Paper Trading to find a system

Wow! Thanks for all of the replies everyone!

For what its worth I have an account with MB Trading and use the MBT Desktop Pro software. I think its pretty good, but I am still learning some of the more detailed features as it is not the most intuitive program in the world.

bone and bsam, you both make good points no need for a dick measuring contest. I would say that S/R levels are commonly agreed to be pretty reliable in all kinds of situations but also I (probably lack of experience talking) have confusion on how to define which S/R's to use in a given situation to have them be reliable. (pivots, Fibonacci, etc..)


cvds:
When you say you trade with si charts, are you saying you have, for example, multiple intra-day and daily, weekly, whatever charts up at the same time to judge the situation? Do you use different indicators on each or basically the same?

So it seems a consensus here would be as follows:
Every market / stock requires different studies / indicators. NN and data-mining is probably a good place to start. It would be a good idea to backtest a strategy for 2 years, and then further in a seperate test and compare the results.

I still am somewhat lost though...
I have found a few good stock screeners (although nothing as good as the old MSN Deluxe that was removed some time ago). So if I search for stocks that are ranging or trending or whatever, I need to have a strategy on how to identify setups, entries, stop losses, and profit targets.
If I use RSI or Stoch, or Willaims R%, or moving averages, etc, or some combination thereof, is there a standard for what values I should use these at based on which interval I am using on a chart? Plugging in random numbers and looking at tons of stocks is a real pain in the ass when I'm sure someone has already done this and wrote it down on a website or something.

Does this make sense or am I over simplifying the whole situation?
 
I myself don't use any indicator whatsoever, I know a few people that use like one as an added help but even their basis is price action.
I trade fx intraday only: I have 11 charts open constantly, but I see the same things happening on higher tf's, it's just too slow for me to really like/use it. And I'd probably need to be awake near 24 hours cause lots of things happen at night and I prefer to sleep without being half awake by stress (been there done that, no more of it). The same concepts are transferable to swing trading, it's just not my thing. To learn this properly it's gonna take more than a while, but then again if not everybody and their dog would be doing this :D
 
Quote from j_hall82:

I have built a few spreadsheets so that I can come up with a system that generates buy and sell signals, then select a few stocks, go back a few months and pretend I am trading real-time.
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Hi j_hall,
I have been there done that. Did the spread sheet thing.
One program that might help you get years of experience in hour is at http://www.turtrades.com it lets you trade back in time and fast forward to see if your strategy is working, it is free to download and use.
TurTrades gives you a chart at a date in a past and you can fast forward a day or several days, you can buy or short, also it allows you to tweak technical indicators to see what works best for you.

Hope this helps.
 
Your topic: paper trading to find a systemis well chosen as are three other things you have dicieded:

1. Your selected trading platform,

2. Your intraday fractal (20 to 40 trdes a day), and

3. Your choice to position trade the "natural" stock cycles (optimally 10%, every 3 days).

The more experienced traders have made good recommendations by taking into account your choices. Others have neglected your needs and explained their mistakes over the years.

The markets have changed little in the last 50 years. Technology as advanced so it is possible to tool up more easily.

The first thing to digest is how to determine you have done proper tuning. Tuning means getting the signal generator to be functional. The test is that it works on all fractals equally well. As you see, some of your respondents have this aspect down cold and others have to use different things at different times and in different contexts.

Play close attention to how a signal generator is giving you timely signals; this is in very high contrast to "prediction" and "setting" tragets". Signals get you in and signals get you out.

When you have had a signal to take a trade (on any fractal), your task is to HOLD through the entire profit segment. All HOLDS are based up on one principle: price is changing favorably with respect to the entry signal.

Finally, the NEXT entry signal in the opposite direction IS your EXIT signal for the profit segment you are finishing taking.

On your chosen platform, you have the "answer sheet". Arrange it above your trading icons. The places on this DOM, siplay the WALL past which a "continuation" of a HOLD will NOT go.

For stock trading, use the Excel to construct a QA based Universe of tradable stocks.

You need to know three values for eachstock and these values TELL you when to begin and end a profit segment. You list these values on the sheet.

You list two other duration related values: how long a position trade lasts and how long it is between such trades.

Thus far there are six columns.

Add a sorting column. This column lists the probable start date for the next trading cycle of each stock.

Position trading stocks is based on QA and repeatability. QA is based on EPS percentiles and RS percentiles. Repeatability is based on a stock getting on the list by performance (at least 5 cycles in 6 months) This is a 3 beta context and short term HOLDS.

I'm not hijacking this thread; I am just insisting that you do not get taken in by some of the BS posted in this thread.
 
Check out this thead: AHG-profitable system for struggling traders

You are just bait in the water right now for the teachers, gurus and big ego failed traders.

I do not offer advice, but if I had a relative embarking on the road to trading and they asked me to elaborate on my mistakes, I would say:

Don't trust any indicator for entry or exit.

Don't risk real money until you are 3 months net profitable on real time sim.

Don't trust backtesting.

Don't buy anything.

There are many concepts to consider and you will have to work your way through them. If a "mentor" takes more that a couple of paragraphs to explain one, just walk away.

There are no secrets.

