Day trading difficulties
- Thread starter oilfxpro
- Start date
You've already stated you had a profitable automated day trading and automated swing trading system.
Thus, your latest commentary is very confusing to me considering your comments seems to move from one system to another without clarification sometimes about if you're talking about automation or discretionary (sometimes you use the word manual instead of discretionary).
My guess is that your profitable automated day trading methods involve a particular market and then there's other stuff you tested that doesn't show profitability beyond 10 years involving a different market.
That's very common for some methods to be profitable in one type of market and not profitable in a different type of market. I say this only because there are some traders using a method on different markets at the same time...having trading days, months or years showing profits in one market while not profitable in another market.
In fact, there was a journal here at ET many years ago where someone was trading I think the DAX, CL and 6E or something like that and he was only profitable in one specific market while not profitable in the other two markets.
Regardless...please clarify your comments considering you've already stated you have a profitable automated day trading method as if you're saying you're the only one with a profitable method whereas every body else (the methods you've tested) are not profitable. Also, I'm sure you realize that most profitable discretionary traders normally adapt their methods to market conditions that's always changing. The markets is ALWAYS changing.
This particular insight can not be duplicated in backtesting without hindsight. This reason amongst other reasons is why backtesting or backtesters prefer to "test the method" instead of testing how the trader is "applying the method" concerning discretionary trading.
For example, a discretionary trader may make an adjustment in his/her position size, capital amounts, amount of time trading, switching trading instruments, changing trade management after entry when market conditions change. These are the discretionary elements that a backtester is not able to duplicate in the "testing theory".
Further, your own discovery with that prior list you posted is an excellent example (proof) that there are other variables involved besides an entry signal that are just as important in determining if a trade method will produce profits or losses. Many of those variables, especially the ones I highlighted as very problematic, are associated with the trader and not the method.
Those other variables that you mentioned is something a backtester cannot input into the "testing theory". Thus, as stated, a backtester will test the method and not test how a trader is applying the method.
Mark
I have three systems.One system is fully automated, occasionally I will exit positions manually on it.Everything else is automated.There are 44 systems working simultaneously.
The second system is a manual swing 15 min trendline break system which works with longer time frames and fundamentals.It is not a day trading system.The third system gets its's signals from the first and second systems , and applies unique trade management .
I did not say or imply ,that I was the only one with profitable method.I ran some automated back tests on 10 years of data , using rule based intra day systems using 10 to 40 pip stops , they never showed consistent profitability on these tests.
The profitable ones had to make a move in one direction of 1/2 atr with momentum.This cut out all the day trades below 1/2 atr move.Below 1/2 atr , most of the moves were 50/50 , there was a directional edge above 1/2 atr.None of my profitable day strategies perform below 1/2 atr, so I do not have any of them and avoid the chop.
Here is an example of a system I devised , it may clarify
http://208.234.169.12/vb/showthread.php?threadid=111305&perpage=6&pagenumber=3
Testing discretionary day trading systems is virtually impossible , this is due vast number of discretionary rules.It does not mean they are not profitable, some of the are , but they can not be back tested.
My personal belief is systems should be profitable in most instruments.If the market conditions for the profitable instrument , change to the market conditions of the non profitable instrument, the system will fail.In fact all systems fail , which is why I use 44 systems.Even they are having difficulty , so I have to apply unique trade and money management to profit from the systems.
Quote from oilfxpro:
The best way of proving this entire theory is to make live calls in advance in a journal .Chart looks good in hindsight, processing of chart information is easier in hindsight.So make a thousand live calls under the stress of live bucks at risk.This will also prove the 10 % psychology /90 % system correct.
Call the thread price action live calls.
I am looking forward to seeing it.
I trade off live charts each day. As good as my trading results are, I can't quite yet afford that "Charts Ahead" service that lets you see them through the end of the day. Also, there is no stress any more in trading because once your edge has been tested through all sorts of market conditions, you come to trust it and the whole process is very routine. The greatest danger is losing focus and missing trades.
I've also made many many live calls here on ET, but I now close everything except my charts and DOM during trading hours because I put on about 20 trades a day with a rather volatile instrument and found that focus boosts daily profitability at least 2-fold.
thanks for the feedback...
Correct me if I'm wrong, but I believe that you were able to achieve success before the 10k screen time hours, right? The fundamental problem/challenge I have is that I tend to have a mixed bag of potential setups for entering a trade as a trend or reversal when price reaches support or resistance. That's one reason why I am soooooooooooooo tempted to utilize the "stop & reverse semi-martingale approach"...
Correct me if I'm wrong, but I believe that you were able to achieve success before the 10k screen time hours, right? The fundamental problem/challenge I have is that I tend to have a mixed bag of potential setups for entering a trade as a trend or reversal when price reaches support or resistance. That's one reason why I am soooooooooooooo tempted to utilize the "stop & reverse semi-martingale approach"...
I had huge success my first three months of trading despite not knowing anything. No risk management though, and all the success went out the window rather quickly during The Big Bear.
I went into a dark place for a while.
I then had great success shorting strong stocks making 52-week highs, which worked great for about 4 months until The New Bull.
I then went back into a darker place where I'm sure all traders go before they quit or finally draw up a set of plans they're comfortable using in all market conditions.
It's a path everyone has to forge on their own, IMHO.
I thought this was a good article:
http://martinkronicle.com/2010/03/29/day-trading-is-distracting-you-from-making-money/
I have to admit, i make far more money from position trading than from day trading.
http://martinkronicle.com/2010/03/29/day-trading-is-distracting-you-from-making-money/
I have to admit, i make far more money from position trading than from day trading.
Wow. I always figured that kind of frequent trading was a death wish on the retail level. Mainly due to commissions. I assumed frequent scalping was for professionals who have access to super low commission rates.
Do you ever worry about the commissions, or is your trading at a high enough level now that even retail comms are insignificant?