Paper Trading to find a system

"Hmmm...what about S/R?"

In a higher volatility, break-out trend formation kind of market you will get smoked fading/timing S/R levels. That's where the trendline and channel break-out systems really shine. Vice-versa in your lower volatility, range-bound markets. The undeniable truth is that you will have to make adjustments for any trading system - no such thing as some sort of 'universal truth' that lasts decades. You make your money, and when you invariably take a few lumps, you adjust accordingly and get right back at it.
 
Quote from cvds16:

you are making this really hard on yourself; indicator trading is one of the hardest things to learn imo, the ones that do it had help from others. Naked price action is my thing, but it takes tons of screentime and reading everything into context, so you'll need several charts up at the same time for the one instrument you're trading. Trading one tf chart is, like one of the biggest traders on ET put it to me last week, like guessing which way the cockroaches are going to crawl after you put the light on. :D
I am not saying indicator tradying can't be done, but it's the same story there: context and several charts at the same time are needed. Don't expect any overnight succes with this advice however, it's the school of hard knocks that will make you wiser.
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Now that I think more into detail of this: even the people I know that use indicators use de facto a combo of price actoin and indicators. I couldn't trade if my life depended on it without at least six charts ...
 
Quote from bone:

This is just my opinion, but going back ten years is a detriment given events of the past 24 months.

IMO, only backtest for 2 years. You don't want to include market cycles that emphasize mean reversion and timing over break-out trends and momentum. Again, just me, but I would advise modeling for the market environment at hand - be effective and profitable for the present market realities, build up your capital reserves, and then adapt when the market cycles again. If you account and model for much different acting market cycles, your system will be less effective in the now. In any event, you will have to make adjustments to your trading system when the market warrants it (your Win to Loss ratios will signal a change).

There is no one system that works in all market cycles and conditions. Every veteran trader has tweaked/modified or even started over again from scratch with a trading system. Build your capital reserves up first by being effective in the current environment.
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Good advice as always, bone.
 
Quote from bone:

Again, just me, but I would advise modeling for the market environment at hand - be effective and profitable for the present market realities, build up your capital reserves, and then adapt when the market cycles again.
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It may too late to adjust then. Good systems function well under many possible market conditions. To accomplish that you have to test them using the longest possible history. You know what happens to those that followed your paradigm and tested system in 2007 using only data for the last two years. They got ruined when the correction came along. Then they adjusted and when the rally started last year they got ruined again. Now they are trying to adjust to that and so on....
 
"It may too late to adjust then. Good systems function well under many possible market conditions."

The market just doesn't change in an instant - you see it in your P&L as your Win/Loss ratio comes off. You keep track of your performance metrics in a spreadsheet, and you can even plot them from Excel. I make adjustments in my models between range-bound to trending markets and vise-versa. Since 1995 I've had to make three major adjustments to my trading system. And for me at least, I chose to change my technical study formats completely - in my personal opinion there is no 'optimum technical study' that performs beautifully in all market conditions. My technical study approach to trending markets is completely different than a range-bound market - the entry signals are generated off of completely different studies, and the profit and stop/loss targets are calculated differently. But the biggest factor was the trade timeframe holding period - it's alot easier in a trending market, especially since you can employ a trailing stop for longer time periods.
 
Quote from bone:

"Hmmm...what about S/R?"

In a higher volatility, break-out trend formation kind of market you will get smoked fading/timing S/R levels. That's where the trendline and channel break-out systems really shine. Vice-versa in your lower volatility, range-bound markets. The undeniable truth is that you will have to make adjustments for any trading system - no such thing as some sort of 'universal truth' that lasts decades. You make your money, and when you invariably take a few lumps, you adjust accordingly and get right back at it.
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Really?:eek: Do you day trade? Do you believe that working S/R is a long term poor way to trade?
 
"Do you believe that working S/R is a long term poor way to trade?"

Sensational choice of context, as usual. My point is that any technical trading model will require adjustments over time. For example, how many different ways are there to calculate support and resistance levels, even for day trading? I can think of several different S/R calculation techniques for intraday trading - all yielding different results.
 
Quote from bone:

"Do you believe that working S/R is a long term poor way to trade?"

Sensational choice of context, as usual. My point is that any technical trading model will require adjustments over time. For example, how many different ways are there to calculate support and resistance levels, even for day trading? I can think of several different S/R calculation techniques for intraday trading - all yielding different results.
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Huh? Two simple questions. Can you answer them?

Questions: Do you day trade? Do you believe that working S/R is a long term poor way to trade?
 
"Questions: Do you day trade? Do you believe that working S/R is a long term poor way to trade?"

Besides from being short and confrontational, maybe ask a better question. What is your definition of "day trading" - specifically, what is your holding period? Makes a big difference with S/R levels. For pivot points alone, you can "day trade" off of daily, weekly, or monthly (R1S1, R2S2, R3S3) levels - and when you vary the sampling periods the results vary. And you want to vary the sampling periods dependent upon market volatility. If I am going to hold a trade for 15 seconds, I can calculate S/R levels off of tic data for that matter. And that's my entire point - to be really good off of technical models you have to tune that model towards what works with a market, and the dynamics of the market will change over time on you.
 
Quote from bone:

"Questions: Do you day trade? Do you believe that working S/R is a long term poor way to trade?"

Besides from being short and confrontational, maybe ask a better question. What is your definition of "day trading" - specifically, what is your holding period? Makes a big difference with S/R levels. For pivot points alone, you can "day trade" off of daily, weekly, or monthly (R1S1, R2S2, R3S3) levels - and when you vary the sampling periods the results vary. And you want to vary the sampling periods dependent upon market volatility. If I am going to hold a trade for 15 seconds, I can calculate S/R levels off of tic data for that matter. And that's my entire point - to be really good off of technical models you have to tune that model towards what works with a market, and the dynamics of the market will change over time on you.
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(Rolls eyes)...LOL...Okay Bone, carry on with whatever it is you claim to be doing. Good luck, bro!
 
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