Are my 6-mth-old results statistically valid? | Forex Factory

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Are my 6-mth-old results statistically valid?

  • #1
  • First Post: May 5, 2013 1:04am May 5, 2013 1:04am
hi guys,

I have been trading a new system for the last 6 months. so far my account is steadily profitable.

my problem is that I'm a bit of a skeptic,I still doubt that this isnt just a lucky streak.I have 66 trades so far with 56% win rate 1.8:1 reward /risk.

Are the results statiscally valid? how long or how many trades would it take for you to trust that your system really works.

your views and suggestions will be highly appreciated.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #2
  • May 5, 2013 2:01am May 5, 2013 2:01am
Your results worth only if they are from a live account (trading with real market/broker conditions).

In my opinion, 66 trades is little small for statistic ... and also keep in mind that you don't know the future market conditions so statistics are only valid for your past results based on past market conditions.
MT4/MT5 EAs/Indicators/Alerts coder
  • #3
  • May 5, 2013 2:20am May 5, 2013 2:20am
the results are from live trading. I stopped believing in automated backtests since my trading involves discretionary aspects that can't be coded.

basically I incorporate the tried and tested rules,but I wonder if its enough for the long run...
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #4
  • May 5, 2013 2:28am May 5, 2013 2:28am
Quoting pemully
the results are from live trading. I stopped believing in automated backtests
I wasn't refering only on backtests but also on forward demo.

LIVE trading is the only way to see how a system/method is going ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #5
  • May 5, 2013 4:51am May 5, 2013 4:51am
56 is badly off, but mark the word off. how about you tweak it and optimize to 65%...that would
be much better
  • #6
  • May 5, 2013 4:59am May 5, 2013 4:59am
Quoting Danny Maina
56 is badly off, but mark the word off. how about you tweak it and optimize to 65%...that would be much better
actually my problem is that I think the results are too good to be true. I try to let winners run coz the system relies on about 5% of the Mega trades....otherwise it stays just around BE.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #7
  • May 5, 2013 5:14am May 5, 2013 5:14am
are 66 trades correlated in any way ? if yes, less significance.

are based trades on TA only or include fundamentals, sentiment. If only TA, less significance.

timeframe you play trades on... you need to wait for couple of market regime changes on that timeframe and see how fast you adapt. if sucessfull in adopting, that will give you good feedback.

i personally think you may have a bit of 'i am good' or 'i have made it' disease. decrease bet size if so. it is f*king difficult to get rid of it without losing too much.
  • #8
  • May 5, 2013 5:38am May 5, 2013 5:38am
Have a look at this article : http://articles.mql4.com/471 and this article : http://www.mql5.com/en/articles/145
There are lot of resources on the net.
  • #9
  • May 5, 2013 6:26am May 5, 2013 6:26am
Quoting seaman2
are 66 trades correlated in any way ? if yes, less significance. are based trades on TA only or include fundamentals, sentiment. If only TA, less significance. timeframe you play trades on... you need to wait for couple of market regime changes on that timeframe and see how fast you adapt. if sucessfull in adopting, that will give you good feedback. i personally think you may have a bit of 'i am good' or 'i have made it' disease. decrease bet size if so. it is f*king difficult to get rid of it without losing too much.
mhhhh....there is moderate correlation between the trades,I hadn't thought of that.
the system relies only on T.A- the trend tends to persist belief.so far I have some close calls but no losing months so far.I can tell the system loses in ranging markets and kills it in trends.

I think I have the "I hope I'm finally close to making it mentality " .thanks for the pointers.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #10
  • May 5, 2013 6:31am May 5, 2013 6:31am
Quoting olsen-yersen
Have a look at this article : http://articles.mql4.com/471 and this article : http://www.mql5.com/en/articles/145 There are lot of resources on the net.
thanks for the links ....will have to study them more.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #11
  • May 5, 2013 9:26am May 5, 2013 9:26am
Quoting pemully
hi guys, I have been trading a new system for the last 6 months. so far my account is steadily profitable. my problem is that I'm a bit of a skeptic,I still doubt that this isnt just a lucky streak.I have 66 trades so far with 56% win rate 1.8:1 reward /risk. Are the results statiscally valid? how long or how many trades would it take for you to trust that your system really works. your views and suggestions will be highly appreciated.
66 trades is nothing . i've seen profitable after 1000 trades only to fail after that. the trades section is pretty self explanatory in terms of how hard it is to be profitable on the long term.
  • #12
  • May 5, 2013 12:48pm May 5, 2013 12:48pm
Quoting pemully
hi guys, I have been trading a new system for the last 6 months. so far my account is steadily profitable. my problem is that I'm a bit of a skeptic,I still doubt that this isnt just a lucky streak.I have 66 trades so far with 56% win rate 1.8:1 reward /risk. Are the results statiscally valid? how long or how many trades would it take for you to trust that your system really works. your views and suggestions will be highly appreciated.
This is the right question to be asking....trading is really challenging (or everyone would be doing it) and most people will never ask themselves this question. Without asking a million more questions of you, on the surface I would say that it is relatively safe to say that this is really not enough trades. The big issue with trading is that markets change from time to time and they will behave at least slightly differently than they ever did before.

