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Re-assessing usefulness of a trading system

  • #1
  • First Post: Sep 20, 2010 1:40am Sep 20, 2010 1:40am
I have a strategy which was 85% accurate with 1:1.2 Risk:reward rate in first 7 months of this year amongst a number of pairs, if strategy in past two months is is around 55% should I scrap it? (overall at the moment including past two months it's dropped to 75%)

I'm a bit undecided as to what to do..

Any pointers would be most appreciated!

If anyone has encountered this in their trading past let me know your experience please!

Regards

-Mike
  • #2
  • Sep 20, 2010 4:46am Sep 20, 2010 4:46am
Quoting nahman
I have a strategy which was 85% accurate with 1:1.2 Risk:reward rate in first 7 months of this year amongst a number of pairs, if strategy in past two months is is around 55% should I scrap it? (overall at the moment including past two months it's dropped to 75%)

I'm a bit undecided as to what to do..

Any pointers would be most appreciated!

If anyone has encountered this in their trading past let me know your experience please!

Regards

-Mike
Mostly, there's something wrong with you - not with your system. Check what have happened recently what is different than before. Maybe your behavior has changed - increased frequency of trading, taking more risks (results of over-confidence). Check yourself before checking your system.
  • #3
  • Sep 20, 2010 6:15am Sep 20, 2010 6:15am
Quoting T.E.Lawrence
Mostly, there's something wrong with you - not with your system.
Wrong, mostly the systems based on fixed rules are crap and they work only a limited amount of time, usually until the market behaviour changes subtly.

nahman, use you system 2-3 years, you can't draw a conclusion after 2 or 6 months.
  • #4
  • Sep 20, 2010 6:23am Sep 20, 2010 6:23am
Quoting T.E.Lawrence
Mostly, there's something wrong with you - not with your system. Check what have happened recently what is different than before. Maybe your behavior has changed - increased frequency of trading, taking more risks (results of over-confidence). Check yourself before checking your system.
Oh I don't think I'm to blame, I have noticed that market has changed a little and has different personality than from previous months. Almost as if it didn't have as much force in some places. Frequency of trading has actually been a little less as there has been less signals - I don't know whether it's to do with time of year or whatever. Risk has been kept the same.
  • #5
  • Sep 20, 2010 6:28am Sep 20, 2010 6:28am
Quoting Sauron
Wrong, mostly the systems based on fixed rules are crap and they work only a limited amount of time, usually until the market behaviour changes subtly.

nahman, use you system 2-3 years, you can't draw a conclusion after 2 or 6 months.
I'm thinking it's to do with market behaviour, all together I have 9 months of data. 34 winners, 11 losers.

My rules are fixed or floating depending on price action ie if too quick I wait for a retrace of x pips etc.

What do you suggest for adapting the market should it be ranged based or time based? Any idea would be awesome and Thankyou both for replying!!
  • #6
  • Edited 5:11am Sep 21, 2010 5:00am | Edited 5:11am
Quoting nahman
I'm thinking it's to do with market behaviour, all together I have 9 months of data. 34 winners, 11 losers.

My rules are fixed or floating depending on price action ie if too quick I wait for a retrace of x pips etc.

What do you suggest for adapting the market should it be ranged based or time based? Any idea would be awesome and Thankyou both for replying!!
Just showing that you need more than one system
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  • #7
  • Edited 5:46am Sep 21, 2010 5:23am | Edited 5:46am
Quoting nahman
should I scrap it?
Reduce the lot size but keep using it and keep updating your statistics.

0.55 * 1.2 = 0.66 this is still far better than what most other traders achieve, its still extremely profitable, 95% of the population of the "Trading Systems" forum would give everything (including their own grandmother) in exchange for such a successful system. I cannot see any problem.
  • #8
  • Sep 21, 2010 5:45am Sep 21, 2010 5:45am
Nice article but in Russian: http://www.mql5.com/ru/articles/137
  • #9
  • Sep 22, 2010 12:37am Sep 22, 2010 12:37am
Quoting Larseg
Just showing that you need more than one system
Yeah, I've been thinking that I should use another system to complement it.

However I think I'll modify the system to incorporate a timeframe in which I raise stops to half their distance from open trade position if price action is minimal and seems to be in a range.

I think also modifying said system with varying lot sizes based on certain events, it seems some events more probable than others.


Thanks for everyone's posts so far! Much appreciated.
  • #10
  • Sep 22, 2010 12:38am Sep 22, 2010 12:38am
Quoting 7bit
Reduce the lot size but keep using it and keep updating your statistics.

