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trading system questions

  • #1
  • First Post: Jan 3, 2007 5:59am Jan 3, 2007 5:59am
Please traders:
Can you help,by giving your opinion,about the following issue:

If we have a trading method with the following characterstics:
1-trades one pair per day.
2-uses no indicators at all.
3-one trade per day,either won or loss.
4-always closed within the same day.
5-defined stop limit,take profit the same always,i.e in terms of no of pips.
6-Risk/reward ratio of 3/5.

Now the questions are:
1-How many trades are enough to forward test this method,so as to till that this method is working or not,and to be almost sure that it is not working by chance?
2-what is the percentage of winning trades,for this method to be consistantly profitable,providing that winning trades achieve the targets 100% or 80% of thier predetermined targets?

I will be very thankfull to have your opinion.

Thanks,
Atheer1
atheer1
  • #2
  • Jan 3, 2007 6:17am Jan 3, 2007 6:17am
Quoting atheer1
Please traders:
Can you help,by giving your opinion,about the following issue:

If we have a trading method with the following characterstics:
1-trades one pair per day.
Ok
Quoting atheer1
2-uses no indicators at all.
At least one indicator is needed <- Or what you use to buy and Sell?Dime!
Quoting atheer1
3-one trade per day,either won or loss. 4-always closed within the same day.
 5-defined stop limit,take profit the same always,i.e in terms of no of pips.
6-Risk/reward ratio of 3/5.
Many people do that
Quoting atheer1
Now the questions are:
1-How many trades are enough to forward test this method,so as to till that this method is working or not,and to be almost sure that it is not working by chance?
As much as you can, But i'll say minimum 100 to get the feel of it.
Quoting atheer1
2-what is the percentage of winning trades,for this method to be consistantly profitable,providing that winning trades achieve the targets 100% or 80% of thier predetermined targets?
The response is in the question.
what is the percentage of winning trades, if 80% achieve the targets? 80 out of 100!!!!!!!
Sorry for my bad english translation
  • #3
  • Jan 3, 2007 6:19am Jan 3, 2007 6:19am
Quoting atheer1
Please traders:
Can you help,by giving your opinion,about the following issue:

If we have a trading method with the following characterstics:
1-trades one pair per day.
2-uses no indicators at all.
3-one trade per day,either won or loss.
4-always closed within the same day.
5-defined stop limit,take profit the same always,i.e in terms of no of pips.
6-Risk/reward ratio of 3/5.

Now the questions are:
1-How many trades are enough to forward test this method,so as to till that this method is working or not,and to be almost sure that it is not working by chance?
2-what is the percentage of winning trades,for this method to be consistantly profitable,providing that winning trades achieve the targets 100% or 80% of thier predetermined targets?

I will be very thankfull to have your opinion.

Thanks,
Atheer1
in my opinion:

1. 100 trades in forward test is enough for me to start live with small amount to continue test in live enviroment (not demo as demo often supplies slightly different data). you will never be sure, there is no such thing as certainity in FX. Even if you have good system consistently profitable live for a year - it can easily collapse as market conditions change.
Quidquid latine dictum sit altum viditur
  • #4
  • Jan 3, 2007 6:23am Jan 3, 2007 6:23am
If you have a system like that, show it to me.... ;-)
Base on 3/5
ex.:
3/5 : 30pip/50pip
20%/20 lost = -600
80%/80 win = 4000
Sorry for my bad english translation
  • #5
  • Jan 3, 2007 6:42am Jan 3, 2007 6:42am
Quoting Zeuzere
Ok

At least one indicator is needed <- Or what you use to buy and Sell?Dime!

Many people do that

As much as you can, But i'll say minimum 100 to get the feel of it.

The response is in the question.
what is the percentage of winning trades, if 80% achieve the targets? 80 out of 100!!!!!!!
Thanks Zeuzere for your help:

A method that does not use an indicator(technical),does not need a dime to buy or sell,providing that most if not all indicators are lagging behind the price,so why not using the price action itself as your non-lagging indicator as I am agreat fan of this.

When I said 80% I meant that a trade that achieve 80% of its predetermind profit target in terms of pips won,still you can call it awinning trade,i hope that you got what I mean.


Thanks again,
Atheer1
atheer1
  • #6
  • Jan 3, 2007 6:58am Jan 3, 2007 6:58am
Quoting atheer1
A method that does not use an indicator(technical),does not need a dime to buy or sell,providing that most if not all indicators are lagging behind the price,so why not using the price action itself as your non-lagging indicator as I am agreat fan of this.
True, trader should learn to trade without indicator(Well see below) then add later indicator to pin point there intry/exit if needed...

