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Advice from the experienced
- Thread starter vanilla2
- Start date
Quote from vanilla2:
AAAintheBeltway
Thanks so much. I will definitely share when I find something worthwhile. I have set out to trade either SPY, DIA or QQQ, with trades as short as an hour and as long as 2-3 days, primarily because of their relatively limited intraday movement compared with individual stocks which could wipe me out fast. Are commodities potentially better because they're poised for a long term rally and more trending patterns as the equity bear deepens and people move from intangible to tangible assets? Is there a deep discount commodity broker that I can access with a relatively small capital base?
Are commodities better? Well, the whole premise of system trading is we don't know, isn't it? We design a system to do one of three things: (1)participate in every big move, at the cost of getting dinged in choppy markets, (2) catch reversals at the cost of missing some big moves and getting stopped out on some true breakouts, or (3) exploit some market anomaly or pattern you discover. All proceed on the basis that price or pattern tells more than logical reasoning. Plenty of people can't swallow that pill.
Whether or not you should trade multiple markets with a system in part is determined by what kind of system you have. If you are trading breakouts, trend following type system, I would say yes, you need to trade at least 4 or 5 non-correlated markets. It's the one big move that will make your quarter and the more markets you cover, the better your chances. Kind of like fishing.
I would look carefully at the eurodollar futures (note , this is interest rate product, not eurocurrency), the grains, maybe bean meal or bean oil, cattle, and the currency futures. I have found that systms that work on these types of markets often do not work well on the stock indexes.
In backtesting, you need to make sure your data includes different market environments. I have seen several traders come on here convinced that a 30 minute breakout system was the key to trading the ES. It worked great for a period, but I know from prior backtesting that it will not alwys work well.
If you want to stick to the stock indexes, perhaps you should consider a hybrid approach in which you have some systemized filters and entry set-ups but manage the trade using discretion, or some variation. You can get screwed badly by data releases, Fed meetings etc without an override.
Vanilla, coding S/R is somewhat difficult. Perhaps sticking with trend following would be better.
Quote from gnome:
Well, but just a little. The last several months have been choppy and indecisive. That enviroment is going to be difficult for almost everybody.
It all depends on your timeframe. Choppinnes is not an absolute concept. Scalpers can tell you that they thrive in such an environment and a new system of mine is doing extremely well in it too, although it does have bad days, but that's understandable. You need to adjust in order to survive, nothing works all the time for all market conditions.
Quote from vanilla2:
I'm a new trader with good programming skills. I did discretionary etf trading for a month, but got frustrated after a month of hovering around breakeven. I set up tradestation to enhance my research about 10 days ago and have quickly reached programming proficiency on this platform. Unfortunately though, I haven't found a strategy with good results yet working 15 hours a day since I got the software besides fading MA crossovers (which is pretty weak). I'm stumped.
I started out optimizing the gammut of canned indicator crossovers and slopes. Predictably no good. Then I introduced stop loss, pullback and profit taking exits. Surprisingly, still no results. I see potential in a few good areas, namely adaptive MAs, fractal efficiency, double screen systems, NYSE $UVOL and $DVOL data, and SR levels... largely inspired by this board. Still, I am struggling to make these work and feel like I've tried everything. I would greatly appreciate direction from writers of successful mechanical systems who want to give back and help out a beginner.
How do mechanical SR systems work? What works?
A month is not enough time: you are expecting instant results. Rather, expect something like a year before hitting upon some sound ideas and have the capital to fund yourself for at least that long ....
If you are just starting out, stick to a few liquid indexes or stocks before jumping to other markets like futures...
Profitable semi-mechanical systems can be built but it takes quite a bit of experience to do this: Dont expect to construct something easily: even if you have already done this for financial firms and / or trading houses it really takes years of experience to know how to do these. FYI: nobody will share a working system with you ...
Be careful with advice on this board. There are only a few experienced people posting here. Your best bet is to hook up with a mentor and work directly under their guidance as an assistant trader if you have not yet had the experience ...
Quote from CalTrader:
u ...
Be careful with advice on this board. There are only a few experienced people posting here. Your best bet is to hook up with a mentor and work directly under their guidance as an assistant trader if you have not yet had the experience ...
Good advice. Also, not everyone has the mindset to trade the same way. Some can tolerate a lot of losses, some can't,etc.
Quote from AAAintheBeltway:
In backtesting, you need to make sure your data includes different market environments. I have seen several traders come on here convinced that a 30 minute breakout system was the key to trading the ES. It worked great for a period, but I know from prior backtesting that it will not alwys work well.
True, almost any system that relies on basically one breakout will fail from time to time. I know this from some other system of this kind that I studied. It did very well in 2002, but only broke even in 2001.
IMO vanilla should keep trading real money for a while , learn to understand the dynamics of the market and develop a few strategies then test their validity over the long term and refine them using TS . I don't see how you can start trading by playing around with backtesting softwares until you find a profitable strategy, it seems to denote a hope to find some holy grail that somehow is out there and it's only a matter of backtesting until you find it. I doubt technology and statistics are a superhighway to profits .