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Why Simple is better in trading and Complex is not

  • #441
  • Dec 1, 2013 12:39pm Dec 1, 2013 12:39pm
Quoting 60minuteman
{quote} that's interesting, is that based on actual quantative data or is it just gut feeling?
I second TEB63.

Money management (includes stops and good RRR) is really the key to making steady profits.
I'm a bit more extreme than TEB63 -- my SL and TP are fixed (10 and 25 on 15m, 25 and 50 on 1h). Say, I don't enter if I need more than 10 pips for SL, or when i really want to enter, I set a limit order 10 pips from the SL line I would have. Believe or not, this works pretty good for me.

As for tools, the less, the better, no doubt . The difference between TEB63 and I is, I don't enter all the signs I get.
  • #442
  • Dec 1, 2013 1:13pm Dec 1, 2013 1:13pm
Quoting 60minuteman
The concept of keeping it simple is true but also mis-leading......
Yes, my experience is likewise that traders add rules as they go. I've coded many EAs for other traders, and the initial "complete" specification that I receive from them typically contains less than 60% of their strategy. I find that they take a lot of 'abstracts' for granted (like those you mention: "don't trade around red news", "don't hold trades over the weekend", "don't have more than one trade open at any given point" etc) and somehow expect that I will automatically think of these things, as they are "obvious". Profitable systems tend to be full of discretionary nuances, which is why good human traders will always outperform EAs, as these nuances can't be readily coded.

If a profitable system was to be defined in terms of strictly mechanical rules (i.e. rules that I could code from), I doubt that anybody could describe their system fully in less than 1,000 words. Now there's a challenge!

If simple equated to profitable, then I'd expect that a lot more traders would be profitable. And (as I've said many times before) to those who believe that exits are everything: if profitable trading was as simple as random entries, cut losses short, let profits run (or take a fixed RRR per trade), and risk a predetermined percent of equity per trade, then writing a profitable EA would be child's play, and we'd all be forex millionaires. I wish I was wrong about that, and for obvious reasons!
  • #443
  • Dec 1, 2013 1:45pm Dec 1, 2013 1:45pm
Quoting Forexgogo
{quote} I second TEB63. Money management (includes stops and good RRR) is really the key to making steady profits. I'm a bit more extreme than TEB63 -- my SL and TP are fixed (10 and 25 on 15m, 25 and 50 on 1h). Say, I don't enter if I need more than 10 pips for SL, or when i really want to enter, I set a limit order 10 pips from the SL line I would have. Believe or not, this works pretty good for me. As for tools, the less, the better, no doubt . The difference between TEB63 and I is, I don't enter all the signs I get.
that sounds like structured trading to me, nothing to do with money management.
tradewith60
  • #444
  • Dec 1, 2013 1:58pm Dec 1, 2013 1:58pm
Quoting hanover
{quote} Yes, my experience is likewise that traders add rules as they go. I've coded many EAs for other traders, and the initial "complete" specification that I receive from them typically contains less than 60% of their strategy. I find that they take a lot of 'abstracts' for granted (like those you mention: "don't trade around red news", "don't hold trades over the weekend", "don't have more than one trade open at any given point" etc) and somehow expect that I will automatically think of these things, as they are "obvious". Profitable systems...
If the strategy truly is simple then why bother with an EA,
tradewith60
  • #445
  • Dec 1, 2013 2:05pm Dec 1, 2013 2:05pm
Less than 1000 word rules for Hanover.

1. if h4 closes down place pending sell 1 pip + spread below the low
2. if h4 closes up place pending buy 1 pip + spread above the high
3. place stop below the low/high of the closed h4 bar unless the bar that triggers the trade makes a higher high or lower low, in which case use those new extremes.
4. If a valid trade entry creates a hedge take the trade.
5. If entries are open already as a hedge and a new valid entry exists, take the trade.
6. exit in profit.
tradewith60
  • #446
  • Edited 2:24pm Dec 1, 2013 2:06pm | Edited 2:24pm
Quoting 60minuteman
{quote} that sounds like structured trading to me, nothing to do with money management.
I forgot to write about the amount of lot I put in. I change the amount of lot according to the asset. That part has very much to do with money management.