But sorry, price by it self is not enought, in forex there is to much volatily to use only price action. You need at least Volume indicator like Stock trader use, to confirm that the movement is real and not a fake out, If you see my journal, i'm using only using volume and price action (recently i added MFI to confirm trend: work great)...
This morning with the Big move weve got on GBP, Volume(OBV-MFI) was showing all that stuff before it happen....

Price action is fine, but not alone...
Thats what i think.... :-)

The way i use it:
I only react to price action(td bread etc...),
MFI <- Trendline breach,
OBV <- Trendline breach or same direction of Price action ,
Volume <- Volume over its average
Sorry for my bad english translation
  • #7
  • Jan 3, 2007 7:11am Jan 3, 2007 7:11am
Quoting Zeuzere
But sorry, price by it self is not enought, in forex there is to much volatily to use only price action. You need at least Volume indicator like Stock trader use, to confirm that the movement is real and not a fake out, If you see my journal, i'm using only using volume and price action (recently i added MFI to confirm trend: work great)...
This morning with the Big move weve got on GBP, Volume(OBV-MFI) was showing all that stuff before it happen....

Price action is fine, but not alone...
Thats what i think.... :-)
Tell that to the James16 Group of traders. It is possible to trade purely on PA.
  • #8
  • Jan 3, 2007 7:12am Jan 3, 2007 7:12am
Atheer

Your method sounds interesting, do you mind sharing the basics?
  • #9
  • Jan 3, 2007 7:20am Jan 3, 2007 7:20am
Quoting Squash
Tell that to the James16 Group of traders. It is possible to trade purely on PA.
They use price action! But not only that....
On there thread they use many indicator like BB and MA...
Sorry for my bad english translation
  • #10
  • Jan 3, 2007 7:22am Jan 3, 2007 7:22am
Quoting Zeuzere
True, trader should learn to trade without indicator(Well see below) then add later indicator to pin point there intry/exit if needed...
I completely agree with this,indicators for me are entry and exit tools,but not to determine buy or sell decisions.
But sorry, price by it self is not enought, in forex there is to much volatily to use only price action. You need at least Volume indicator like Stock trader use, to confirm that the movement is real and not a fake out, If you see my journal, i'm using only using volume and price action (recently i added MFI to confirm trend: work great)...
This morning with the Big move weve got on GBP, Volume(OBV-MFI) was showing all that stuff before it happen....
Still I am thinking that price action is fair enough if you know how to utilise it in your favour.May be I am wrong,but I am here to learn.
Price action is fine, but not alone...
Thats what i think.... :-)

The way i use it:
I only react to price action(td bread etc...),
MFI <- Trendline breach,
OBV <- Trendline breach or same direction of Price action ,
Volume <- Volume over its average

Thanks,
Atheer1
atheer1
  • #11
  • Jan 3, 2007 7:35am Jan 3, 2007 7:35am
Quoting Squash
Atheer

Your method sounds interesting, do you mind sharing the basics?
Hello Squash,

Thanks for your post,this method is just under forward testing on a demo account,till now looks promising,but i have to have enough trades to decide whether to post it or not.

Would you mind to share your openion about the questions in the 1st post.

Thanks,
Atheer1
atheer1
  • #12
  • Jan 3, 2007 7:38am Jan 3, 2007 7:38am
Quoting Zeuzere
They use price action! But not only that....
On there thread they use many indicator like BB and MA...
Jim has stated many times that trading only price action is possible and combined with Fibs and S/R is very accurate.
  • #13
  • Jan 3, 2007 7:47am Jan 3, 2007 7:47am
Quoting atheer1
Hello Squash,

Thanks for your post,this method is just under forward testing on a demo account,till now looks promising,but i have to have enough trades to decide whether to post it or not.

Would you mind to share your openion about the questions in the 1st post.

Thanks,
Atheer1
Sure, but I am definately no expert. I would suggest you forward test at least 3 - 6 months or at least 100 trades before going live with a system. If you can backtest it is even better. I have been backtesting PA on several pairs with historical data from Alpari. It is very time consuming but it will hopefully help me when I go live with a full account.

With a R/R of 3/5 you only need 40% winners to BE or make a small profit. I think this is right. Someone correct me if I am wrong.

