Easy edges in the markets for retail participants?

[ras72]

You gotta love the reaction you get from gurus and vendors when you open such topic ...

No I don't. It isn't about that. I find it frustating. It's about me understanding.

 

[dbphoenix]

If you're compounding your profits, you should be a millionaire by now, as you've been talking about this stuff for years now.

Remind me again. Did you make it on any of the Combines with TST that you attempted?

Nothing personal, but I've seen you many times talk about your edge and 'how the market will tell you in advance where it will go', but I don't get the impression that you're raking in cash.

Are you?

Thanks.

Here's a more productive question: you've not only been told for months where to look for entries but also how to make the entries and yet you haven't. Why not?

 

[austinp]

You gotta love the reaction you get from gurus and vendors when you open such topic ...

" The bars, indicators, patterns, systems, structure, and action are all driven by what the other party is doing. The other party is the cause and everything else is the effect. This is why some of the best "setups" you see still often fail to produce winning trades. We use tools and visuals to have context in what we decide to do relevant to direction and timing but the outcome after the entry is made is driven by the other party.

There are no "winning" entries. There are no winning trades that are decided in advance as many would like to believe. It is a game of who has the will to hang in there and who will push the other out. It is a game of poker and a game of chicken. I best compare it to a tennis match in which one player will wear the other down to the point that an unforced error is made.

Many of us are correct in direction and premise on our winning trades but still end up donating to the market. This is the a result of the trader on the other side having the ability to wear us down and force an error. "

that's because you were half-wrong in the other thread, and you still insist on clinging to those half-wrong errant beliefs.

trading is like a marathon tournament of poker games... not any given poker hand. You know the statistics, you scratch & fold, scratch & fold until the odds of probability are in your favor. Then you manage the bet size accordingly. Sometimes a hand with 75% odds of probability is bested by another hand at random. So what? That lone instance doesn't mean jack shit about your overall results in the poker tournament. Or trading. It's merely the random statistical outcome of one lone instance from the series.

Sometimes you lose the game = entire trading session. But nobody - nothing wears a trader down or force errors outside of themselves. Those self-control issues are all up to each trader for self-management. Our job is to procure an edge, either constructed, purchased or a blend of both, and then learn how to effectively execute that process over long periods of time thru all varying market conditions.

to win or lose any given hand of poker = any given trade or single session means nothing. Nothing at all is what it means, to overall long term success. Once your mind grasps that fact and no longer looks at a trade as some kind of meaningful contest, you've shed one chain that's weighing you down.

 

[NoDoji]

FWIW I do believe that the back test boys (and girls) can make money.
And I started the thread to poke fun at them.

-ras72

I had someone run backtests on all sorts of ideas before I developed my current trading plan by doing meticulous manual analyses day by day.

Every single backtest - whether based on one or more indicators, price bar patterns, breakouts, whatever - produced results that indicated we'd be multi-millionaires in a couple years.

Not a single one of them matched the results of live simulated application. The difference between backtest results and reality was so far off that I can't imagine how people use these backtests for anything of value.

 

[ras72]

I had someone run backtests on all sorts of ideas before I developed my current trading plan by doing meticulous manual analyses day by day.

Every single backtest - whether based on one or more indicators, price bar patterns, breakouts, whatever - produced results that indicated we'd be multi-millionaires in a couple years.

Not a single one of them matched the results of live simulated application. The difference between backtest results and reality was so far off that I can't imagine how people use these backtests for anything of value.

What. You don't play backtested setups yourself? You mean you add context and a degree of discretion?

 

[Laissez Faire]

I did not pass any combines with ZS/CL or CL attempts. Probably for the same reasons nobody inside the now-dead CL Thread here ever did, either.

As for markets telling where they'll go in advance on a statistical basis, they do. But each and every price move is not predictable on its own. Recent example? CL projected to 100.20+ zone yesterday hours before it ever made it there... and price was still near 99.20s at the time. But the movement from there to eventual target reached was so raggedly chopped, it was impossible to stay in that trade and hold stops.

You are verbalizing the same mentality most traders have. When you scoff at the idea markets can measure and project where price will go way more often than not... it means more often that not over a series of similar sequences. Yesterday's CL move predicted to 100.20 while at 99.20s meant nothing to that specific, singular event. Could as easily have plunged to 97 by day's end. The same ten or twenty or fifty sequences? Most would go from 99.20 to 100.20 as the market predicted. But some of them would do so in such erratic fashion, you cannot aptly manage that trade.

