Arthur Deco Mentors ET Noobs

[Arthur Deco]

Quote from Optionpro007:

Arthur, where you crazy before you started trading or did trading make you crazy?

In truth I did not know that I was crazy until after I had been trading about five years. I always knew I was somewhere north of newrottic, but believed I was definitely southward of psychotic. The painful acts of repeatedly writing checks to replenish my brokerage account cornvinced me otherwise. I then knew that I was a raving lunatic. But being a devotee of NLP, I asked myself "What can you do with a problem like that?" So I started rigorous backtested system development, an insane pastime if ever there was one. Now I happily rock along, drooling and mumbling and scratching and belching and farting and swearing in a state of total bliss as the money that it is theoretically impossible for me to be making rolls in.

Do you know WHY that money rolls in? Because I tested INSANE ideas.

 

[Arthur Deco]

Quote from dafeeder:

Arthur,

How much capital did you start with and how much do you have now?

What was your main source of income during your trading career?

How do you make money trading futures?

What was the most important thing that helped you be profitable?

I have been told to make a million dollars trading futures, a trader must start with 3 million. Is this true?

How much I had and how much I risked in daytrading are vastly different sums. When I wised up and quit trading stocks in favor of futures, I opened a $2K account. That was back when that would buy a couple of NQ's, ah, those were the days! I don't remember the exact numbers, but back then I never had an account bigger than was required to trade 5 NQ.

Understand that my goal, which I lernt from the late great Eddie Toppel, has always been to put far less than 1% into daytrading, with the intent to make as much off of that as you do investing/position trading the other 99+%.

What I have now I will not say, because I don't want anyone reading this to feel in any way inadequate.

I have a healthy respect for the fact that cash in a brokerage account might as well be left in a bag on the sidewalk, it is equally well insured. So I keep my cash balance as small as I can.

If my trading had to support me in the early years, I would be posting on my breaks at Wally's. I worked as an engineering mismanager in the defense industry. I looked on trading then as a hobby, and I still do. That was a good thing, because I spent as much on that hobby as Hells Angels do on their hogs.

I make money in futures by trading wide range days. Doesn't everybody? I think scalpers who claim they make money are congenital liars.

What helped me to become profitable was dreaming the market. I dream ESignal in full color and in real time. I see something peculiar, figure out an algorithm for it, and code it. I cannot, however, as yet, test in my dreams. The key part is that upon waking I remember the idea and the gist of the algorithm. So I spend a lot of time leaping out of bed at 3AM to go code some absurd idea up. That this coincides with an alcohol-fueled sugar high does not bother me at all. I just take another drink.

You can start with $5K and do just fine.

 

[zedDoubleNaught]

Hello Mr Deco, thanks for previous responses.

Ok, the part about rigorous backtesting, then system trading, with R:R over 2.5 or so, not in a range bound market, is slowly making its way through to me.

Next question -- what is your system disposal process, or how to tell when a system is no longer profitable and should be disposed of like a ... ?

 

[Samsara]

Yousa good man sir and an inspiration for the hopeful.

Art Deco: do you code your strategy to issue siggals based on conditions of the previous bar?

And with that symphony of yours that issue mutual confirmations, how do you backtest their combined siggals without stuffing them all into one script, much like the fatass I have lumbering along?

 

[Arthur Deco]

Quote from zedDoubleNaught:

Hello Mr Deco, thanks for previous responses.

Ok, the part about rigorous backtesting, then system trading, with R:R over 2.5 or so, not in a range bound market, is slowly making its way through to me.

Next question -- what is your system disposal process, or how to tell when a system is no longer profitable and should be disposed of like a ... ?

Bear in mind that you are asking questions of a feeble-minded old man who cannot remember what the question was by the time he is halfway through the answer.

What you ask is a painful process, like strangling a deformed newborn. There are a few tricks to deciding if a new system is simply a random overoptimized fluke, or the real deal. But the truth IMO is that new systems are like new girlfriends: you can never really know if they are fooling you or not. The only way to tell for sure is to keep optimizinging it (keep fucking her) over a period of six months to a year and to see how stable it is (if she continues to put out).

My experience is that a system that is faking it will gradually lose profitability through increasing numbers of bad trades between good ones (she sleeps with you less and less often). My stuff typically goes to shit in a six months to a year. So I don't put any money into a new system. Kind of like you don't take a girl home for an overnight until you think she may be a keeper.

 

[sosueme]

Quote from Arthur Deco:



My experience is that a system that is faking it will gradually lose profitability through increasing numbers of bad trades between good ones (she sleeps with you less and less often).

I take it from this excellent example that you are never married to a system.

 

[Arthur Deco]

Quote from Samsara:

Yousa good man sir and an inspiration for the hopeful.

Art Deco: do you code your strategy to issue siggals based on conditions of the previous bar?

And with that symphony of yours that issue mutual confirmations, how do you backtest their combined siggals without stuffing them all into one script, much like the fatass I have lumbering along?

Thank you for your kind thought, but in fact I am one of the most reprehensible people you would ever want to not meet. I feed doves in my back yard so I can watch the hawks eat them. Rather than poisoning rats and mice, I put down sticky traps so I can enjoy watching them gnaw their little stuck feet off. I feed my neighbor's dog a treat once every month so it will drive the neighborhhood insane barking for one and rarely getting it. At the grocery store self-service checkout I stack two items and scan only the bottom one. And I am cruel in trading and take money away from complete strangers whose only offense is that they want to take mine.

To answer your question, my systems generate signals at the close of the bar, and I backtest assuming that I transact at the close of the bar. This is cheating, of course, but I LIKE to cheat. In fact I enter manually two seconds before the close of the bar, since I know from warnings that a trade is about to pop. It's like women. You know they are going to screw you long before they do.

I fear I have misled you about confirmations. I have a multitude of putative confirming siggals that I DON'T USE. They are there only to learn whether or not I can sharpen the system. So my trade codes are only 100 lines or so in ESiggal. It's the other bullshit that takes upward of 2K of code. In a pinch I could trade off a screen the size of a postage stamp, and in fact I set up such a window to teach my wife how to trade my systems.

 

[Arthur Deco]

Quote from sosueme:

I take it from this excellent example that you are never married to a system.

That would be a good philosophy if I could pull it off. Remember your first piece of ass? Was it maybe the best you ever had? My first wife was like that. As is my first profitable system. So I look at it this way. The system will eventually leave me like she did, and I will try not to look back. Very often. Oh, hell! I'll miss it all the damn time!

Fortunately if have five things that are uber-stable, five more that look promising, and as many that didn't pan out as women I dated while I was looking for a second wife.

Trading systems are like lonely middle-aged women looking for love. There are more of them out there to be found and trained than you could possibly service in a lifetime.

 

[LEAPup]

Quote from Arthur Deco:

Thank you for your kind thought, but in fact I am one of the most reprehensible people you would ever want to not meet. I feed doves in my back yard so I can watch the hawks eat them. Rather than poisoning rats and mice, I put down sticky traps so I can enjoy watching them gnaw their little stuck feet off.

Do you really do this, or was that a joke?

 

[jinxu]

Arthur Deco,

I've finally tweet my trading system (modify the rules) enough so that it could be fully automated with little discretionary decision-making involved and can produce returns in the triple digits with an 80% win ratio. Do you think I'm ready to dive all in???

Example of trading using automated rules