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changing psychology

  • #1
  • First Post: Dec 4, 2006 10:34pm Dec 4, 2006 10:34pm
I've been developing a trading strategy based on trends and news announcment since May of 2006. I've come up with a REALLY good strategy. It is in a constant development still but I keep improving it and theoretically I could make over 1000 pips certain months. Of course theory and practice rarely match up. But here is what bothers me. I tested the strategy all the way back to January 2006 and everything lays out perfectly. I rarely lose. On average maybe 1.5 trades. My loses are limited to 60 pips. I let my winners run. I trade GBP, CHF and EUR vs USD. I have already funded my live account and ready to trade live. But a few days ago I decided to test it abit further just to make sure. I went back all the way to July of 2005. And I noticed that my strategy pretty much fails every month. I had to augment it quite abit to make theoretical profit in a month that I could have made in a week in 2006. How could this be? How could one strategy work so well for 11 months but then just stop?
  • #2
  • Dec 4, 2006 10:51pm Dec 4, 2006 10:51pm
Well, if you "curve-fitted" or "over-optimized" your strategy, then yes it is very possible it could only work for that time period. There was a great post here about developing a system and proper backtesting. If someone could find the link I would appreciate it.

andersenws
"Youth is the trustee of prosperity." - Benjamin Disraeli
  • #3
  • Dec 4, 2006 11:02pm Dec 4, 2006 11:02pm
Fooled by Randomness could that be the reason?


Lou
  • #4
  • Dec 4, 2006 11:08pm Dec 4, 2006 11:08pm
Quoting andersenws
Well, if you "curve-fitted" or "over-optimized" your strategy, then yes it is very possible it could only work for that time period. There was a great post here about developing a system and proper backtesting. If someone could find the link I would appreciate it.

andersenws

Yeah I always thought that would be a huge problem if my system was based on pure technical analysis. I do involve it abit with SR and trends but most of how I'd earn is though the price action. What ends up happening for me before 2006 is that I break even on 90% of the trades I make. And the funny thing is, there is no transitional period. I always thought that a change in the market would just slowly fail the system more and more often until you optimize it again. Especially true with mechanical systems. But by using the price action you shouldn't need to do any big adjuctments. Yet, the conditions in 2005 are so different. Has anyone else found this?
  • #5
  • Dec 5, 2006 6:23am Dec 5, 2006 6:23am
Quoting Lou
Fooled by Randomness could that be the reason?


Lou
Just finished that book! Awesome read.

andersenws
"Youth is the trustee of prosperity." - Benjamin Disraeli
  • #6
  • Dec 5, 2006 6:36am Dec 5, 2006 6:36am
the reason is that market dynamics change, its just change from being stuck in a range for the last six months


have a look at what sort of market your in and make it a trading factor, hope this helps
  • #7
  • Dec 5, 2006 7:12am Dec 5, 2006 7:12am
This isn't necessarily true. Imagine, for example, that you've developed an incredible strategy for a ranging market. How does a market break out of an extended range? With powerful moves. Look at what happened Thanksgiving week to the EURUSD and GBPUSD. Hundreds of pips while the market wasn't even looking and a big breakout of an extended range. Market dynamics can truly change very quickly.

I'd suggest you go figure out why it's so successful during that time period. Then, figure out if there's something that can indicate you to those conditions and trade the strategy when you get that indication.

Quoting mmnoname
Yeah I always thought that would be a huge problem if my system was based on pure technical analysis. I do involve it abit with SR and trends but most of how I'd earn is though the price action. What ends up happening for me before 2006 is that I break even on 90% of the trades I make. And the funny thing is, there is no transitional period. I always thought that a change in the market would just slowly fail the system more and more often until you optimize it again. Especially true with mechanical systems. But by using the price action you shouldn't need to do any big adjuctments. Yet, the conditions in 2005 are so different. Has anyone else found this?
  • #8
  • Jan 16, 2022 9:03am Jan 16, 2022 9:03am
Trading the forex or other markets doesn’t have anything with pain, psychology or improvement: the only law is: if you know, you win, if not you lose! The proof: your results and abandon your thread.

You who have already lost everything and are looking for a way to get your money back, stay away from all the EA’s, indicators, softwares as Metatrader, Jigsaw, Sierra, Bookmap and all other. Understanding the options on the futures is the only thing that will help you efficiently. You ‘ll never find anything to help you on forex website.

Finally, think about that: universal access to financial markets is a huge opportunity to get rip off millions of naive people! YOU JUST GIVE LIQUIDITY TO THE MARKET MAKERS VIA YOUR BOKER !
  • #9
  • Jan 16, 2022 11:01am Jan 16, 2022 11:01am
I trade forex automatically and manually according to candles and arrows and I do not complain.
Please excuse the bad English via Google Translate.
  • #10
  • Jan 17, 2022 3:38pm Jan 17, 2022 3:38pm
I suggest attempting to automate your system so you can see how it performs based off only your system entries, exits, risk management, etc. This occurred with me as well when trying to develop a manual system, I was like WOOO I found the holy grail but when it was automated it turned out to win a fraction of the rate it did when I was back testing it. Without really knowing it, you will probably use hindsight bias and that will mess up your day when you go live with your system and realize its not that great.
  • #11
  • Last Post: Jan 26, 2022 9:20am Jan 26, 2022 9:20am
Mistakes need to be made as quickly and long enough as possible.
Please excuse the bad English via Google Translate.
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