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Developing an edge

  • #1
  • First Post: Feb 23, 2009 10:30pm Feb 23, 2009 10:30pm
Hey folks,

I've heard a lot about backtesting to quantify an edge and to gain confidence in that edge. It has become clear that I need to do this, but I am at a loss as to how this is done, or where to begin. So I am beginning here.

Do I have to understand programming code? (As though trading itself isn't a large enough mountain to climb)

Should I just go through historic data and do it manually?(more mountains)

I am clueless. Please help.
Compelled beyond my will
  • #2
  • Feb 23, 2009 10:32pm Feb 23, 2009 10:32pm
NUMBER ONE THING: Don't re-invent the wheel. Trading did not start with Forex on the internet. There have been profitable systems out there *for decades*. You don't have to create a new one, they already exist. Read up on them, understand them, and (if you can) program them.

Too many people start trying to "design" their own system - you're not the first trader to walk the earth, the systems already exist

Good Luck!
  • #3
  • Feb 23, 2009 10:38pm Feb 23, 2009 10:38pm
After countless hours of reading the Internet, going to Barnes and Noble and looking at Forex and trading books, and testing your own strategies (if you decide to commit yourself to coding) then you will get a clearer understanding of what is going on.

I would be leary who I listened to on FF.... the people that have been here longer have survived longer... the newbies giving advice are likely not to stand the test of time.


Hmmmm..... I will close by saying that the worst thing you can do is be excited by good looking backtests, and that believing in yourself is ultimately where you fate lies because it is your hard earned money at the end of the day, not somebody giving you advice.

THIS DOES NOT MEAN THAT YOU CONTROL YOUR FATE BY CONTROLLING YOUR EMOTIONS. It simply means that at the end of the day, you are pushing the buy and sell buttons, and must understand that the market doesn't listen to anyone.
  • #4
  • Feb 23, 2009 10:54pm Feb 23, 2009 10:54pm
Quoting tdion
Hmmmm..... I will close by saying that the worst thing you can do is be excited by good looking backtests,
Ignore backtests at your own peril. Sure, they don't tell everything but they sure do help. Following a system that has no back-test (which is VERY common on FF) is just plain insanity.
  • #5
  • Feb 23, 2009 11:11pm Feb 23, 2009 11:11pm
Quote
NUMBER ONE THING: Don't re-invent the wheel. Trading did not start with Forex on the internet. There have been profitable systems out there *for decades*. You don't have to create a new one, they already exist. Read up on them, understand them, and (if you can) program them.

LongToBeFree, this is the dumbest thing I have ever heard.

I would start by not asking for advice on a forum, you will always get either retarted views like the above, or people will start arguing. I just come here when I'm bored.

As for backtesting, I have always found it helpful to go back in your charting program a few years, and just meticulously go forward bar by bar, and place trades like you would if it was real life (through whatever method you have come up with). This is extremely time consuming, boring, and tiring. However, I have found it to make a world of difference.

If you really do want to become a trader, you will need to put in a lot of man hours, just like any profession.

Before you try to develop an "edge", make sure your BS filter is up to snuff.
  • #6
  • Feb 23, 2009 11:39pm Feb 23, 2009 11:39pm
Not everything is BS. But the nuggets are very few and far between, especially when you analyze each system/money management strategy for risk.
  • #7
  • Feb 24, 2009 1:11am Feb 24, 2009 1:11am
Thanks loa. I am only truly realizing the actual value of backtesting from all the hours i've already put in. It is very logical for me to begin to backtest at this point in order to improve my trading. I am not at all against using someone else's system, I just find it hard to believe that any worthwhile system would be published for free on some forum. So as with everything, if you want it you have to get it yourself.

Are there any free charting sites which have historical data that far back? Netdania is pretty good but its not very user friendly. know of any others?
Compelled beyond my will
  • #8
  • Feb 24, 2009 2:59am Feb 24, 2009 2:59am
Quoting ramrob
Are there any free charting sites which have historical data that far back? Netdania is pretty good but its not very user friendly. know of any others?
MT4 have the option to download historical data in the platform but i know some people say that data is not very good for some reason.
But you can dowload data for MT4 from Alpari and as far as i know that data should be ok.
I don't want to post any links because people get banned here for doing that but if you Google "Alpari historical data" or something like that you should find it.

Arctic4x
  • #9
  • Feb 24, 2009 7:51am Feb 24, 2009 7:51am
Quoting loa1452
LongToBeFree, this is the dumbest thing I have ever heard.

I would start by not asking for advice on a forum, you will always get either retarted views like the above, or people will start arguing. I just come here when I'm bored.
You obviously don't read very much. Go to your local bookstore and sit in the business section for a while. If you can't find books that already contain proven systems, then you're just plain dumb.
  • #10
  • Feb 24, 2009 12:03pm Feb 24, 2009 12:03pm
I think that the free systems posted here are great tool. I don't think I'd ever use a stock system from here but those systems ARE great for the one fact that they allow you to see how a system is constructed and used.

