1
- Joined Jul 2016 | Status: Member | 2,534 Posts
Day Trading vs. Swing Trading vs. Position Trading 86 replies
Ok, so what do I believe? Most of it lines up with the conclusions already drawn from the book club. Some spoilers for current books follow.
Beliefs
Ok, so what's in store for the future?
Disliked{image}AUD is either going to chop sideways for a time, possibly bouncing up into the channel or it's going to continue to drop with USD strength. Does that help me make an accurate forecast?Ignored
Entry:
Exit:
Position size:
2%
No. of simultaneous positions:
2 MAX
Notes:
Later versions checked for news; determined a dominant trend using the band midline direction; required a band bounce; waited for a bar break before entering; using signal and confirming candles; double tap entry; added trailing stops; waiting for ATR uptrend (no effect); discretion like exiting if the trend starts faltering, if the trade has cleared the spread; checking higher TF to determine the trend; checking correlations; and of course the filter length for the bands changes a hundred things.
On paper it looks great, but in practice it hardly won as you can only really profit by being on-side with the trend; the straddle only invites trouble. But why? It should work. This is just about as simple an idea as it gets, and is basically the bi-directional version of Cosmic Tennis (TBD) or a banded version of Nyan Cat.
Good: simple band mean-reversion strategy
Bad: cannot handle the chaos of real life trading, although my expectations at the time of invention may have been too high.
It's important to notice:
1. This particular version is only meant to trade in towards the midline. Or out to become a trend trade. You could eliminate all trend trading and only take the 1/2 band fluctuations. Then you'll likely get burned by trends.
2. There is no trading from the midline out to the band edge. However that's something else you can try.
3. There is no edge-to-edge trading; that's a different system.
Sadly I did not keep testing results for this. Or did I? No. I have this comment on one version. "This seems to be about random success and profitability - same problem as the others."
This is a major shortcoming in my methodology as recording results both successful and failed is critical to knowing what has been done and WHY things failed. It's an important part of 'reciprocal thinking'. What I recall is that you'd place a straddle and then one side would get hit inside the bands and cleanly move away to become a trend. Then move back when the higher volume trend trade was triggered. And this could run on ad infinitum creating a mess. If you use tight stops they just get run roughshod.
One obvious solution is to widen the straddle bands so that they encompass the band's midline/pivot. Did you ever think of that? No, you only think about yourself. Then you're trading out from the midline, and in from the band edge. This could require an extra trade if price begins trending.
Well, what do you do when you lose everything (testing results)? You just start again. You start all over again.
Deduct from position when:
Exits:
Re-entry:
My goodness, how are you going to test all those options? My notes advise using a checklist.
Good: nothing? At least not for a mechanical system. This could be someone's discretionary holy grail after years of training. How would I know?
Bad: complexity without evidence for its necessity. No allowance for ranging trading conditions or how to avoid them.
Overkill? It still looks fairly tidy to me.
Oh my goodness, no. This is overkill. This many signals will cause you to delay correct entry and fall victim to Ehlers' 'Spectral Dilation'. It's definitely a spectre, and definitely causes dilatory behaviour.
This ended up becoming something closer to the Early Warning Detection System (EWDS) (I’m calling it ‘guttersnipe’) but here is another template of BandRunner that’s a little cleaner. Now if I could just Nitefort it in a logical way.
Don’t forget that target bands are a little bit deceptive as they bend with trends; it might not be possible to avoid entries that are too early/late after a band touch.
TMA bands are deceptive, as they recalculate. I found something better. However this system didn't work nearly as often as it seems it should, for reasons that will be deemed paranoia, except that I have documented proof, as I do this morning, for example, of limit orders not being triggered, especially in the case when they are likely to be profitable.
For that reason I prefer to be bidirectional and win at whatever price my criminal broker will deign to give me. Although this system combines two real tendencies, mean reversion and overall trend, it seemed to fail at just the time when I showed sufficient interest. Perhaps I needed to set my bands wider, and lengthen the period of my HMA. Perhaps I needed to trade only in the longer-term trend direction, and ignore countertrend moves. Perhaps.
-K period: 21
-D period: 4
-Slowing: 3
MA method 1 (SMA)
Timeframes: H4 and H1
The key is to allow the long trends to play out. So you will often get deep retraces but they should occur only after the position is in profit. The position should become profitable fairly quickly. Exit the trade early if it isn’t behaving as expected. Don’t get shaken out of a long trend by noise on H1 or on temporary signals from H4. Wait for candle closing to confirm signals.
Entry:
Exit:
MM:I’m using 0.1 lot per $1k dollop. Since I”m testing on only one instrument on a 3k account that’s 0.3 per trade. Never heavier than this, and lighter when setups are not perfect.
Stops: Set safety (virtual) stops under the previous swing high/low.
Divergence:Make note of divergence especially on H4. Prepare to exit or enter when a divergence opportunity is spotted but wait for the confirmations.
Ignore: Apart from the entry signals you should ignore:
Exit based on H4 signals.
Here's the thing. All this system does is 'buy the dip' in a trend. Thousands of similar systems use the same notion. Price is temporarily out of line with the larger trend because of a random(?) fluctuation, it's probably a good time to get in when the trend resumes. Trends are real. This method by itself is one of the things that works, and is valuable to recognize.
What isn't real?
-Set nth consecutive same bar to 1
I also ‘turn off’ the standard candles by setting their colors to the same color as my background, leaving only the Heiken Aishi candles visible on chart.
Settings are different for all instruments. I had specific ones for gold, but again, they won't be the same in any regime, so pointless to copy here. Besides, once you put this many indicators on one chart you are lost. Too many degrees of freedom. It would be a while before I recovered from this particular sickness that afflicts many traders, some veterans even.
Principles:
An anchor is just a trade that you want to run longer-term.
That's a lot to be skeptical about. Are sure there's any baby left in that bathwater?
Description
Observe the centerlines of the band time period you’re trading within. If it bounces off the centerline that could be an early reversal. So, might be a place to straddle, especially on H1/H4. If it does bounce but then returns to the centerline before reaching one side that was probably a fake reversal, close the trade early and/or resume the original trade.
The more advice I give, the wishier-washier it sounds.
Complicated. Wishy washy. A classic indicator of fuzzy confused thinking. I knew I had to simplify this and the 'simplification' became the next system. A common habit.