Parrondo's paradox.
Do you have any piece of advice for a novice trader? Anything that could be helpful?
- Thread starter newbie003
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Aside from to losing strategies, and more to combining two winning strategies .... honestly that is a really good point and helps illustrate what I believe to be the fascinating thing about entrances, and why I really don't believe an entrance is that important.Parrondo's paradox.
You put enough winning strategies together, you begin to see that entrance is almost completely meaningless, because in essence The Edge becomes that your long and short everything and different periodicities
Silly question. You will learn eventually that no one will sell you a magic recipe. You have to develop one yourself.
Of course if you bet with the bull market starting in 2009 any bullish strategies will do very well. But don't confuse the bull market with skills. This bull market will eventually have to stop and many of us trading geniuses will disappear from ET.
Very profound statement.
Yeah, it can definitely take a while. I've been involved in a project for ourselves, and it's going on two and a half years worth of testing. We have begun to move it into a simulated environment to see how it works live moving forward with what we refer to as out of sample data ( in other words, The Future as It unfolds ). And I probably still have another 2 months of work ahead of me before it's ready to roll out live. And by live, I only mean set the metrics and the risk overlay and continue to sim it with no deviation to those metrics moving forward. It would not be ready for live money even further into the future.
It is just how we view risking money. If we are going to put that money at risk, it's worth the work to find out with data we already have just how robust our processes are.
As far as your event count? That is a good number of Trades to begin to tell how something works in the current environment.
But remember that we have something that we refer to as a market regime. In other words a phase of the market. I'll give you some examples to show you what I mean. Look at an image of the stock market from 2002 to 2007. And only those years. That is what we might call, one regime. The vix, and the volatility of the market itself sort of behaved in one manner. 2008 is another regime. A stark sell off. The average range of a given day increased dramatically. Then from 2009 to 2015? We might call that another regime. Another type of Market. In fact as I have tested various processes? Would you like to know what the most difficult years were? 2012 to 2015. Volatility collapsed. The market began and extremely dedicated trend. It may have been easy to be long the market? But other process has had a very difficult time if they relied on Medium volatility.
Then 2015 through a lot of people for a loop. It was a different type of Market. If I recall, I believe Marty Schwartz said publicly the 2015 for himself however? Was one of his best years ever. If I recall I think that Marty is doing a lot of Premium selling. Or at least he was.
Then from the election of President Trump until now, we have had a very different market then say the bull market run that we had from 2012 to 2015. So I would almost look at that as a different regime.
Here is my real point. Volatility will act differently and different times, and this can completely wreck a process that may have worked very well for 2 years. Things will change a little bit, and what did work well for five years suddenly reverses and is horrible.
I mean, if you do not wish to go through the rigorous testing that I have done? Not only is that understandable, but probably a Mark that you are more sane than myself, LOL. But at least maybe take a few segments of different time periods and see how your process would have worked through those time periods.
something you may have to do? And this is absolutely huge to any process, is too maybe widen your stops and decrease your position size during very volatile time periods.
It's almost incredible what that approach can do for you.
But yeah, maybe take a month or two and just go through the end of 2008 and see how your process would have done. Do you need to increase the size to your stops and decrease your position size a little bit? Or adapt for that volatility? The answer is can be very Illuminating, and help you as you move forward
The Edge
Volume profile, price action, patterns, identifying when trend is getting exhausted and momentum coming out, SR levels, Comparison overlay... Trading and options trading is a long term game of probabilities and the first thing and maybe the most important thing an options trader needs to do before even applying any strategies is getting the probabilities of direction correct. No one can really read the market. If you're going to trade options get educated on how options are priced and how Implied Volatility can effect options price. Basically you have to know whether they're cheap or expensive. In general if IV is low it maybe a better strategy to buy options and if high it's better to sell premium or do vertical spreads. Understand the rights and obligations. Options give you options. Happy Trading!
Teaching you how to how to read indicators or entry point is another course on it own, I suggest you spend much time on demo about this, or get a professional trader close to you, so you physically be with him and ask about this technical, personally I do not entertain questions or like to get distracted when I'm doing live trading, but I can school traders after live trading, you can watch while I live trade, then ask questions like reasons that trigger my entry and exit points, as I'm daily trader, then I can school you on that.
But during live, no question is entertained, except I decided to go 0.01 lots to teach you on 100k account , as I do not entatain demo teaching.
Read everything you can, watch videos, and question all of them.
Probably the most efficient answer of them all.