After going through enough trading systems from other people you get a feeling of what indicators work best for your type of trading, which then leads to developing your own plan. This goes for fundy/techy trading.

As for backtesting...I'm not a huge fan. It has its merits but I too scroll back in time about a year and forward test that way one bar at a time.

I would never leave trading up to an EA since I not only take into account how my indicators are lining up but also apply judgment to the candle stick patterns forming.

it's a huge work in a progress to develop a good trading plan and even more work to learn to trade it to the best you can.

Best advice I can give is to learn to trade forex as seriously as possible from day one. Treat it like a job...because when your money is on the line you don't want to base your trades on..."Hmm..I think that will continue up."
  • #11
  • Feb 24, 2009 3:50pm Feb 24, 2009 3:50pm
Quoting loa1452
I would start by not asking for advice on a forum, you will always get either retarted views like the above
Dude, if you are going to call someone, or refer to someone as "retarded" you should at least spell it correctly lest it make you look retarded.

You and the EURJPY just made my day.
  • #12
  • Feb 24, 2009 4:46pm Feb 24, 2009 4:46pm
Quote
Dude, if you are going to call someone, or refer to someone as "retarded" you should at least spell it correctly lest it make you look retarded.

Oops. Your right. Sorry. I retract my whole statement then.

Quote
You obviously don't read very much. Go to your local bookstore and sit in the business section for a while. If you can't find books that already contain proven systems, then you're just plain dumb.

Lol... That statement just took priority on my list of the dumbest things I've ever heard, with your other statement in 2nd place.

Hey LongToBeFree, do this guy a favor and simply point him out a proven system so he won't have to do any work and can just be rich.
  • #13
  • Feb 24, 2009 5:10pm Feb 24, 2009 5:10pm
Quoting LongToBeFree
You obviously don't read very much. Go to your local bookstore and sit in the business section for a while. If you can't find books that already contain proven systems, then you're just plain dumb.
I have to agree with whoever called this comment 'retarded', this is all time forum comedy gold of the highest order. Wow! so that's where everybody was going wrong! (slaps head), the answer was down at the local bookstore all this time! I bet we all feel pretty stupid now, I'm going down there after lunch and learn me how-to trade! Perhaps I can become a brain surgeon as well, certainly no need to re-invent the wheel there either!
The breaking of a wave cannot explain the whole sea.
  • #14
  • Feb 24, 2009 5:23pm Feb 24, 2009 5:23pm
Quoting Craig
I have to agree with whoever called this comment 'retarded', this is all time forum comedy gold of the highest order. Wow! so that's where everybody was going wrong! (slaps head), the answer was down at the local bookstore all this time! I bet we all feel pretty stupid now, I'm going down there after lunch and learn me how-to trade! Perhaps I can become a brain surgeon as well, certainly no need to re-invent the wheel there either!
Dont spoil the dream for me craig, I just got excited...
Living the adventure in my head.
  • #15
  • Feb 25, 2009 7:29am Feb 25, 2009 7:29am
Quoting Craig
I have to agree with whoever called this comment 'retarded', this is all time forum comedy gold of the highest order. Wow! so that's where everybody was going wrong! (slaps head), the answer was down at the local bookstore all this time! I bet we all feel pretty stupid now, I'm going down there after lunch and learn me how-to trade! Perhaps I can become a brain surgeon as well, certainly no need to re-invent the wheel there either!

You continually disappoint me with your lies.

You told me I was on your ignore list and you obviously are not a man of your word - you just can't stay away from me can you?
  • #16
  • Edited 11:13am Feb 25, 2009 10:11am | Edited 11:13am
LOL, got under your skin did I? But no you're right, I can't turn away, it's like trying not to rubber neck when passing a car crash.
I'll repost my other response for the 3rd time, since I know patience and repetition are required for training folks who have special needs.
http://www.forexfactory.com/showthre...69#post2510269

You can keep on pretending you haven't read that post in order to pretend that I said you were on my ignore list, in order to not have to address the retarded content of your post.
In fact I encourage you to do so, we all need a good laugh

P.S. How is the demo account draw down coming on?
The breaking of a wave cannot explain the whole sea.
  • #17
  • Feb 25, 2009 11:25am Feb 25, 2009 11:25am
Quoting Craig

P.S. How is the demo account draw down coming on?
ouch!
Compelled beyond my will
  • #18
  • Feb 25, 2009 5:45pm Feb 25, 2009 5:45pm
I see the lil' fella got bounced again. After a while its not funny anymore, just sad. A couple years of therapy and who knows he may be OK.
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In trading, there is no bullshit. You either make money or you don't.
  • #19
  • Feb 25, 2009 5:51pm Feb 25, 2009 5:51pm
The sound of his burbling insanity was becoming a torrent, But I'm sure he will be back for more japes!
Is he the new Moe?
The breaking of a wave cannot explain the whole sea.
  • #20
  • Last Post: Feb 25, 2009 6:23pm Feb 25, 2009 6:23pm
Nah, just looked at his profile and there's a comment from Twee - he got life. FF members worldwide will be crying themselves to sleep tonight.
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