How much data do you need to make a decision?

[Whip]

You could apply,as suggested,a trusted protocol of one of the most successful men to have ever lived.

Who are you referring to?

 

[easymon1]

Back testing is not an option so I need practical numbers. I haven't seen any practical answers yet.

Why not go with your gut.
Formulate a hypothesis in writing as part of your trading plan.
Start Small, Small, Small.
Review results at preplanned milestones and refine your hypothesis as warranted.
If your theory is sound, positive results will emerge after which you will want to implement Position Sizing, at which point you can get your ass off the bench and get into the game!
Break a Leg!

 

[Whip]

Thanks @easymon1 I'll do that

 

[rb7]

Hi everyone. I want to ask professionals and statisticians, how do I know if I have enough data in my journal to make a decision? I've done about 70 trades with a new strategy and in my journal I'm seeing a pattern (see screenshot).

The graph is about my trade distribution across different float categories of the stock. I've had nearly equal number of trades in 10-50M, 50-100M and 100-500M float - which is 20. The results for 100-500M float is clearly not good though. I want to stop trading this float range but I wonder if I'm making the decision too soon, do I need more data to confirm this pattern?

First, we never have too much data. There ain't such thing as 'I failed cause I had too much data'.

70 trades seems low in terms of sample, although you didn't specify your time frame.
If you hold each position for several month, then 70 might be enough. If you do day trading, it's surely not enough.

The number of trade is one thing, but you need to make sure that your sample is covering all types of market (bear, bull, choppy, etc.) in all conditions.

 

[Whip]

Yes, should've mentioned that. This is one week of trading.

But by your logic, every strategy would have to be tested for atleast 6 months. Doesn't seem practical.

 

[easymon1]

Thanks @easymon1 I'll do that

Stevo Likes Position Sizing, has an app for that...
https://elitetrader.com/et/threads/...ly-and-profitably.354854/page-11#post-5312365

Here are a few pages on position sizing.
https://elitetrader.com/et/threads/fixed-ratio-position-sizing-money-management.303441/#post-5012086

 

[rb7]

Yes, should've mentioned that. This is one week of trading.

But by your logic, every strategy would have to be tested for atleast 6 months. Doesn't seem practical.

Well, no pain no gain.
There ain't such thing as a free lunch.

And 6 months seems short IMO.
But you asked the question and you got some answers.
Not the answers that you wanted to hear obviously.

 

[easymon1]

Thanks @easymon1 I'll do that

There's no reason why you can't continue your data collection and analysis in parallel with the action oriented research having skin in the game. The results, lessons, experience that you gain by getting in the game via stakes that are Small Small Small as well as Real will inform you in a way that spreadsheet numbers can't.
While you plan your actions consider that you could manage trades for 10% or 20% of the categories that appear to offer largest gains, say maybe select the best prospective stock from two out of 5 or 10 categories, so one from category '3' and one from category '8' if the stats or your gut tells you those are the top prospects out of each of the top two categories, or somesuch scheme that you find promising. Record your reasons.
Then Follow Up with Small Small Small Trades that are entirely affordable in those bad boys following sound entry setups. The payoff is not in the yield of these trades as much as to generate Real life stats on what it's like to trade this thing that you have hatched.
Now you're bridgin', Jack.
While you do this, you can still be collecting your stats as usual and further developing your database in those quarters. It ain't mutually exclusive, lol.

 

[Whip]

Yeah absolutely. I have built a swing trading strategy in the past like this and I'll do it again for this day trading strategy. After some initial demo data collection, I'll start trading with real money and continue collecting data. Journaling never stops.

 

[murray t turtle]

I do over 20,000 over at least ten years doing intraday and 40 years on daily data.

%%
10 years can work well+ all the data. Small caps business do the best on mainstreet; seldom happens that way on Wall Street. Penny [-$5] stocks so seldom work, find out why??
But since mid cap has some of the lowest volume, i leave that to the fund managers.
7 or 77% years may work, a stock that closes @$10,000 from a high of $46,ooo\downtrends to$6.66\downtrends to$2.666maybe a screaming buy ?? LOL dont try this @ home.
Only if one likes penny stock losses + i dont; 6 months x2 =12 months may work maybe not with pennies.
I pick up a penny on main street not wallstreet, but market makers do well with penny profits.