Manual strategy testing

[tomorton]

The fatal flaw in that reasoning is the inherent recursion in it. How and where does someone acquire the judgement to decide whether a strategy is "proven" without being an expert trader in advance?

Lather, rinse, repeat...

There is no shortage of proven successful strategies out there. In any case, its the users of the strategy who must provide the proof if they allege their strategy is successful.

Actually we both agree that an inexpert trader cannot tell a proven strategy from an unproven one. So how much more difficult and unlikely it would be for an inexpert trader to conceive, develop and stringently backtest a novel strategy that is nowhere to be found already proven.

 

[trend2009]

There is no shortage of proven successful strategies out there. In any case, its the users of the strategy who must provide the proof if they allege their strategy is successful.

Actually we both agree that an inexpert trader cannot tell a proven strategy from an unproven one. So how much more difficult and unlikely it would be for an inexpert trader to conceive, develop and stringently backtest a novel strategy that is nowhere to be found already proven.

which one is the proven successful strategy? buy low sell high? or trade the trend breakout or trend pullback?

 

[tomorton]

For example?

All well known strategies can be made to work. But for an inexpert trader, wishing to maximise probability of success, they need to select a widely used strategy which is -

• simple to run
• uses straightforward TA which is objective, so they don’t have to make lots of judgement calls
• appropriate for a small account
• applicable to most markets
• involves the right time-frame(s) for their trading style
• does not involve massive risk per trade (as a % of account capital)

In general there's too much emphasis on finding exotic and complicated strategies, which are in any case mostly just dressed-up exotic and complicated entry patterns. Which is why I rarely visit forexfactory any more.

The basic rule for trading is that if prices are rising you should be long or at least not short, if prices are falling, you should be short or at least not long. How you get there is not very important.

 

[Slope Trader]

All well known strategies can be made to work. But for an inexpert trader, wishing to maximise probability of success, they need to select a widely used strategy which is -

• simple to run
• uses straightforward TA which is objective, so they don’t have to make lots of judgement calls
• appropriate for a small account
• applicable to most markets
• involves the right time-frame(s) for their trading style
• does not involve massive risk per trade (as a % of account capital)

In general there's too much emphasis on finding exotic and complicated strategies, which are in any case mostly just dressed-up exotic and complicated entry patterns. Which is why I rarely visit forexfactory any more.

The basic rule for trading is that if prices are rising you should be long or at least not short, if prices are falling, you should be short or at least not long. How you get there is not very important.

Tom,

I appreciate your contributions to this site and other forums as well. Basically agree about ForexFactory...though I sometimes look at their Trading Systems section because it can be a source for new ideas.

Instead of "All well known strategies can be made to work.", it might be better to say "Some published strategies can be made to work."

Your other suggestions are good too, but requiring a positive expectancy strategy to be applicable to the markets one wishes to trade is probably more important and feasible than trying to find one that is applicable to most markets.

The other thing I'd add is that the trader will need to do detailed backtesting, manually or otherwise, and make adjustments to any published methods they wish to try.

 

[BlueWaterSailor]

There is no shortage of proven successful strategies out there.

Please name one that has not been arbed out of existence, or has a positive return expectancy for any other reason.

In any case, its the users of the strategy who must provide the proof if they allege their strategy is successful.

Proof that newbies must have enough knowledge to interpret. Martingale and TA are trivially-easy to sell to newbies - witness the profusion of "trading schools" out there vs. the "successes" of their graduates.

Actually we both agree that an inexpert trader cannot tell a proven strategy from an unproven one. So how much more difficult and unlikely it would be for an inexpert trader to conceive, develop and stringently backtest a novel strategy that is nowhere to be found already proven.[/QUOTE]

So... the right answer to failing is to buy into something being marketed to you? I don't think so. If someone has a successful strategy, the easiest route to profiting from it is to use it - not spend huge amounts of time and effort marketing it and then teaching it.

 

[tomorton]

You're in the same ghetto-thinking about trading as what you would probably call the scammers.

