- Joined Jan 2012 | Status: Member | 564 Posts
Bottomless wonders spring from simple rules, which are repeated without end
A Simple Mean Reversion Strategy 327 replies
Pairs Trading: Reversion to the Mean 22 replies
Forward test of my new mean reversion strategy 11 replies
Synthetic hedges, cointegration, mean reversion and similar stuff 419 replies
Cointegration, Synthetic hedges, mean reversion in R, Tech Thread 0 replies
Dislikedhi Avraham, OP in the second strategy is talking about only taking 2 trades: buy on level 4 and 5 below medium, sell on level 4 and 5 above medium. stop losses on level 6 and 7. so even better with only 2 trades.Ignored
DislikedHi friends if anyone can clarify me these: If the price is above (what is) 1+(what is) X then we add 2. If the price is above 2+X then we add 3. ? ThanxIgnored
DislikedI just implemented the strategy described in Post 1 in MQL5 and did a backtest based on real ticks from 2017-01-01 until 2018-07-30 on GBPUSD,H1 starting with 2000 USD capital: {image} I observed that the big losses are mostly due to days that price moves in one direction. We may get better results if we can filter those days.Ignored
Disliked{quote} Hi math as i can understand even if no one is posting more here, i have followed for some time PIvotTrading thred started from Davit. Long story short he aims ranging markets (in wich i think these system can work grate) for these reason he uses ADR, when she is up 100 that means trending lower than 70 or something like that there is range maybe these can be a good filter to be on chart before take 1 decision lower the adr higer the propabilities to price return to 50%...!?Ignored
DislikedThe results from week 2018.08.20 - 2018.08.24. This time we saw the most differing results between both methods since I started tracking this method I think. The original method did quite good wether my variant fails. 9990 = my variant of SMR with 4H MA filter, BE stop, no fixed timed 25%/50% exits but "candlestick jumping stop loss" - see above for more details 9993 = original method from post 1 with only BE stop added. _ EA trades the broker min lots per symbol (0.01...Ignored
DislikedEU allsow is doing fine quantum indi (settings set at 100) i use for reason to see when price breake lower to open trades as lower as possible..... lets see the end in these!! {image}Ignored
Disliked{quote} Nice! But I think posting numerous individual trade entries/exits doesn't make really sense here in the thread. Or should I post screenshots of all the ~200 trade entries and ~200 trade exits my EA is doing over the week (The thread gets messy by doing that imho)Ignored
I would say, to all of the developing traders who are envisioning a future where they trade for a living—one of the questions you need to be asking is should you trade for a living? Even if you could, should you? Do you really want this life?
Let’s dig deeper.
The path
We don’t need to spend a lot of time here. If anything, my writing, speaking, teaching, has over-emphasized the negatives—the challenges, the pitfalls, and all the ways a developing trader can go wrong.
Since we’re looking at reality against the typically slick marketing message of the internet gurus and scammers, let me just say this: your chances of success are far less than 50%. You must know and accept that going in, because it makes this different than most careers. If you want to be a doctor, you can probably follow a path and get there. Same with being a lawyer, or air traffic controller, or master craftsman. In most careers, there’s a pretty clear path to success.
Industry stats (from brokers) tell us that between 80% – 90% of trading accounts lose money, depending on the sample. Don’t be too quick to dismiss those stats and say “well I’ll be a winner.” Maybe you will be, but you at least need to respect the fact that you are going into a situation where the cards are stacked against you. You have to respect the challenges and have a realistic view of what you need–edge, money management, capital, discipline, support framework, etc.
If you respect that, you can do things to make your odds much better than the typical ~15% success rate. I know this is not in line with “the power of positive thinking”, but I also think that positive thinking and visualization can work against us in many situations. It’s not a panacea, especially if it encourages us to deny reality. Then, it’s a poison.
You need money to make money
There are laws of nature that cannot be broken. The speed of light appears to be one. Gravity is probably another. Risk/reward, and the somewhat proportional connection between the two, is yet another.
Anything can happen in financial markets. It is possible that I can “invest” $500 and make $5,000,000. You could borrow money on a credit card and blow the trading account up into the millions. You could put all of your net worth on some 3 delta options and make it big. It’s possible, but it’s so unlikely that you must eradicate thoughts like this from your thinking.