Hope that helps.
  • #14
  • Jan 3, 2007 8:20am Jan 3, 2007 8:20am
Quoting Squash
Jim has stated many times that trading only price action is possible and combined with Fibs and S/R is very accurate.
I agree 100%.
  • #15
  • Jan 3, 2007 1:33pm Jan 3, 2007 1:33pm
Quoting atheer1
Please traders:
Can you help,by giving your opinion,about the following issue:

If we have a trading method with the following characterstics:
1-trades one pair per day.
2-uses no indicators at all.
3-one trade per day,either won or loss.
4-always closed within the same day.
5-defined stop limit,take profit the same always,i.e in terms of no of pips.
6-Risk/reward ratio of 3/5.

Now the questions are:
1-How many trades are enough to forward test this method,so as to till that this method is working or not,and to be almost sure that it is not working by chance?
2-what is the percentage of winning trades,for this method to be consistantly profitable,providing that winning trades achieve the targets 100% or 80% of thier predetermined targets?

I will be very thankfull to have your opinion.

Thanks,
Atheer1
I trade without any indicators.
I have only one or at max two trades per week.
My system is 76% profitable (over the last 13 months). But I'll be happy if it was 60% accurate. My Risk/Reward is 1:1.25 and I let the money management do the rest.

Hope that answers some of your questions.
  • #16
  • Jan 3, 2007 2:17pm Jan 3, 2007 2:17pm
Quoting saaedb
I trade without any indicators.
I have only one or at max two trades per week.
My system is 76% profitable (over the last 13 months). But I'll be happy if it was 60% accurate. My Risk/Reward is 1:1.25 and I let the money management do the rest.

Hope that answers some of your questions.
Thanks Saaedb,but what do you mean by the accuracy % of winning trades,or those of winnings that reach the target profit.

Thanks,
Atheer1
atheer1
  • #17
  • Jan 3, 2007 2:35pm Jan 3, 2007 2:35pm
Quoting atheer1
Please traders:
Can you help,by giving your opinion,about the following issue:

If we have a trading method with the following characterstics:
1-trades one pair per day.
2-uses no indicators at all.
3-one trade per day,either won or loss.
4-always closed within the same day.
5-defined stop limit,take profit the same always,i.e in terms of no of pips.
6-Risk/reward ratio of 3/5.

Now the questions are:
1-How many trades are enough to forward test this method,so as to till that this method is working or not,and to be almost sure that it is not working by chance?
2-what is the percentage of winning trades,for this method to be consistantly profitable,providing that winning trades achieve the targets 100% or 80% of thier predetermined targets?

I will be very thankfull to have your opinion.

Thanks,
Atheer1
I suggest to take the following steps:

  1. Backtest the system for two years (or at least 1 year) to see how it responded to market conditions in the past.
  2. Forward test it on a demo account for at least 100 trades.
  3. Forward test it on a live mini/micro account for at least 100 trades.
  4. Start live trading.

At any stage if you are not happy with the results revise the system and start from step one.

Note that the steps I mentioned are for manual trading because backtesting is not very accurate. If you have an automated system in hand then the backtest results could potentially be more accurate and then you may reduce the number of trades for forward and min/micro trading significantly.

Good Luck,
Al

  • #18
  • Jan 3, 2007 5:11pm Jan 3, 2007 5:11pm
Hi,
Quoting Squash
I would suggest you forward test at least 3 - 6 months or at least 100 trades before going live with a system.
I would just like to add to Squash's point.

I've backtested systems which have doubled their maximum drawdown percentage between 100 and 200 trades for a single currency so these days I prefer closer to 200 trades than 100 trades.

Best regards
Alan
  • #19
  • Jan 3, 2007 6:06pm Jan 3, 2007 6:06pm
Quoting firehorse
Hi,I would just like to add to Squash's point.

I've backtested systems which have doubled their maximum drawdown percentage between 100 and 200 trades for a single currency so these days I prefer closer to 200 trades than 100 trades.

Best regards
Alan
I have come across the same situation many times Alan. Its so frustrating after 100 trades you think your on to something and then after 150 trades your back to square one. The joys of backtesting.
  • #20
  • Jan 3, 2007 6:18pm Jan 3, 2007 6:18pm
Quoting Squash
I have come across the same situation many times Alan. Its so frustrating after 100 trades you think your on to something and then after 150 trades your back to square one. The joys of backtesting.
I agree entirely. I don't believe 100 trades is anything like enough. If you had developed a system that trades every hour as opposed to every day would you believe that a system that has worked well over the last 4 days (96 trades) will now cope with all mkt conditions ? Surely not !

I would like to know my maximum drawdown after at least 3000 trades and preferably significantly more - if this is acceptable maybe then it would be worth considering for trading live.
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