You see, these are the things that take years and years to figure out. There is one helluva lot more to trading than take this pullback here, and my gut feeling tells me to enter that trade over there.

I used a historical database and statistical analysis to make projections of the OHLC of the day in advance. I'd say I did pretty well most of the time in doing so. In fact, something as simple as pivot points and a running average on volatility can give you a good indication of the day in advance at the opening bell or say after the first 30/60-minutes.

But you need a lot more than that in order to play the day profitably and read price as it goes up and down.

As I read your answer, you're still a net loser who makes excuses for himself, yet spends a lot of time on ET being a guru on trading.

I could say the same thing: "If that trade wasn't a loser, it would have been a winner!"

Same logic.

 

[Laissez Faire]

Go add those results all up, and tell me what you arrive at. If that is a net profitable finish, it's been said that 90+% of all traders across the spectrum lost money.

Where then does that place my performance posted there?

Next week, same results. Following week, same results. Only a matter of time.

Well, I've had many great runs myself, only to have a few 'black swans' take it all away.

Please post a continuous blotter AFTER you've had a good run beyond two weeks.

Or maybe tell us how much money you made in 2013?

 

[Tonkadad]

What. You don't play backtested setups yourself? You mean you add context and a degree of discretion?

This is what was said:

"I developed my current trading plan by doing meticulous manual analyses day by day."

 

[Laissez Faire]

Here's a more productive question: you've not only been told for months where to look for entries but also how to make the entries and yet you haven't. Why not?

This wasn't about me, but about me being tired of losers deluding themselves (and others) into thinking they're winners.

It's dishonest.

But I'll bite.

Where have I've been told this that you're talking about?

I can answer in advance though. I'm not trading or doing any research at the moment because:

1) I'm a full-time student and in addition to that work nearly 100% on the side.

2) I do not have a stake at the moment.

If I will return to day trading, I will continue where I left with the methodology I developed on my own.

Regards.

 

[dom993]

I had someone run backtests on all sorts of ideas before I developed my current trading plan by doing meticulous manual analyses day by day.

Every single backtest - whether based on one or more indicators, price bar patterns, breakouts, whatever - produced results that indicated we'd be multi-millionaires in a couple years.

Not a single one of them matched the results of live simulated application. The difference between backtest results and reality was so far off that I can't imagine how people use these backtests for anything of value.

There are a number of traps one can get into with programmed systems & backtesting ... like assuming a LMT order is filled when price hit that level, or not accounting for slippage on STP & MKT orders - not to mention assuming anything with STPLMT orders, which are the most difficult ones to get right in a backtest.

Other considerations are working with poor quality historical data, not accounting for commissions.

Of course, the worse one is over-fit to past data ... anything that relies on using the optimizer to get a system profitable in backtest is over-fit & won't work live. But even without using the optimizer, the only remedy is to backtest on 5 years / several thousand of trades *minimum*, and then make sure that the information ratio (avg/stdev) remains comparable year over year.

That said, I know for a fact that some price-action patterns disappear over time (the DF20 reversal being one such pattern), and no matter how much money one made in the past trading that pattern, it is now a net losing pattern.

As for austinp comment re. CL being dead, I will post later this week-end in my CLAlwaysIn journal an objective study of CL from 2007, through the lense of the market model used by this system (and CL151).

In a nutshell though, 2013 had:
- the smallest average trend total-size of the period (0.93pt, the upper range - excluding 2008 - being 1.16pt in 2010),
- the lowest "with-trend" average useful-size (0.53pt, the upper range - again excluding 2008 - being 0.64pt in 2009 & 2011),
- the lowest "counter-trend" average useful-size (-0.31pt, the upper range - again excluding 2008 - being -0.37pt in 2009 & -0.35pt in 2011),
- and noticeably for my systems, almost the lowest number of trend-changes (1372, 2007 absolute low at 1321, 2011 & 2008 absolute highs at 2466 / 2479).

All in all, a reduction in volatility of about 20% compared to the prior 6 years period (excluding 2008).

Aside from these metrics, 2013 was no different than any other year, in particular same % of TR trends (trends that make money when traded from trend-change to trend-change), same % of CT trends (trends that make money when faded from trend-change to trend-change).

So I would certainly say, no, CL isn't dead - although less volatile.