mentioned many times before...it has little to do with intelligence and more to do with getting rid of the baggage that binds us. That brain of yours can be your best friend if used with coherent thought process or worst enemy if you simply let...
Thanks mate. I had first hand experience in just what a bastard our brains can be.......but fortunately was able to work my way out of the pit with a focus making me realise that anyone can do it.....but those bloody distractions of the brain deliberately get in the way to make the challenge almost insurmountable. I admire it's power but then again I hate it's deception. One of the reasons I write the way I do is more to get those folks in a current 'mind pickle' back on track using coherent thought to hopefully rid them of their demons. Some good friends of mine helped me out a long ago getting me back on track and I have been eternally grateful :-)

Cheers BN

PS Nice track
  • #2,266
  • Oct 11, 2017 9:28am Oct 11, 2017 9:28am
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  • #2,267
  • Oct 13, 2017 1:58am Oct 13, 2017 1:58am
Quoting Copernicus
{quote} Hi T That is a work in progress mate. Trading sideways congestion is perhaps the hardest nut to crack in the composite. The very nature of sideways congestion itself is one of general randomness within support and resistance constraints. In applying a principle of trading within the congestion zone using BB's or methods of mean reversion, so far we have not been very successful. Acceptable but not great............ I think that R is finding that currently as we are both trying to crack that nut. It is an easier ask at least in my experience...
Dear C

I would like to come back to this topic and give some thoughts of mine.
I dont believe in "filters". I have tried all short of filters through my trading career only to find out that they "filter out" both bad and good trades.
Unfortunately when you realize that you are in a congestion zone, you usually have already placed two trades (usually one long and one short) which have of course failed.
One idea in such a case would be to scale out.
According to the examples presented in this forum, after two consecutive loses one could scale out from ie M30 to H1 only for the instrument or instruments that have entered congestion and until we have evidence that they are back in trending mode.

Another idea would be the opposite
Let us first see what type of losing trades can we have.
I will give fictional examples just to make myself clear.
A trade could go 50 pips in our favor and then come back 100 pips and close at -50 pips.
Or it could go 0-20 pips in our favor and close at -150 pips.
Since we are blending many instruments, it is obvious that in order to further smooth our equity curve we have to focus on the second type of losers.
Again referring to the examples presented in this forum, how about taking trades at M15 as well.
Maybe a losing (type two as above) trade on M30 could be followed by an opposite winner in M15 thus reducing its negative effect.

Even if M15 produces many losers, I suppose that what really matters is the effect it has on smoothing or not the equity curve by reducing DD.

As I said, just a few thoughts...

T
Enter Signature
  • #2,268
  • Oct 13, 2017 6:19am Oct 13, 2017 6:19am
More views like this would be fine:

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Cut short your losses. Let your profits run on. David Ricardo (1772-1823)
  • #2,269
  • Oct 13, 2017 8:07am Oct 13, 2017 8:07am
hmmm ...

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  • #2,270
  • Oct 13, 2017 8:08am Oct 13, 2017 8:08am
Quoting BlackNapkins
hmmm ... {image}
Go get 'em BN :-)
  • #2,271
  • Oct 13, 2017 8:19am Oct 13, 2017 8:19am
Quoting thomasK
{quote} Dear C I would like to come back to this topic and give some thoughts of mine. I dont believe in "filters". I have tried all short of filters through my trading career only to find out that they "filter out" both bad and good trades. Unfortunately when you realize that you are in a congestion zone, you usually have already placed two trades (usually one long and one short) which have of course failed.
Yep mate. I agree with that entirely. :-)


Quoting thomasK
{quote} One idea in such a case would be to scale out. According to the examples presented in this forum, after two consecutive loses one could scale out from ie M30 to H1 only for the instrument or instruments that have entered congestion and until we have evidence that they are back in trending mode.
Nice mate. I like where you are going with your thoughts.