Yes, there are stories of people who have done this, so the hopeful, optimistic new trader will point to those examples and say “but it’s possible. Anything is possible.” This is true, but it also underestimates the impact of survivorship bias (and, possibly of how the markets have changed in recent decades.)
If you are going to trade for a living, you are going to have to do it the old-fashioned way—slow(ish) and steady. Plan on making a reasonable percentage return on your trading capital; we can have a debate on what the number should be, but it’s far less than 100%, to be sure.
What this means is that you aren’t going to open a $3,000 trading account, quit your job, and make a good living scalping off a 500 tick chart or something. (As an aside, if you’re absolutely determined to roll the dice on a tiny account, your best bet is to put all your chips on one big trade and sacrifice a chicken to the market gods. Ok, maybe the chicken won’t help, but when the odds are against you you should avoid multiple times at bat. Note that this is exactly the opposite of what a trader with an edge should do. (Except, again, maybe the chicken…))
Please don’t be discouraged by this—you can make a very solid living off a very solid percentage return on your account, but you will need a substantial capital base to make a substantial living. There’s no avoiding that, just as there’s no avoiding gravity. For the developing trader, work on developing the skills, showing the consistency, keeping your expectations realistic, and then you can address the capital issue down the road. If you have the skills, the money will come, one way or another.
Trading income is uncertain
Typically, when we get a job we know what we’re going to make. Even in crazy fields like finance where the bonus might be a huge and variable piece of your compensation (and your base salary insignificant by comparison), we still have a pretty good idea what your year-end compensation is going to be. Not so in trading.
Some years, you’ll make three or four times what you expect. Some years, you will make a fraction of what you expect. Some years, you might get to pay the market (i.e., lose money) for the privilege of being a trader.
Can you imagine a job where, some years, you might write a check back to the company? Of course not! That’s not the way the world works, but it is the way trading works.
The myth of perfect consistency in trading is a lie, even for active traders. (It’s a lie sold by people pushing daytrading courses to the uninitiated.) You can tend toward consistency with active trading, but that’s also a function of leverage… which means your overall ROC will be lower… see? Everything is tradeoff.
So, from a practical perspective, this means that you need to plan your trading career by looking to replace some multiple of your target salary with trading income. In other words, if you could get a job, live the life you want, and make $X a year, $X is not your trading income target. Maybe it’s 3 times X, but it’s certainly a lot higher.
Also, once you do have some success, you need to think about how to plan for the lean times. Don’t spend every extra dollar you make. Don’t take out too much from your trading account to buy a car, planning to replace it with a few good trades. Psychological pressure is a funny thing, and you can easily find yourself on the wrong side of it.
Planning your life
A few practical thoughts here, some of which will reiterate points above.
Conclusion
I think, sometimes in my work, I’m too negative. I portray trading as a very challenging endeavor for which few people are well-equipped, and at which few people will succeed. I emphasize the challenges and remind people of all the ways they can mess up and fail.
While this is true, it’s also true that you can be a successful trader, and that success may exceed all your expectations. You can change your life and your world. You can change the world of those around you. You can make the world a better place.
But you will only do that if you have a realistic picture of what is ahead, and if you’re prepared to meet the challenges along the way.
Disliked{quote} Could you please share your average Trade Duration, Average profit/loss pips and max open trades at any given time....if possible. I think this stat is important when having time-cycle discussions. Also / do you think these results are correlated with the trading the USD Index (for comparison with theYTD chart of USD index)?Ignored
Disliked{quote} I don't have these stats yet. At this point I'm just trying to prove or to disprove the validity of the logic and the effectiveness of the model. So far it looks promising but the real stats can be obtained only with real forward testing on live data and this will take some time. However one thing is for sure. The characteristics of the model are such that the edge can be extracted only with variable position sizing + averaging/grid. So in terms of pips distance the average loss is always larger than the average profit. This however is compensated...Ignored
Disliked{quote} ......................... Could you please share more details on what you mean by the bold below: "With the correct formula we create our own unique price action to fit the model almost perfectly.This theory is already proven mathematically. "Ignored