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The life of a trading system on Forex Factory

  • #381
  • Mar 31, 2012 4:01pm Mar 31, 2012 4:01pm
Quoting Custos
wrong. Not all systems, but a lot.
Well, I agree with this. There seems to be a growing consensus that systems are 'bad', that the only true way to trade is to completely forget the idea of using a system, throw up a naked chart, and trade 'price action'. This is fine if you can get away with it, but naked chart trading is not for me, and never will be. Systems aren't bad.....bad systems are bad, good systems are good. The problem with the systems you find on forums, is that there are way too many discretionary decisions involved, and even the mechanical portion of the system, has little to no edge to begin with... bad on both counts. I would say that all the systems I've ever looked at on FF, are about 20% mechanical, and 80% discretionary. If 80% of your trading decisions are based on gut feelings, instincts, and hunches...if you are second guessing every signal your 'system' gives you (probably rightly so, because its a bad or mediocre system), you worry about getting whipsawed, you're not sure where to take profits or set stops, then you are just pissing in the wind, and imo, this will eventually eat you alive. Even for those few people who are 'good guessers', and can actually turn a mediocre system profitable(because of the hundreds of discretionary decisions they make, not because of the system), the stress involved in this type of trading is extremely high. I'm not saying it can't be done, because I know it can....just don't underestimate the impact that stress can have on your success as a trader, over the long term.

I'm convinced that the traders that are actually making money, consistently and longterm, are the ones that have been able to develop systems that are primarily mechanical in nature, while still maintaining a clear edge... but what an incredible challenge it is to achieve this. I'm not discounting the value of discretion in trading, discretionary manual trading can be a huge edge in itself, IF you are very very good at it. I have pulled off some absolutely amazing discretionary trades over the years, I've also pulled off some amazingly BAD discretionary trades over the years. While exciting, I decided this wasn't the way to go for me.
  • #382
  • Mar 31, 2012 4:44pm Mar 31, 2012 4:44pm
Quoting Connected
Thank you AlienFrog, I appreciate you taking the time to share your views and experience with the method in question, I've planned to test the method up until the end of next week and then will evaluate the results from there. You make some good points, thanks again.
I will be interested to know how it works out. Mega pips to you!
Luck occurs when preparation meets with opportunity.
  • #383
  • Mar 31, 2012 9:12pm Mar 31, 2012 9:12pm
Quoting Aldente
Well, I agree with this. There seems to be a growing consensus that systems are 'bad', that the only true way to trade is to completely forget the idea of using a system, throw up a naked chart, and trade 'price action'. This is fine if you can get away with it, but naked chart trading is not for me, and never will be. Systems aren't bad.....bad systems are bad, good systems are good. The problem with the systems you find on forums, is that there are way too many discretionary decisions involved, and even the mechanical portion of the system,...
this is a very good post,elements 1,2 and 3.
  • #384
  • Mar 31, 2012 10:39pm Mar 31, 2012 10:39pm
Thanks
New voice message: Why are you calling me? If I need you, I'll call you!
  • #385
  • Apr 1, 2012 12:12am Apr 1, 2012 12:12am
Quoting Aldente

I'm convinced that the traders that are actually making money, consistently and longterm, are the ones that have been able to develop systems that are primarily mechanical in nature, while still maintaining a clear edge... but what an incredible challenge it is to achieve this.
Primarily mechanical? So what's the rest of it, discretion?


Quoting Aldente

I'm not discounting the value of discretion in trading, discretionary manual trading can be a huge edge in itself, IF you are very very good at it. I have pulled off some absolutely amazing discretionary trades over the years, I've also pulled off some amazingly BAD discretionary trades over the years. While exciting, I decided this wasn't the way to go for me.
So what did you decide was the way to go for you?
  • #386
  • Apr 1, 2012 1:53am Apr 1, 2012 1:53am
Quoting pipmutt
Primarily mechanical? So what's the rest of it, discretion?
Sure, how about 70% mechanical, 30% discretionary...that would be primarily mechanical, wouldnt it?



Quote
So what did you decide was the way to go for you?


