My losing, forward-tested Forex strategy (charts and equity curves) - let's fix it!

JM1987 · Mar 30, 2011

have fun donating your $$$ to the market

tradingjournals · Mar 30, 2011

Quote from 1a2b3cppp:

I cannot predict direction.

If I could, I would load up with massive positions in the direction that price was going to go. There would be no need for stops, or scaling in, or money management.

Price may not be random, but when I try to predict direction I'm right about 50% of the time, so it might as well be random to me.

I read some of your posts, in a number of your threads. You seem to be energetic, but markets do not know if someone spend work and energy, and do not use work/effort as a basis to pay.

You may want to think things through or to seek someone to teach you. For instance the last post may suggest that you may not understand a number of things, for instance there was no stop size and time frame associated with the 50%?

Good luck to you.

nLepwa · Mar 30, 2011

Quote from cvds16:

prices are not random: there are real people with real emotions buying and selling there ... if you learn how to read prices you can spot them ... bigger traders trade on bigger tf's ...

Your argument is right, your conclusions are wrong.

It is precisely because real people with real emotions interact that prices are (mostly) random.
People have conflicting interests, they buy or sell at different times and for different reasons. The aggregated conflicting movements give almost perfectly random prices.
Think of swarms... It's the same principle.

Now you still can spot the few cases where the markets are non random. It is however much easier to trade the randomness.

Ninna

cvds16 · Mar 30, 2011

Ha, you have no idea how many times I am wrong, really ... maybe 30% trades really works out well (anywhere from 10 tot 25 pips for me), 15% are break even, 18% of twenty are small losers (like 2 pips), 20% are real 'losers' (-6 pips, that should be my most), and then there is a variety left of smallish winners (mostly in the 6-10 category). People have this idea that they'll 'understand the market' somehow or will be able to 'predict price like a fortuneteller' that's not what this is about ...
I got a whole set of exact rules for entry (basically four different setups) and then got exact rules for stopmoving according to price action and time to cut my winners short and let my winners run. Experience plays a role in the last part. For most people my day might seem like a total uphill battle but after a while (well a really really long time lol) you know that when you follow your rules you'll come out on top, so it get's better. I can not allow myself to get 'smart', I can not deviate from those, I can not gamble, I just have to follow my rules and get out when the market proves me wrong or I am lost.
One of the guys I am in chat with every day over the last few years, made over 20 million two years ago ...

rdg · Mar 30, 2011

I have a hard time believing you have spent years studying this stuff based on what you post. It's not uncommon for trend following systems to generate their entire yearly profits with a single trade or with a very small number of trades. Why would you base any sort of go/no go decision on a month's worth of Oanda demo trades? It makes no sense at all if you sit down and think about what you are trying to accomplish.

cvds16 · Mar 30, 2011

Your argument is right, your conclusions are wrong.

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well what might seem random to you might not be random to me, I can't vouch for your trading, I trade 1 minute charts, I can assure you these are not random, I know people who do great trading 100 tick charts ... some people are just better reading bigger timeframes (I must admit, I really suck there

, these will give you fewer opportunities imo). Trading is a personal thing: my way is not the only way ...

cvds16 · Mar 30, 2011

Quote from rdg:

I have a hard time believing you have spent years studying this stuff based on what you post. It's not uncommon for trend following systems to generate their entire yearly profits with a single trade or with a very small number of trades. Why would you base any sort of go/no go decision on a month's worth of Oanda demo trades? It makes no sense at all if you sit down and think about what you are trying to accomplish.

yes, in a way you might say I am a trendfollower myself too (although most people would call it scalping) just on a really really small TF: I try to find the entries where the market reverses, jump aboard and then try to let it run.

nLepwa · Mar 30, 2011

Quote from cvds16:

Your argument is right, your conclusions are wrong.

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well what might seem random to you might not be random to me, I can't vouch for your trading, I trade 1 minute charts, I can assure you these are not random, I know people who do great trading 100 tick charts ... some people are just better reading bigger timeframes (I must admit, I really suck there , these will give you fewer opportunities imo). Trading is a personal thing: my way is not the only way ...

Well randomness isn't about perception... You measure it.

On any time frame, 10 sec to 1 month, when you normalize prices by trading activity you get perfect randomness i.e. almost 100% Gaussian distribution of prices.
It's an eye-opener

Ninna

1a2b3cppp · Mar 30, 2011

Quote from The Big D:

If you believe price is random, this system will not work - it tries to predict price. The prediction it makes is as follows:

When price has moved 50 pips one direction, it is more likely to move that direction than the opposite in the near future.

In other words, in order to believe in trends you have to believe that price can be predicted. So if you really believe price can't be predicted in that manner, you have to give up and go home. Game over. However, I would say the problem is not that price can't be predicted with some level of accuracy - it can. The problem is that this system can't do it because it's poorly executed.

I was looking at it more in the sense of:

the market will eventually make a big move (in a random direction) and I'd like to be in it on the correct side when it does.

But I see why what you said is also correct.

Quote from nLepwa:

Your argument is right, your conclusions are wrong.

It is precisely because real people with real emotions interact that prices are (mostly) random.
People have conflicting interests, they buy or sell at different times and for different reasons. The aggregated conflicting movements give almost perfectly random prices.
Think of swarms... It's the same principle.

Now you still can spot the few cases where the markets are non random. It is however much easier to trade the randomness.

Ninna

I agree with the guy you are quoting who said that emotions drive markets.

For example, after a huge down movement, people like to say stuff like "oh yeah, everyone was selling on emotion and fear, and that's why price fell by [some large percentage]." And then they'll point to the bottom and be like "and then here, some of that fear subsided and people started buying again, driving prices up. Markets are run by emotion. I'm a guru! Buy my course!"

And they're correct.

But that's also useless knowledge. Unless you have a method to predict what the results of that fear will be, such as how far down it will drive price (and I'm pretty sure the answer has nothing to do with fibonaccis), it doesn't matter if you understand that emotions move the markets.

But if you guys have any emotion formulas that result in quantifiable predictions (eg. "people are afraid at a level of 7 fear units, therefore price is going to fall 10%"), I'd be very interested to talk about that.

1a2b3cppp · Mar 30, 2011

Quote from tradingjournals:

I read some of your posts, in a number of your threads. You seem to be energetic, but markets do not know if someone spend work and energy, and do not use work/effort as a basis to pay.

I never claimed they did.

You may want to think things through or to seek someone to teach you.

I doubt I would find someone who is actually profitable and not trying to sell me something. I have a PM box full of ET gurus wanting to coach me for money or sell me their system. No thanks.

For instance the last post may suggest that you may not understand a number of things, for instance there was no stop size and time frame associated with the 50%?

Oh, I know. I'm aware that win rate isn't correlated with profitability, variances in target profit and stop losses and all that stuff. I was just being concise (for once) and saying that predicting direction is not an edge for me. My account stays at about breakeven, which is about no better than random.

Look I'm not saying predicting direction cannot be done. I'm saying I cannot do it.