It all comes down to consecutive losses, drawdowns, and leverage....but a healthy trading attitude is that your highest drawdown and largest number of consecutive losses is always lurking somewhere in the future. If you have that attitude, you take trading a lot more seriously because you understand that there is no "system" or "method" that you can find out there that will not fail at some point in the future assuming that you are leveraged close to or at the the max based on what would have been required to survive in the past.

Sounds like you are being cautious, so you should be OK. What R-multiple are you trying to achieve per year? Answering that question can also help to understand if you are being realistic or not. I agree with what someone said above....take a look at the Trades section of this website to get a glimpse of just how difficult it is to be profitable over the long term (so many of those trades only opened up to show their trades after they had been profitable for some time, and yet most of them fall on their face pretty fast soon after making their trades public).
Trading Foreign Exchange....But Only By The Grace of God!
  • #13
  • May 5, 2013 1:23pm May 5, 2013 1:23pm
Quoting McPip
{quote} This is the right question to be asking....trading is really challenging (or everyone would be doing it) and most people will never ask themselves this question. Without asking a million more questions of you, on the surface I would say that it is relatively safe to say that this is really not enough trades. The big issue with trading is that markets change from time to time and they will behave at least slightly differently than they ever did before. It all comes down to consecutive losses, drawdowns, and leverage....but a healthy trading...
I'm trying to achieve a 2:1 reward/risk.the system itself is based on 5 years backtest of a simple trendfollowing model.though it is largely discretionary regarding entries and exits.so far I have been able to survive ranging market conditions.
my position sizing is conservative with ruin levels set at 30% drawdown.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #14
  • May 5, 2013 1:37pm May 5, 2013 1:37pm
Quoting pemully
hi guys, I have been trading a new system for the last 6 months. so far my account is steadily profitable. my problem is that I'm a bit of a skeptic,I still doubt that this isnt just a lucky streak.I have 66 trades so far with 56% win rate 1.8:1 reward /risk. Are the results statiscally valid? how long or how many trades would it take for you to trust that your system really works. your views and suggestions will be highly appreciated.
Pemully,

Remember that you are profiting from your trading so what you are doing is working. Take another 6 months and see how your statistics compare to what you have now. The markets do change but of course your results are statistically valid, for the period you have traded they were your results. Its just I feel your concern is for how long will they stay at that level and the truth is it will always fluctuate to some degree.

Just draw a line in the sand and see what you can do for your next 66.

NineKaye
NineKaye
  • #15
  • Edited 7:23pm May 5, 2013 3:51pm | Edited 7:23pm
hi pemully,

congratulation first of all for your 6 profitable month
In my opinion NineKaye said it quite well

Quoting NineKayeLTD
The markets do change but of course your results are statistically valid, for the period you have traded they were your results.
We all know that past results do not necessarily repeat themselves in the future (for better or worse) but it's the main thing one has for any statistical validation. Not only in trading but all the other science stuff: how effective is a vaccination?
Well there are only past statistical information.

I'm not arguing that there are no differences and trading might be much more speculative than some other things: but one can only work with what's available: and in the case of a trader it is mostly past data.
(not talking about MM and such things)

so while 6 live profitable month might be not good enough to draw strong conclusions for the long run
it is what you got.

I wish you all the best and much success for the coming 6 month


Quoting pemully
I have 66 trades so far with 56% win rate ..... how long or how many trades would it take for you to trust that your system really works.
I guess I would feel similar to you: 66 trades by 56% does not seem a lot after all.

But you based it on 5 years backtest data (not sure how many trades this produced)
- I would ask myself: are my 6 month similar to the results of the previous 5 years?
- if so we are talking about 660 trades
Money is important, Love is essential.
  • #16
  • Aug 12, 2013 3:07pm Aug 12, 2013 3:07pm
The system has now over 150 trades and the results have deteriorated to 51%,1.7 payout ratio.There is no doubt as the trades increase it will go to below 50% win to about 40-45%.My biggest disappointment is cutting winning trades and not pulling the trigger always. It has cost me at least half my profits.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #17
  • Aug 12, 2013 6:36pm Aug 12, 2013 6:36pm
If your trading is consistently profitable, you'll be able to see it in the results by now. 6 months is long enough if manual trading. EAs can give great win streaks, then fail once market climate changes.
  • #18
  • Last Post: Aug 12, 2013 7:54pm Aug 12, 2013 7:54pm
Personally I would be happy that I was profitable with 56% win rate because it shouldn't be hard to maintain or even improve (not that it needs to be any higher)

My only concern is as always discretion.... discretion with what is really important, personally I like to have non discretionary entries and some discretion for exits, too much discretion leaves the gates open for YOU not your system to fail..and fail badly...

Good luck with it
tradewith60
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