To try to find the best balance between rigidity(clearly defined criteria for entering and exiting trades), and flexibility(discretionary decisions).
  • #387
  • Apr 1, 2012 2:43am Apr 1, 2012 2:43am
i think the most important thing is to build a system that you are 100% compatible with....when i 'discovered' my system i was like,no way this is too simple it cannot work!!!! After 100's of trades on a simulator, i didn't have even a losing month...so i thought my mind or the market was tricking me just to turn around and take my money when i went live.

So far the system has held pretty well.my brain cannot handle too much analysis...i just wait for some conditions to form and i form a bias then trade that.

The trick is to find a system that mirrors your brain thought process about price action and to have hard statistical facts to give you confidence when you encounter losing streaks,especially if u have a low win system like mine. So long as the losses are within your system boundaries.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #388
  • Apr 1, 2012 3:12am Apr 1, 2012 3:12am
Quoting Aldente

Sure, how about 70% mechanical, 30% discretionary...that would be primarily mechanical, wouldnt it?
Yes it would. So a framework to work within for finding suitable set ups, and then discretion based on additional current information to make the final decision on whether the trade was appropriate, valid, and viable.
  • #389
  • Apr 1, 2012 3:21am Apr 1, 2012 3:21am
Quoting pemully

i think the most important thing is to build a system that you are 100% compatible with....
Not forgetting have (justifiable) confidence in.


Quoting pemully

when i 'discovered' my system i was like,no way this is too simple it cannot work!!!!
lol, me too! Mind you that was after a lot of time (and money!) trying out complicated strategies, I thought that's what was needed to make money in this business, the more complicated and 'clever' the better! Turns out the opposite was true, well for me anyways.
  • #390
  • Apr 1, 2012 3:28am Apr 1, 2012 3:28am
people naturally want a high win/loss ratio, and believe it is required to make money from forex...

some proper money management with 50% win loss is a near as damn it the holy grail...

but people dont give trading TIME and they don't keep data of their trading...

If you can't truthfully say you know accurately what your win/loss ratio is, what your risk reward is, and what percentage of your account you use for every trade, then finding your winning system is gonna be near impossible
tradewith60
  • #391
  • Apr 1, 2012 4:50am Apr 1, 2012 4:50am
Quoting LazyPawn
I became a member of the forum 7 years ago. As a beginner I spent most of the first 2 years studying various trading systems posted here, using some of them on demo accounts and (unfortunately) a few on my live account. Eventually I created two of my own which I still use with little modifications up to this day. However, the old hobby is not dead. I still test almost everything. Occasionally I find a new idea, an interesting indicator, even a good system that can be made profitable with some adjustments.

But the really fun part is to follow what...
Well , it called Factory, ForexFactory for a reason you know.

But well put.
  • #392
  • Apr 1, 2012 9:13am Apr 1, 2012 9:13am
Quoting pipmutt
and then discretion based on additional current information to make the final decision on whether the trade was appropriate, valid, and viable.

Yeah, thats exactly right, but at the same time, I'm trying to minimize this aspect as much as possible. I like to think of it as a continuous process of breaking down the discretionary components, and quantifying them.
  • #393
  • Apr 2, 2012 4:19am Apr 2, 2012 4:19am
I personally believe its a tough call, im not sure there is one system that every forum member will be able to use to great success. I feel there is a fine line between several heads being better than one and too many chefs spoil the broth. What would be good is for the OP to have used each system they post for an extended period seeing profit consistantly.
  • #394
  • Apr 2, 2012 11:18am Apr 2, 2012 11:18am
That long post of Aldente's was a wonderful piece of information.

Its the same with me, I knew and still know that frequently, superb opportunities for discretionarily "catching" a trade arises - but i was unable to keep my hands away from it, when analyzing all the high risk times. so, after a very intense time, I am now back to the first truth i learned from a certain "Merlin" on a german board.
it was this: flip a coin 100 times, heads means +2, tails means -1. thats all you need. the equivalent for completely blind random position opening means:

flip two coins. 2x heads is +4, all others is -1. in the markets, this means, if you have more than 25% winners and they are 1:4 R R ratio, your account cannot but grow! if you want it to grow fast, switch into the small timeframes and throw the coin to command you what to do - SL and TP are always fixed (never taking profits is optional)

this is purely mechanical. even blind mechanics do work. Agree?

Custos said, 10 000 trades are not enough of a proof for it to be more than a random walk. i would say, after several hundred trades, you are finished with trading, if you risk 3% instead of 1 oder 0,5%. Meaning that you can stop because you have reached your dream sum.