I push my pending order entries further away after a couple of losses in a row as clearly the market conditions are non-conducive to my strategy. By doing this however I do pay a price by missing a portion of the move when market conditions change...but so what? The price of retarding a drawdown is well worth it.

Quoting thomasK
{quote} Another idea would be the opposite
Let us first see what type of losing trades can we have.
I will give fictional examples just to make myself clear.
A trade could go 50 pips in our favor and then come back 100 pips and close at -50 pips.
Or it could go 0-20 pips in our favor and close at -150 pips.
Since we are blending many instruments, it is obvious that in order to further smooth our equity curve we have to focus on the second type of losers.
Again referring to the examples presented in this forum, how about taking trades at M15 as well.
Maybe a losing (type two as above) trade on M30 could be followed by an opposite winner in M15 thus reducing its negative effect.

Even if M15 produces many losers, I suppose that what really matters is the effect it has on smoothing or not the equity curve by reducing DD.
Yes mate. I am hearing you. It makes a lot of sense. As we revert to lower timeframes we can turn a portion of a Sumo into a nice momentum move....probably in the breakout itself and the mean reverting element of it.....To do this, rather than predicting the move and being late to 'switching down a timeframe'....we would need to have the strategy 'turned on' at the same time as the M30 strategy is.....*scratches head*.....I don't actually think there is a problem with that principle mate....but provided we are not simply kicking the can down the road to the lower timeframe as you have identified....*I need to mull on this mate*. Let's put the thinking caps on.

Cheers for the ideas T :-)
  • #2,272
  • Oct 13, 2017 1:29pm Oct 13, 2017 1:29pm
I think I found the root cause of this strategy working....

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It is rooted in psychology of homo sapiens.... as a cognitive bias....

The bandwagon effect is a phenomenon whereby the rate of uptake of beliefs, ideas, fads and trends increases the more that they have already been adopted by others. In other words, the bandwagon effect is characterized by the probability of individual adoption increasing with respect to the proportion who have already done so.[1] As more people come to believe in something, others also "hop on the bandwagon" regardless of the underlying evidence.
The tendency to follow the actions or beliefs of others can occur because individuals directly prefer to conform, or because individuals derive information from others. Both explanations have been used for evidence of conformity in psychological experiments. For example, social pressure has been used to explain Asch's conformity experiments,[2] and information has been used to explain Sherif's autokinetic experiment.[3]
According to this concept, the increasing popularity of a product or phenomenon encourages more people to "get on the bandwagon", too. The bandwagon effect explains why there are fashion trends.[4]
When individuals make rational choices based on the information they receive from others, economists have proposed that information cascades can quickly form in which people decide to ignore their personal information signals and follow the behavior of others.[5] Cascades explain why behavior is fragile—people understand that they are based on very limited information. As a result, fads form easily but are also easily dislodged. Such informational effects have been used to explain political bandwagons.[6]

More:

https://en.wikipedia.org/wiki/Bandwagon_effect
Cut short your losses. Let your profits run on. David Ricardo (1772-1823)
  • #2,273
  • Oct 14, 2017 5:36am Oct 14, 2017 5:36am
Hi Copernicus, Ramadas, and everyone

I don't mind being the outlier here and saying the music is a little 'eclectic' at best. I am forcing myself to listen to some of it for the mere exercise of expanding my palate *grump*

I am lucky I have had school holidays the last couple of weeks here in NZ and have not had any scheduled Karate classes to teach so I have had the luxury of reading some of your lovely thread. Got up to post 125 and got a bit distracted and jumped to 231 for a sneak peak. Honestly, will have to go back and reread it. At some stage this week my mind went numb and I didn't notice.

Makes a lot of sense, diversification and trend trading. No flashing lights, bells and whisltes just a simple SDC and Donchian channel breakout. Simple not easy.

What strikes me is the insane amount of discipline involved in just plugging along with your thread while testing and fine-tuning your strategy. Impressive.