0.55 * 1.2 = 0.66 this is still far better than what most other traders achieve, its still extremely profitable, 95% of the population of the "Trading Systems" forum would give everything (including their own grandmother) in exchange for such a successful system. I cannot see any problem.
The 0.55*1.2 is only for last two months.. overall so far 0.75*1.2 = 0.9

I Think people would be willing to sell more than their family for this.
  • #11
  • Sep 22, 2010 4:51am Sep 22, 2010 4:51am
Quoting nahman
Yeah, I've been thinking that I should use another system to complement it.

However I think I'll modify the system to incorporate a timeframe in which I raise stops to half their distance from open trade position if price action is minimal and seems to be in a range.

I think also modifying said system with varying lot sizes based on certain events, it seems some events more probable than others.


Thanks for everyone's posts so far! Much appreciated.

I have always used fully mechanical systems but are training with micro lots to see if I can be discretionary.... I can't see how it shouldn't work after all theese hours looking at the price
  • #12
  • Sep 23, 2010 4:42am Sep 23, 2010 4:42am
Quoting Larseg
I have always used fully mechanical systems but are training with micro lots to see if I can be discretionary.... I can't see how it shouldn't work after all theese hours looking at the price
My greatest problem is myself, I need to let it run and not care and keep myself busy for it to be profitable.
  • #13
  • Sep 23, 2010 4:53pm Sep 23, 2010 4:53pm
Quoting nahman
My greatest problem is myself, I need to let it run and not care and keep myself busy for it to be profitable.

Can I be completely honest with you? I assume, yes

A trading model is just a reflection on your thoughts...

I know the frustration and I know where you are now because every trader have to go through the steps of learning, theese steps can be catalysed if you go to someone who knows how to make money. So attending a seminar isn't neccessarily good unless they have proved that they know how.

And even if you attend a seminar you might not make it...

But if you stick to trading long enough its going to turn around.

Ok, my honesty, I know you have read that you need 1:3 risk/reward let the profits run, don't revenge trade, don't do this don't do that... Forget all that and try to trade without any indicators (even trendlines) but you need several timeframes (in one window).
Your brain is programmed to make you adapt to the market and just by trial and error will you find success... I know this is scary but give it a go...

The only true rule you actually need is don't risk too much on a trade... Imagine your account being 100 times bigger and you wouldn't need to trade so hard to make a living....

Whatever people says, this is a game, but there is no house taking your money, honestly this is shit easy compared to poker and that is skilled and patience based...

I know people are reading this in anger right now so I will just say that remember 5% is making money, why is this so low when we all know how to trade? I reckon It's because we follow other peoples steps or are forcing trades, make your own way... You don't need a plan, you need practice... unless you still feel for diversifying your account

I am sorry if traders in here are angry now so I will back my saying up with another trader's quote... From Market Wizard's...
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  • #14
  • Sep 24, 2010 1:46am Sep 24, 2010 1:46am
Quoting Larseg
Can I be completely honest with you? I assume, yes

A trading model is just a reflection on your thoughts...

I know the frustration and I know where you are now because every trader have to go through the steps of learning, theese steps can be catalysed if you go to someone who knows how to make money. So attending a seminar isn't neccessarily good unless they have proved that they know how.

And even if you attend a seminar you might not make it...

But if you stick to trading long enough its going to turn around.

Ok, my honesty, I know you...
I think I have that book actually, that excerpt seems familiar, yeah I do understand what you mean - but you have to realise there's more than one way to skin a cat! It's a matter of comfort I think, if you're comfortable things will go well. When I was comfortable with trades I was making money, when I was nervous and tense, I didn't follow my rules and lost money. I know I'm on the right track though. I'll kill these internal demons eventually!


Cheers for the reply!
  • #15
  • Last Post: Sep 24, 2010 7:27pm Sep 24, 2010 7:27pm
Quoting nahman
I think I have that book actually, that excerpt seems familiar, yeah I do understand what you mean - but you have to realise there's more than one way to skin a cat! It's a matter of comfort I think, if you're comfortable things will go well. When I was comfortable with trades I was making money, when I was nervous and tense, I didn't follow my rules and lost money. I know I'm on the right track though. I'll kill these internal demons eventually!


Cheers for the reply!

The pdf book was too big to post here but if yu haven't read it google for market wizards, its essential in trading... and your absoutely correct, there is many ways to skin a cat but more ways to skin it wrongly...

If you have been trading "mechanically" for some time you should really give it a go with ultra small lots or something...

cheers buddy
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