Success and insight everyone
  • #395
  • Apr 2, 2012 6:11pm Apr 2, 2012 6:11pm
Interesting post LazyPawn.

This is my first post on FF but I've reading plenty of posts on this forum whenever I have time. FF is certainly most successful of it's kind.

I suppose what you stated are true for most of the system here, this further demonstrated that a great system is hard to come by. Also simply pick up other people's idea is not the best way for a successful system, the key ingredient is still hard work on your own.

As a programmer, I do have one disagreement. For those robots (EAs) that don't work, the root of the failure is the system itself, not the approach of using a robot. People tend to say there are certain things traders can feel that EAs can't, the fact is anyone who is trading using a systematic approach, if they do have clear and firm rules, and if their EA is programmed correctly, robot should only do better than a human in most cases.
  • #396
  • Apr 3, 2012 7:42am Apr 3, 2012 7:42am
Automatic systems have the flaw of not being able to see the big picture and adjust constants based on that. You can say: Whenever price stops within 10 pips multiple times then this is S or R. And the system will do exactly that. What if suddenly there's a spike to 11 pips? System won't notice it, despite the fact that it might be valid S/R.

There's a reason banks and institutions hire rocket scientists to come up with equations to be used for the programmers in a trading system, it's not within the capability of MQL language or the average programmer to implement/devise such a system. EA's are handy for calculating and repetitive actions, but programming a self-sufficient EA that vacuums up the money from the market is a pipe dream.
  • #397
  • Apr 3, 2012 8:29am Apr 3, 2012 8:29am
Quoting mister me

the only exiting methods i know of are for a better word scalping or intraday descresionary traders,who have gained emense knowledge of entry through confluence .these can produce very high win rates and large % account gains,

excuse my poor english

regards
me
Me,

I tend to agree with you on that. When a trader's knowledge and experience dovetail with confluence in the market PA...it can be like taking candy from a baby.

I have never used a mechanical system to trade, but I just might look into it one day...just to compare.

I think you've got some deep understanding from careful observation and study that you can really appreciate.

Thanks for sharing...anyway . There is something there for those new to the world of trading with EAs to glean.

FX4
Trade what you see, not what you think or feel. Let the market come to you.
  • #398
  • Apr 3, 2012 10:44am Apr 3, 2012 10:44am
Quoting Pipsgeek
Automatic systems have the flaw of not being able to see the big picture and adjust constants based on that. You can say: Whenever price stops within 10 pips multiple times then this is S or R. And the system will do exactly that. What if suddenly there's a spike to 11 pips? System won't notice it, despite the fact that it might be valid S/R.

There's a reason banks and institutions hire rocket scientists to come up with equations to be used for the programmers in a trading system, it's not within the capability of MQL language or the average...
Well simply tell the system what to do if there is a 11 pip spike. If a system goes without noticing those events, it only means the person who created the rules did not cover all possibilities. Still not the fault of the program.

Even if you trade the same system manually, you still have to decide beforehand what to do if same situation appears, it's a matter of rules complete or not.
  • #399
  • Apr 3, 2012 4:03pm Apr 3, 2012 4:03pm
Quoting Aldente

Yeah, thats exactly right, but at the same time, I'm trying to minimize this aspect as much as possible. I like to think of it as a continuous process of breaking down the discretionary components, and quantifying them.
Do you plan on incorporating any sort of AI into the system to try and cover the discretionary elements? That would be an exciting project!

Like Pipsgeek said, EA's are handy for repetitive tasks but I think they only scratch the surface of developing a truly automated and consistently profitable system. There are massive investments being made in developing these systems, and some extremely clever scientists, I'm not sure we have the same resources available!
  • #400
  • Apr 4, 2012 4:15pm Apr 4, 2012 4:15pm
Quoting FX4Newbies
Me,

I tend to agree with you on that. When a trader's knowledge and experience dovetail with confluence in the market PA...it can be like taking candy from a baby.

I have never used a mechanical system to trade, but I just might look into it one day...just to compare.

I think you've got some deep understanding from careful observation and study that you can really appreciate.

Thanks for sharing...anyway . There is something there for those new to the world of trading with EAs to glean.

FX4
why do we not trade these trades only,we are all guilty of this,why
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