Home for me at the moment is the TMS thread and I am learning heaps from Emmanuel7788 - the man has the patience of a saint - he is laying out educational puzzles and conundrums for us to contemplate and solve throughout the week and guiding us towards some reflection and planning during the weekend. Good habits to build. Must have been a school teacher in a previous life, and a good one.

Unfortunately TMS and other threads attract their fair share of lazy people who just want it handed to them. I have been reading the TMS thread for the last 6 months at least and still find it hard to ask for help.

I am slowly exploring other threads and corners of FF and was pleasantly surprised to find your posts Copernicus. Articulate and interesting. I finally clicked on your profile and traced you back to this thread. Wonderful work! A real pleasure to read and work through. I love the way you lay out the good with the bad, your wins with your losses. Also a critical approach to the strengths and weaknesses of the approach. Some of the finance concepts and maths is a little over my head, but I'll work on it.

I would love to have 200k to play with (read: invest) but at the moment I have a measly micro account. My belief is that if I can not protect my capital and grow it from here then I don't really deserve a bigger account. What I have read to contradict this is that there might be such a thing as under-capitalisation in trading. If this is the case I guess I'm screwed then

After years of demo trading and blowing a couple of small accounts I am happy to be sitting on a small profit for the longest time yet. Mostly due to finally facing my fear and greed and coming to grips with risk and money management. Currently trying to find a balance between making enough to feel I am making some headway, and not being to aggressive and blowing it.

Many thanks for the education - appreciate your efforts and skill
Real knowledge is to know the extent of one's ignorance.
  • #2,274
  • Edited 2:04am Oct 15, 2017 12:41am | Edited 2:04am
Quoting SanAshi
Hi Copernicus, Ramadas, and everyone I don't mind being the outlier here and saying the music is a little 'eclectic' at best. I am forcing myself to listen to some of it for the mere exercise of expanding my palate *grump*
Just add your melodies S and let's see what the blend does :-)

Quoting SanAshi
I am lucky I have had school holidays the last couple of weeks here in NZ and have not had any scheduled Karate classes to teach so I have had the luxury of reading some of your lovely thread. Got up to post 125 and got a bit distracted and jumped to 231 for a sneak peak. Honestly, will have to go back and reread it. At some stage this week my mind went numb and I didn't notice. Makes a lot of sense, diversification and trend trading. No flashing lights, bells and whisltes just a simple SDC and Donchian channel breakout. Simple not easy.
That's it in a nutshell S. I needed to apply an efficient strategy to capture momentum, and the SDC in a breakout seems to do the trick....but the bottom line is that the strategy deployed can really be any....provided they display an edge over a large data set that captures a wide range of different market conditions. It is the robustness that is important rather than the performance itself. Once the core strategy is laid down, then performance comes through applying the tricks of diversification.

Quoting SanAshi
What strikes me is the insane amount of discipline involved in just plugging along with your thread while testing and fine-tuning your strategy. Impressive. Home for me at the moment is the TMS thread and I am learning heaps from Emmanuel7788 - the man has the patience of a saint - he is laying out educational puzzles and conundrums for us to contemplate and solve throughout the week and guiding us towards some reflection and planning during the weekend. Good habits to build. Must have been a school teacher in a previous life, and a good one.
I think that is a good way to approach instruction mate.

Quoting SanAshi
Unfortunately TMS and other threads attract their fair share of lazy people who just want it handed to them. I have been reading the TMS thread for the last 6 months at least and still find it hard to ask for help. I am slowly exploring other threads and corners of FF and was pleasantly surprised to find your posts Copernicus. Articulate and interesting. I finally clicked on your profile and traced you back to this thread. Wonderful work! A real pleasure to read and work through. I love the way you lay out the good with the bad, your wins with your...
Cheers mate. It has been a bit of a labor of love and as you step through the thread, you will see how where we are right now was never planned for.....it just evolved that way. In a sense, this thread has been a living thread that recounts the journey undertaken of a trend/momentum trader.


