A Strong Trading Mind

[newuser_RK]

I back tested a simple system manually, based on MA. It yielded good returns but the problem is its too simple and if it were to be so good machines would have already sucked this rule...so I am not sure if this ma based system is actually as good as its appearing to be...

 

[amitrandive]

I back tested a simple system manually, based on MA. It yielded good returns but the problem is its too simple and if it were to be so good machines would have already sucked this rule...so I am not sure if this ma based system is actually as good as its appearing to be...

Algos will be used for short time frames by Scalpers ,eventually the market has to go in some direction for someone to get the profit.

Algos have made jobbers redundant not swing traders or positional traders.
People are still trading the US and Forex and Commodity markets.
If you are scared of Algos, you should not be trading at all.

Jusy friendly advice, automatic backtesting does not work in the real world.There are lot of gap ups and gap downs which nullify the backtesting results.

 

[amitrandive]

Dear Amit,

The struggle to decide upon a trading system is one of the toughest battle every one faces inevitably in his trading career.

Being a master of psychology I request you to write up an article to get rid of the psychological struggle one faces in deciding upon the same.

This is bcoz of non availability of a successful trading mentor I guess.

Every one wants to have the best available trading system.

But free systems are not profitable and profitable mechanical trading systems are difficult to program and no body will sell it.

After spending Lot of time/effort/energy/money and costly mistakes/fees paid to markets one comes to a conclusion of a probable trading system.
Again the system should suit the personality of the person.

Again since this may not be backtestable - has to be done manually as it will be discretionary.
Or even if one manages to get/design a mech trading system he should be able to follow it.

The final decision to come to conclusion accepting the trading system I guess is purely psychological.

Just few questions which comes to my mind
------------------------------------------

At what stage one drops this search ?
What are the psychological reasons behinds this search ?
What stage a trader is able to accept the system he envisage psychologically ?
And when does he realize that the system he envisage is psychologically fits his personality ?
And at what stage he accepts/trusts the system fully and start following it with discipline ?
Should one stop learning new new technical concepts ?
etc etc

Thanks in advance.

jagankris

Thanks for your kind words.

I am a simple trader like you.I too make losses and mistakes.
I actually started this thread to motivate my self and other fellow traders.

Like Rish has said that if one searches , one can get a good mentor in trading.Such a person should be actively trading/traded earlier.
An analyst cannot be a good mentor as he does not have any risk in predicting.

Regarding system search ,any simple system works effectively only if one uses proper discipline and money management.

The search for the perfect system never ends.This search can only be stopped by you yourself.We all have to understand that any system works only 50 % of the time(believe me anything better than this is either a myth or fabrication).

Some hints for improving trading decisions,

Firstly you have to understand the strengths and weakness of your own as a trader.
Then you have to understand the strengths and weaknesses of your trading system.

The problem with us traders is that we try to optimize our trading system for all types of markets , ie both trending and sideways.

This never works.You should have different systems for different types of markets.

Even a simple system of two moving average crossover works , the secret is not to trade every crossover.Only trade the crossovers which occur at important support and resistances.

Another simplest system is use previous day high and low on charts.
On trending days buy once the price crosses the previous day high and sell when it crosses the previous day's low.
On sideways days ,short at the previous day's high and buy at the previous day low.

Million dollar question is how to identify whether day is trending or not.The only answer to this is study the price action.Lot of such articles and images I have posted in my thread "Learning to catch High probability breakouts".

Check this post by Dan ,trying to motivate another trader who has taken a hit by overtrading.

http://www.traderji.com/options/98626-selling-straddle-strangle.html#post1077974

Hope this helps.

Learning should never stop as the markets are dynamic and always changing.
Only do not run from one system to another.Sticks to just one or 2 systems.

Remember a broken clock is also right twice in a day.

The idea is to have so much discipline that one should not trade if there is no valid setup on a particular day,even if he has to sit in front of the screen for 6-1/2 hours.

 

[Dax Devil]

...
The idea is to have so much discipline that one should not trade if there is no valid setup on a particular day,even if he has to sit in front of the screen for 6-1/2 hours.

And also, allow me to add, to have the conviction in one's trade decision so as to put a logical SL and get out of the face of the screen. Let the market work its magic on its own without any hinderance.

 

[VJAY]

Algos will be used for short time frames by Scalpers ,eventually the market has to go in some direction for someone to get the profit.

Algos have made jobbers redundant not swing traders or positional traders.
People are still trading the US and Forex and Commodity markets.
If you are scared of Algos, you should not be trading at all.

Jusy friendly advice,backtesting does not work in the real world.There are lot of gap ups and gap downs which nullify the backtesting results.

Dear Amitbhai,
Hope you meant it using automatic backtesting......
Otherwise I differ with you...One if manually backtests its helps a lot to build confidence ones method...My view & also my own experience....

 

[amitrandive]

Dear Amitbhai,
Hope you meant it using automatic backtesting......
Otherwise I differ with you...One if manually backtests its helps a lot to build confidence ones method...My view & also my own experience....

Yes VijayBhai

I meant automatic backtesting.
If an AFL was to get it right more than even 80% percent of the time by slightly tweaking the parameters ,everybody would have traded on the basis of AFL's , no use to care about emotions.

 

[newuser_RK]

Algos will be used for short time frames by Scalpers ,eventually the market has to go in some direction for someone to get the profit.

Algos have made jobbers redundant not swing traders or positional traders.
People are still trading the US and Forex and Commodity markets.
If you are scared of Algos, you should not be trading at all.

Jusy friendly advice, automatic backtesting does not work in the real world.There are lot of gap ups and gap downs which nullify the backtesting results.

Thanks amit...I know back testing might not work in the real world but I tried to be conservative while noting profits and aggressive in losses, and even if I discount the final points by a good margin the final result is good for me. Only couple of drawbacks it's tested for a trending period of past 1 year only plus I am afraid of whips.
.which are bound to come in any swing strategy....

 

[amitrandive]

 

[amitrandive]

 

[amitrandive]