Looking for traders to share how they come up with hypotheses about the market to backtest. What is your process (if there is one)? How do you look for an edge to exploit?
How do YOU come up with trading ideas?
- Thread starter slowcheetah
- Start date
Thanks dbphoenix.
So is that all there is to it?
I guess I'm asking about the observation phase in particular. Do you basically sit and focus on the live market and try to pick up on subtle clues which you then test? Do you look at historical data, see a price move and try to figure out what might have lead up to it, which you then backtest?
Do you ever run into writer's block so to speak, where you don't have any ideas worthy of trying to test?
So is that all there is to it?
I guess I'm asking about the observation phase in particular. Do you basically sit and focus on the live market and try to pick up on subtle clues which you then test? Do you look at historical data, see a price move and try to figure out what might have lead up to it, which you then backtest?
Do you ever run into writer's block so to speak, where you don't have any ideas worthy of trying to test?
Well, yes, but few people can do it properly. See below.
When observing, beginners think of little else but where to enter and where to exit in order to make the greatest number of points, which defeats the purpose of the observation. Since they learn little if anything about price movement, their fears of losing money and of being wrong remain intact, and their subsequent efforts are for the most part a waste of time. If one can avoid thinking about the money and the trades, the observation phase can bear fruit rather quickly (there are, after all, only three directions price can take). Otherwise, it may never end.
There is the matter of indicators, however. And if one decides to go that route, the observation and testing can go on for years.
I got done with testing long ago, so coming up with new ideas is not an issue. The chief difficulty is not falling asleep.
These phases, by the way, originated with this: www.traderslaboratory.com/forums/wyckoff-forum/15535-developing-plan-trading-journal.html. You may find it helpful if you're just beginning.
There are no shortcuts here, traders have to watch/study those stupid charts for years and years, day and night, until something clicks.
Then, at some point in time, the persistent trader will simply run out of things that do not work.
If one can't tell time or tie his own shoes. Otherwise he can accomplish the task in relatively short order.
Yeah, sure.
And one can become a Taekwondo Master just by watching a couple of Bruce Lee movies.
No. Nor can one become an accomplished price trader by looking at only a couple of charts.
But it doesn't take "years and years". If one can tell time and tie his own shoes. Otherwise . . .
from my life experience- i have observed 2 kind of people(very generalized)-the ones that are having creative mind and ones that can get the job done. there is a very rare group that can do both. and very tiny fraction of it are the traders\programmers\system traders. to OP-if you don't know where to look and you have no idea what do you want from your observations or you can't come up with any idea at all-i'm not sure if you need to go any further.
you can find the 'general hints and tips' here, but if after a while you can't come up any idea-leave it alone. move on. i have exact opposite mind- i can come up with 10 new trading ideas each and every day and probably at least another 10-20 'regular ones' based on my every day observations.
i mean-just some random s*** keeps popping up in my head. from design ideas to a algo for a score calculations in a video games(my son is keeps laughing at me),cause one that i was keep talking about with my family members 15 years ago been aborted by major software company just few years ago and it's their 'main feature'...
you can find the 'general hints and tips' here, but if after a while you can't come up any idea-leave it alone. move on. i have exact opposite mind- i can come up with 10 new trading ideas each and every day and probably at least another 10-20 'regular ones' based on my every day observations.
i mean-just some random s*** keeps popping up in my head. from design ideas to a algo for a score calculations in a video games(my son is keeps laughing at me),cause one that i was keep talking about with my family members 15 years ago been aborted by major software company just few years ago and it's their 'main feature'...
Only brokers with a vested interest would even suggest that trading is easy!
So keep saying that trading is easy, I can assure that nobody would notice a thing...
(PS: By the way, seriously, how much are THEY paying you ($$$) to spread those lies? )
I could be dead wrong on that subject of course (and in that case I do apologize)...