I have nothing against the way other people bid on trades. That is, TP and SL are very flexible depending on the wave you try to catch. Some traders magically calculate the optimal SL and TP, which is amazing to me.

I just don't have that kind of skill and am not interested in it. Rather, I want to establish a way of earning 25 pips in any market condition every day.

If what you call "structured trading" leads me to my goal, I will be more than happy to do it
  • #447
  • Dec 1, 2013 2:12pm Dec 1, 2013 2:12pm
Quoting Forexgogo
{quote} I forgot about the amount of lot I put in. I change the amount of lot according to the asset. That part has very much to do with money management. I have nothing against the way other people bid on trades. That is, TP and SL are very flexible depending on the wave you try to catch. Some traders are magically calculate the optimal SL and TP, which is amazing to me. I just don't have that kind of skill and am not interested in it. Rather, I want to establish a way of earning 25 pips in any market condition every day. If what you call "structured...
yes I believe you need to trade based on rules or completely discretionary...mixing the two leads to break even results at best...

that doesn't mean you can't have some flexibility, but you can't just add or break rules here there and everywhere, and reading the threads on here... we all do it and we all pay the price...
tradewith60
  • #448
  • Dec 1, 2013 2:33pm Dec 1, 2013 2:33pm
Quoting 60minuteman
{quote} yes I believe you need to trade based on rules or completely discretionary...mixing the two leads to break even results at best... that doesn't mean you can't have some flexibility, but you can't just add or break rules here there and everywhere, and reading the threads on here... we all do it and we all pay the price...

"completely discretionary" how would you trade this way" lol

I think everyone has rules - the issue is the degree of discretionary ,
I think I have none.
But as things happen it changes what I may do- but not my the rules
ie, there was a holiday on Thursday of last week so I closed out and did not let the trades just run
But I did not just think I am going to close out - I knew on Monday I would
  • #449
  • Dec 1, 2013 2:39pm Dec 1, 2013 2:39pm
Quoting TEB63
{quote} "completely discretionary" how would you trade this way" lol I think everyone has rules - the issue is the degree of discretionary , I think I have none. But as things happen it changes what I may do- but not my the rules ie, there was a holiday on Thursday of last week so I closed out and did not let the trades just run But I did not just think I am going to close out - I knew on Monday I would
you would trade with no structure at all, changing and making decisions based on the moment. Am I suggesting it as a way to trade? no.... The point im making is that when you start with a rule based system and then start adding in new variances as you go (oh i left that entry because benanke was walking the dog etc) then you may as well trade with no rules at all
tradewith60
  • #450
  • Dec 1, 2013 6:32pm Dec 1, 2013 6:32pm
Quoting 60minuteman
{quote} If the strategy truly is simple then why bother with an EA,
It depends on how you define " truly simple".

If the strategy is mechanical enough that it can be coded (i.e. no manual intervention is needed), then why wouldn't you want an EA?

[A few of the benefits of automated trading (copied from an old post of mine): "An EA will trade 24/7, executing a plan flawlessly, consistently, tirelessly, emotionlessly. It removes the trader, his mindset, and any lack of self-mastery, from the equation altogether. An EA automatically guarantees all of the following: Adherence to strict MM rules. Perfect accuracy of execution. Endless patience. Unwavering discipline. No fear, greed or hesitation. Immunity from hunches, guesswork or outside ‘noise’. Around-the-clock trading that’s unaffected by tiredness, illness, stress, negative attitudes. No data entry errors. Much more recreational time for the trader, away from his computer."]

As a programmer, my definition of "simple" is something that can be readily coded. If you start adding discretionary elements, then I would query whether the system is "truly simple".

Quoting 60minuteman
Less than 1000 word rules for Hanover. 1. if h4 closes down........
My three conditions were (1) profitable, (2) completely mechanical, and (3) a full description.

