Yea, how’s backtesting working out for you? Ray Dalio?
1:1 Risk:reward gives me a 90% win rate but...
- Thread starter metatrader54
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Forex, H1, as stated
Thanks for this post, the only post I find useful, the rest are all useless nonsense. No more questions here from me, too many wannabe traders.
Good points! I’m going to take a look at market conditions especially summer time where it might be slower. Will test extensively. Awesome.
The only thing I am concerned is that my trades often last only a day or less. I’d think that summer time affects higher time frames like H4+ more than H1 and below.
i am ready to help anyone who asks....
and my win rate...how do you know my win rate since by your own admission you did not visit my journal
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Price time series and order depth contain data. And sure some of it might be useful at times. But that’s the outermost layer of the whole shell.
Trying to build a whole foundation on the final output is not the right way to go about things. It doesn’t lend itself very well to confidence/conviction (see all the beginner threads on psychology problems; that’s actually your emotions being helpful and acknowledging you don’t know what you’re doing), and price alone doesn’t give you very stable material to build forecasts at all.
Imo, try to start understanding why things are priced the way they are. For the largest blocks of capital, what inputs go into their calculations of the value of something? It’s surely not past price data for the last hour. What are conditions that can make things deviate or drift away from fair value?
When are there scenarios where something is likely close to a limit of sorts that will prevent further movement in a certain direction? If you can rule out just one of the up/sideways/down paths even for a relatively short period of time, you can make some really great trades.
Take it from someone who passed through the usual TA gauntlet on my way to get to some modest success. There’s some peripherally useful stuff there, but price is the output of models, not the input. To start there or overemphasize it don’t lend well to the kind of success that can actually get traction. Not to mention the plethora of distractions, illusions, and lack of rigor that is so easy to fall into pursuing that avenue.
Thanks, I understand the basic idea and I must say I agree.
I'm not sure about "fair value" (looking at indices continuing to break new highs)
And it might not be the same for big players.
Is there any book you recommend to look at price in another perspective?
Thanks!
To take it from the top I’d say read Markowitz and then try to do a study on CAPM and it’s evolution over time. Churn through white papers. Get familiar with the latest iteration of modern portfolio theory.
Familiarity with financial accounting is a decent bonus, at the end of the day it helps to have a general idea of how assets are priced and what factors tie into that. You could even compare some local real estate listings, underwrite and price them yourself for a practical exercise. What are some factors that make one asset more or less attractive than another one?
To get at trading more directly once you have the background information on finance read Hull. He’s recommended very often. But after that it gets harder to find good literature that talks about next steps. You have to get good at reading between the lines, taking white papers and correcting their errors, sifting through tons of junk on forums for a few gems, etc.
Hello gaussian,
Are you suggesting that if a day trader manual or OP back test idea, the answer to the question will be revealed?
If so, I agree with you. It is a lot of work indeed, but it will give a trader confidence in my opinion.