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How do you develop a system?

  • #21
  • Oct 21, 2012 3:34pm Oct 21, 2012 3:34pm
Quoting Indrek
Most people in most threads are trading on demo accounts. So, it has not much to do with real trading.
Nobody ever posted a well tuned system in a public forum. Only way to advance is to pick up ideas from different threads and to put together your very own system.
If you manage to do this (it takes around couple of years of hard work on your own) then you have to remember that any good system will stop working very profitably soon after you have shared it publicly.
On the other hand, most ideas and systems work in the hands of a good trader...
I disagree. Many people have traded live and posted here. One girl had a thread here for 2-3 yrs,remember her. Anyway I have a question that could help people in developing a system, cause its a mistake most of us make.

WHY DO ALMOST ALL OF US TIGHTEN OUR STOP as the trade we are in accrues more $$$ and lasts more bars? Isnt that the time to, "if" we do anything to loosten the stop as the trend has confirmed itself the longer its lasted. Now come on guys, How man of you said I will get out when the first bar closes under my 8sma and then you see it stall for one bar, produce a doji and then go back and forthfor 30 seconds and you just figure its out of gas and you bail, figuring you could always re-enter? Or you are happy with the gain you have...only to see that you are in that one day a month, 20-1 where the stock does not draw back all day long and just grinds up till 4pm! This is both a separate question and also a concept to adapt into a system. If youd like to work on this privately with me, send me a PM. Im trading years and thats my 2nd biggest mistake. Now I solved it by having tgts set "before" entering. In the scenario I gave I would have been using a 2 or 5 min chart. Oh yeah...hint for the newbies: If I could have a system, it would be to find anyone(there are so few) who can win off of a 1 min chart, and just pocket the spreads and commissions and misc. fees they pay each month. Sickening isnt it? The best trader in the world can never make more than the CME or NDAQ. Just threw that in, it doesnt mean much.....or does it?
  • #22
  • Oct 25, 2012 6:19am Oct 25, 2012 6:19am
Quoting jcl365
I often find - with one remarkable exception so far - that it is unprofitable.
I noticed since the time I trade, that for testing of the system you heed to have some time. That's why it's helpful to see first of all the log for ... half of the year, for example.
Then I test it on the demo account.
Only long periods (at least from 1 month) can say something. But of course after some time you need to upgrade the system and for that you need to understand the ground principes of it.
  • #23
  • Oct 25, 2012 12:49pm Oct 25, 2012 12:49pm
good point about tightening stops...with my own trading i would do so much better if i just placed stop at last swing high or low and let it go...tightening stop ultimately gets u out early and messes with your r/r ratio i find



Quoting Silat50
I disagree. Many people have traded live and posted here. One girl had a thread here for 2-3 yrs,remember her. Anyway I have a question that could help people in developing a system, cause its a mistake most of us make.

WHY DO ALMOST ALL OF US TIGHTEN OUR STOP as the trade we are in accrues more $$$ and lasts more bars? Isnt that the time to, "if" we do anything to loosten the stop as the trend has confirmed itself the longer its lasted. Now come on guys, How man of you said I will get out when the first bar closes under my 8sma and then you...
  • #24
  • Oct 29, 2012 9:45pm Oct 29, 2012 9:45pm
Im with you 100%.
looking to eventually start a small shop fast execution forex ecn/dma for a select few
Getting there slowly but surely....been doing it for a living....so i see the money these guys are making....more than hft junkies



Quoting Silat50
I disagree. Many people have traded live and posted here. One girl had a thread here for 2-3 yrs,remember her. Anyway I have a question that could help people in developing a system, cause its a mistake most of us make.

WHY DO ALMOST ALL OF US TIGHTEN OUR STOP as the trade we are in accrues more $$$ and lasts more bars? Isnt that the time to, "if" we do anything to loosten the stop as the trend has confirmed itself the longer its lasted. Now come on guys, How man of you said I will get out when the first bar closes under my 8sma and then you...
  • #25
  • Oct 29, 2012 9:53pm Oct 29, 2012 9:53pm
I think you're wrong on messing up the rr....
Think abt it this way.
A always fixed sl is the only known in your system.....
Profit can be positively floating above zero, whereas sl is never floating...its an absolute (status quo)

Quoting robybarletta
good point about tightening stops...with my own trading i would do so much better if i just placed stop at last swing high or low and let it go...tightening stop ultimately gets u out early and messes with your r/r ratio i find
  • #26
  • Oct 29, 2012 10:53pm Oct 29, 2012 10:53pm
Quoting jcl365
When you read the description of a system here, how do you decide if you want to trade it or not? Do you go through price charts and manually simulate trades, adding the results in a pocket calculator? Or do you just trade away when you like the rules?
Cause and effect relationship.

There has to be a reason why your system works, that's how you decide if you want to trade it or not. If you can't explain why and how your system works, then it is 100 % sure unprofitable. This kind of thinking will save you a lot of time and help you realize why most systems posted on this forum are completely useless. Let me give you an example:

Hypotetical system A:

It is Friday, traders have acumulated long positions during the week and as the weekend is coming, I think some of those traders will want to protect their profits and they will close some/all of their long positions. When they start selling in order to close their trades, price will go down so I will go short.

Hypotetical system B:

I put a moving average on my chart and I go long every time price crosses above it and I go short every time price crosses below it.

Well, there you have it. System A is based on a cause and effect relationship. We know why it works and we can explain how it works, there is a reason behind that trade we are taking.

System B on the other hand is just based on some random parameters, we are adding indicators to the chart and hoping that (for some unknown reason) traders will push price in our direction. Under this kind of system you are basically gambling because you have no edge.

So, how about we all start thinking about how markets work and come up with something that is based on real information.

Good luck on your journey!
  • #27
  • Last Post: Oct 30, 2012 2:07am Oct 30, 2012 2:07am
Trial and error.
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