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How do you filter out bad trades?

  • #21
  • Jun 4, 2011 3:34am Jun 4, 2011 3:34am
Quoting Davidee
Simple method for medium to long term trading systems, filter out trading against the trend. How to do this? Compare the price the market opened at 100 days ago to the price today. This works better than moving averages.
I like the idea, I'll test it out and see how it goes, cheers!
  • #22
  • Jun 4, 2011 9:03am Jun 4, 2011 9:03am
Quoting nahman
I like the idea, I'll test it out and see how it goes, cheers!
You're welcome. Here is a test I once did -

 

  1. If Today's_Close > Past_Closing_Price AND Tomorrow's_Close > Today's_Close THEN record the number of pips between today's and tomorrow's closing price as a positive movement.
  2. If Today's_Close > Past_Closing_Price AND Tomorrow's_Close < Today's_Close THEN record the number of pips between today's and tomorrow's closing price as a negative movement.
  3. If Today's_Close < Past_Closing_Price AND Tomorrow's_Close < Today's_Close THEN record the number of pips between today's and tomorrow's closing price as a positive movement.
  4. If Today's_Close < Past_Closing_Price AND Tomorrow's_Close > Today's_Close THEN record the number of pips between today's and tomorrow's closing price as a negative movement.

You add up with positive and negative movements and work out the ratio.

On medium times of around 3 months it worked pretty well. Using Simply Moving averages of between 40 and 100 instead also worked, but not quite as well. Comparing price to raw past price was more effective than comparing the price to the past average price; hint whilst indicators can be useful to filter out 'noise' they are still a price distortion. http://www.myforexdot.org.uk/BestTim...eLookback.html

  • #23
  • Jun 5, 2011 1:46am Jun 5, 2011 1:46am
Quoting Davidee
You're welcome. Here is a test I once did -

[list][*]If Today's_Close > Past_Closing_Price AND Tomorrow's_Close > Today's_Close THEN record the number of pips between today's and tomorrow's closing price as a positive movement.[*]If Today's_Close > Past_Closing_Price AND Tomorrow's_Close < Today's_Close THEN record the number of pips between today's and tomorrow's closing price as a negative movement.[*]If Today's_Close < Past_Closing_Price AND Tomorrow's_Close < Today's_Close THEN record the number of pips between today's and tomorrow's...
Interesting stuff, would you ever consider weekly data as well say for example what happened last week in this exact moment in time?
backtesting is proving to be a very tedious task especially with such large amounts of data and variables to look at
  • #24
  • Jun 5, 2011 9:26am Jun 5, 2011 9:26am
Quoting nahman
Hmm this possibly means (which I had a hunch on) trading only at the possible start/middle of the trend and ignore anything until trend reversal, I've noticed that this system does sometimes take losing trades near bottoms and tops of trends
If you trade with the trend you can only be wrong 1 time... when the trend is reversing....



Quoting nahman
I think this might be good to evaluate what is a key factor in what is happening in losing trades, can be helpful definitely
You've made it clear that your making profitable trades.. so if that is true then your problem is accepting losses..

you should take a small portion of your account and try to lose money on monday.. that way you can cope with losing trades and understand they are no big deal


Best wishes,
NY
  • #25
  • Last Post: Jun 5, 2011 2:58pm Jun 5, 2011 2:58pm
Quoting hanover
1. Pair selection: pair the strongest currency/ies against the weakest - this will, on balance of probability, lead to continuation of the strongest, cleanest trends.

2. Time of day: examine volatility on a session by session basis. What are the best (most volatile) times of the day to trade? To what extent does this vary from pair to pair?

3. Candles: Look for big candles (preferably also with high volume) signaling that price is starting to resume in the direction of the major trend, following a pullback/lull/congestion.

4. RR: Focus not...
Solid Gold Hanover! These 4 points mentioned will greatly improve your success rate. I would also add.. Use a Higher Time Frame & Trade with the trend always.

www.forexnetworth.blogspot.com
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