The strategy looks mechanical enough to be coded (except I'd need to ask a few questions, e.g. what MM do you use?, what pairs do you trade?, how many pips/dollars in profit before you exit? etc etc). But how profitable would it be if I was to code your rules 1 thru 6, exactly as written, and then run the resulting EA over the next (say) 5 years....... without adding any of the discretionary elements that you presumably use, but haven't mentioned?
  • #451
  • Dec 1, 2013 6:36pm Dec 1, 2013 6:36pm
I was going to reply to this thread but then I saw Hanover making the points I would make but a lot more clearly so I will just say.....I second Hanovers opinion
AVT INVENIAM VIAM AVT FACIAM
  • #452
  • Dec 1, 2013 6:37pm Dec 1, 2013 6:37pm
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  • #453
  • Dec 1, 2013 8:49pm Dec 1, 2013 8:49pm
Quoting aud
Not especially, just that NY is the middle of my night, so I look for Asian trades extending into London. Gold is something asians seem to trade, so I get some movement .
Saw your post here on GOLD.. I am up northern NSW.. and never thought to watck gold movement in ASIAN session.. would be interested in hearing your thoughts further on this.. here is 1 hour gold chart over last 6/7 hrs ..shows clear trade at hi..and if you look at shorter term charts 50 sma clearly shows way..Thanks for tip.. will pm you later..ps on 5 min 50 is resistance but CCI not in agreeance at this point.. great thred.. in my opnion
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  • #454
  • Dec 1, 2013 9:01pm Dec 1, 2013 9:01pm
AUD.. here is 5 min gold.. have marked enter point.. which I havnt taken cause I dunno any thing abt gold.. lets see how she goes..??
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  • #455
  • Dec 2, 2013 1:17am Dec 2, 2013 1:17am
Quoting hanover
{quote} It depends on how you define " truly simple". If the strategy is mechanical enough that it can be coded (i.e. no manual intervention is needed), then why wouldn't you want an EA? [A few of the benefits of automated trading (copied from an old post of mine): "An EA will trade 24/7, executing a plan flawlessly, consistently, tirelessly, emotionlessly. It removes the trader, his mindset, and any lack of self-mastery, from the equation altogether. An EA automatically guarantees all of the following: Adherence to strict MM rules. Perfect accuracy...
They're good points, but they sound like the report from someone who completely understands programming but not trading.
tradewith60
  • #456
  • Dec 2, 2013 1:20am Dec 2, 2013 1:20am
if simple rule based systems work then why isn't everyone a millionaire..... is the assumption.

But IS everyone following a simple system? In my opinion not.

In fact is everyone using a simple system but failing to execute?
tradewith60
  • #457
  • Dec 2, 2013 1:23am Dec 2, 2013 1:23am
Hey 60, you still doing H4 power, your thread have been a bit quiet.
Good Trading
  • #458
  • Dec 2, 2013 1:30am Dec 2, 2013 1:30am
Quoting aud
Hey 60, you still doing H4 power, your thread have been a bit quiet.
Hi Aud, yes I am trading that way still. I have said all I can on the thread.
tradewith60
  • #459
  • Dec 2, 2013 1:40am Dec 2, 2013 1:40am
Quoting hanover
The strategy looks mechanical enough to be coded (except I'd need to ask a few questions, e.g. what MM do you use?, what pairs do you trade?, how many pips/dollars in profit before you exit? etc etc).
Without knowing anything about coding, you would think items like pairs, stacking, news, weekends, hedging etc would all be user definable (yes/no). If you code what one person asks for, another will want something different with the same system.
Good Trading
  • #460
  • Dec 2, 2013 1:52am Dec 2, 2013 1:52am
Quoting danc
AUD.. here is 5 min gold.. have marked enter point.. which I havnt taken cause I dunno any thing abt gold.. lets see how she goes..?? {image}
Hi danc, I do not look to trade gold any different to currencies. I was looking for something to trade during asian/Oz sessions and gold seemed to have some movement without being volatile. That said it has been quiet today. Possibly because it's a monday and the previous days have been in a tight range. I've learnt to step aside when it's not so obvious.
Good Trading
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