What's really important is to be long when prices are rising and short when they're falling. How you enter and what indicator signals you use and what pattern you wait for and how long are the MA periods and what its called is all irrelevant detail which is just consolation for struggling traders or sales aids for strategy and book salesmen.

Tell me the strategy of being long when prices are rising is bad.........

 

[BlueWaterSailor]

You're in the same ghetto-thinking about trading as what you would probably call the scammers.

So you don't have even a single shred of evidence for the "proven strategy" snake oil you're selling, and must resort to personal accusations to hide it. Got it.

What's really important is to be long when prices are rising and short when they're falling.

Really? Shocking. Hold on, let me write that down...
Your Nobel Prize for this amazing discovery will surely be announced soon.

While you wait, you may want to work on understanding the difference between fantasy (e.g., being able to predict when prices will rise) and reality (say, being able to execute a mundane buy or sell order.) Right now, you seem unable to distinguish the two.

 

[tomorton]

So you don't have even a single shred of evidence for the "proven strategy" snake oil you're selling, and must resort to personal accusations to hide it. Got it.



Really? Shocking. Hold on, let me write that down...
Your Nobel Prize for this amazing discovery will surely be announced soon.

While you wait, you may want to work on understanding the difference between fantasy (e.g., being able to predict when prices will rise) and reality (say, being able to execute a mundane buy or sell order.) Right now, you seem unable to distinguish the two.

I never predict, only react. When prices are rising, that's when I buy.

But the reality is that trading is that simple. You mock because you can't believe it really is that simple and that therefore I must be a scammer or a loser or a sock puppet. I'm guessing you're invested in the belief that trading is complicated and the more you know the more you will make.

Me, I pride myself on not knowing too much........ I'm good at it. That and being lazy.

In reality this strategy and that strategy and all strategies are based on only simple principles and the detail is irrelevant. The position is what counts, and the position that makes money is being long position when prices are rising, being short when they are falling. Being long when you think prices are going to rise doesn't make any money.

 

[BlueWaterSailor]

I never predict, only react. When prices are rising, that's when I buy.

The fantasy part here is that you know that the prices will continue rising one second after you buy. If you don't think that's prediction, then you need a better brand of dictionary.

Since you like simple, I'll make it simple for you: you don't know what the market is going to do to any greater degree than anyone else does (positive drift, general volatility, etc.) If you think you do, I'd be happy to take the other side of the bet. Want to put some cash on the line? I'm pretty good at experiment design; just let me know.

But the reality is that trading is that simple. You mock because you can't believe it really is that simple and that therefore I must be a scammer or a loser or a sock puppet. I'm guessing you're invested in the belief that trading is complicated and the more you know the more you will make.

[laugh] When someone starts projecting like that, I know that they're far beyond reasoned argument; no place left to stand, so all they've got is emotional investment. But that's been obvious for a while now. You just go right ahead and battle that strawman; I'll just sit on the sidelines and watch.

Me, I pride myself on not knowing too much........ I'm good at it. That and being lazy.

I'll resist the desire to make the obvious comment.

 

[tomorton]

The fantasy part here is that you know that the prices will continue rising one second after you buy. If you don't think that's prediction, then you need a better brand of dictionary.

Since you like simple, I'll make it simple for you: you don't know what the market is going to do to any greater degree than anyone else does (positive drift, general volatility, etc.) If you think you do, I'd be happy to take the other side of the bet. Want to put some cash on the line? I'm pretty good at experiment design; just let me know.



[laugh] When someone starts projecting like that, I know that they're far beyond reasoned argument; no place left to stand, so all they've got is emotional investment. But that's been obvious for a while now. You just go right ahead and battle that strawman; I'll just sit on the sidelines and watch.



I'll resist the desire to make the obvious comment.

I have tried and used all sorts of strategies and entry patterns and trade systems and the one factor that unified all of their financial outcomes concerns trend. I always made more money when the duration of a position mostly comprised a trend.

The nice part about trends as against random price movement is that the most common next move price makes within the trend is continuation. Of course, this isn't guaranteed and I certainly can't predict how long it will last. When the trend stalls or reverses I react accordingly. That's trading. Its simple. Me too.