Quoting SanAshi
I would love to have 200k to play with (read: invest) but at the moment I have a measly micro account.
Mate, don't be dissuaded by the size of your capital account. Yes, it does restrict you to some instruments but you can play this game no matter what your capital account is. It provides a sustainable and steady way forward and you would be surprised how quickly your capital can grow with it.


Quoting SanAshi
My belief is that if I can not protect my capital and grow it from here then I don't really deserve a bigger account. What I have read to contradict this is that there might be such a thing as under-capitalisation in trading. If this is the case I guess I'm screwed then
Totally agree with your premise here mate....but you are not screwed. It is just a lesson in patience and capital protection.

Quoting SanAshi
After years of demo trading and blowing a couple of small accounts I am happy to be sitting on a small profit for the longest time yet. Mostly due to finally facing my fear and greed and coming to grips with risk and money management. Currently trying to find a balance between making enough to feel I am making some headway, and not being to aggressive and blowing it. Many thanks for the education - appreciate your efforts and skill
I hear you S. Spot on......and welcome aboard....but don't forget to bring your tunes as well

Cheers

C

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  • #2,275
  • Oct 15, 2017 12:47am Oct 15, 2017 12:47am
Quoting Ramadas
I think I found the root cause of this strategy working.... {image} It is rooted in psychology of homo sapiens.... as a cognitive bias.... The bandwagon effect is a phenomenon whereby the rate of uptake of beliefs, ideas, fads and trends increases the more that they have already been adopted by others. In other words, the bandwagon effect is characterized by the probability of individual adoption increasing with respect to the proportion who have already done so.[1]...
Nice stuff R. Just stepping through it now. It makes a lot of sense. :-)
  • #2,276
  • Oct 15, 2017 5:05am Oct 15, 2017 5:05am
Quoting BlackNapkins
Copernicus wrote this elsewhere....... "No mate. I am as stupid as you. It's just different to what you may be used to. The way I treat new concepts is to first simply have a quick read. What this does is hopefully reconfigure the brain to be more receptive on the second read....and so on and so forth. As mentioned many times before...it has little to do with intelligence and more to do with getting rid of the baggage that binds us. That brain of yours can be your best friend if used with coherent thought process or worst enemy if you simply let...
Ok 3 of us lol

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In detegere possumus omnes mortui sunt
  • #2,277
  • Oct 16, 2017 4:00am Oct 16, 2017 4:00am
Quoting Copernicus
{quote} Nice stuff R. Just stepping through it now. It makes a lot of sense. :-)
So algos and traders see the move and they join with the hope of profits. Until it is "crowded trade" and there is nobody else to propel it higher (in case of uptrend) by steady demand.

And by the way I think I do something wrong.... my win rate is too high
Congestion boxes and half ADR stops help in overtrading....
or maybe portfolio construction based on exposure and not correlations?

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Cut short your losses. Let your profits run on. David Ricardo (1772-1823)
  • #2,278
  • Oct 16, 2017 5:26am Oct 16, 2017 5:26am
Wti gapped into buy stop.... Good to put stops near congestion boxes before weekend. Worked nice for EUR TRY last weekend...

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Cut short your losses. Let your profits run on. David Ricardo (1772-1823)
  • #2,279
  • Oct 16, 2017 8:46am Oct 16, 2017 8:46am
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Cut short your losses. Let your profits run on. David Ricardo (1772-1823)
  • #2,280
  • Oct 16, 2017 8:21pm Oct 16, 2017 8:21pm
Quoting Ramadas
{quote} And by the way I think I do something wrong.... my win rate is too high Congestion boxes and half ADR stops help in overtrading.... or maybe portfolio construction based on exposure and not correlations? {image}
Check your win rate against you back-test. This particular approach does have a higher win rate than traditional TF....so it might not be a problem. :-)

C
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