If you look at the offerings of "successful" trading websites, notice the the word "hypothetical" usually appears somewhere, in small print, not on the front page.

I just saved you 20K and 3 years min.
 
Hey everyone, thanks again for the continued advice.

Andyroki - I installed turtrades, and it is kind of a clunky program but it seems like a good concept, although unfortunately it is not for intra-day from what I can see. Still, it could be good for testing momentum/swing trades.

cvds16 - As always thanks again for the input. Do you have any recommendations on where to learn more about trading on price action strategies? I am doing random googling right now and am not convinced that is the best way to find valuable info.

jack hershey - I had a little trouble understanding what you were trying to say but I get the general idea and it sounds like mostly what I am trying to do.

bmwhendrix - those are good pointers. It is hard to resist jumping in a trying some trades, but when I run my strategies through my spreadsheet formulas and watch me either totally lose my ass or barely scrape my way out with .003% profit over a given period of time it is good motivation to learn more first. I will check out "AHG-profitable system for struggling traders" and see what I can get from it.


I recently read a thread on ET that is very inspiring:
http://www.elitetrader.com/vb/showthread.php?threadid=148752&perpage=6&pagenumber=1

Its a really long journal that I read all of. In short, a guy takes 70k and doubles it in like 4 or 5 months using a few intraday tricks and no leverage if I read it right.

The guy is not much on words (although it appears that it is because he is busy with a real job) another poster sums up his strategy on page 233:

http://www.elitetrader.com/vb/showt...148752&perpage=6&highlight=bet&pagenumber=233


I have to admit; I understand the words, but I dont understand how he saw these things on the posted chart pictures. Does anyone feel like trying to explain this?

If you can it looks like you can possibly turn the market into your damn personal bank. This guy posted his trade in real-time and is no joke, he totally doubled his money in half a year. Cant beat that. I just dont understand how he was seeing what he states he was looking for.

Well anyway. Its Christmas and I'm in Germany so time to get drunk. Prost! Cheers! Salud! and all that good stuff.
 
well, I have found more or less my own thing after a few years of screen trading ... BUT ... it's somehow more or less based on candlestick patterns: engulfings are important and learn to look how tops and bottoms set up (this alone will have you looking at charts for quite a while), get Trader Vic the only real book worth reading and even then there's only 15 pages you need to know (those about 123's and 2B's) forget all the blabling about economics schools and so on, but you want those technical setups in your luggage with you. You could also use trendlines and look for tings like wedges, flags etc (I don't cause I have more sophistacated reading; to me these are just an expression of what I had allready seen through other things; and I know pretty well when they are gonna make or when they are going to fail or when I should reverse) Don't just discard this last stuff cause I have something better, you can and should use it on your learning road. Learning to read charts is a process where you add and delete things, you get more complex in the hope of getting more sophisticated, that turns out to work not too great after all, you get to simpler again, but more subtle somehow and then move forwards to more complex again often leaving you feeling like you are running around in circles but there will be progress if you do it right. This whole proces drove me crazy at times as I wrote here on ET before; but nothing new there; it's a common experience. I am into contact with several price action traders: we all trade a different version according to risk profile (I can predict to the pip were some traders will get in, but these are hero-trades to me, so I will pass and wait for the confirmation; that will get me in later, they will have the better entry, but a bigger chance of it going sour; nothing is 100% perfect and it's all a trade-off and that's personnal). They have things I don't use that work great though: I don't use channel tops or backside of trendlines; these work great thoug; it's just I don't happen to see them too great in realtime ... don't know why, not for lack of trying, so had to find a way around that to get me in with a different rule I had to come up with based on another pattern. So you see it's all very personal ...
To summarise: learn candlestick patterns, learn about 2B's and 123's, learn about basic chart patterns like triangles, flags and wedges then learn to read all of this into context of several charts. It's the last thing that will cause you more than one headache. I guess I just wrote the ultimate handbook for trading :D I guess it's Christmas
 
cvds, you are the real deal and you gave quite a gift here. Sometimes the greatest gifts are the simplest things.

OP, you need NO indicators. You need only price action in your time frame, with smaller and larger time frames for cross-reference. Cross-reference only. Trade your time frame, reference other time frames for guidance so you can enter with a survivable protective stop and so you know what the big money's looking at. DO NOT start trading other time frames unless you've made a conscious decision to trade a different time frame.

My trading friends know exactly where I enter trades, almost to the tick/pip without me having to say a word. Why? Because it's price action and there's no magic formula to where you put on a trade in a given time frame. Draw trend lines and channel lines. Know the S/R levels in your time frame by heart when you start your trading day. Know the major S/R levels in longer time frames as well. These levels become potential ATM machines, especially if they've held up more than once because they contain the potential for a breakout.

Learn the psychology behind breakouts.

Have you ever been in a trade where you expected a major S/R level to hold because it held before (maybe a few times) and because your pet indicators told you price will reverse there and this trade is a real gimme, money in the bank, and you decide there's no reason to use a stop because of that, and price breaks out and runs harder than you could imagine and you either move your stop farther away or, worse, you average down as it runs against you? And you think everyone's an idiot for buying that high or selling that low? And deep down inside you're thinking, "WTF? Why's it doing THAT?"

Well, you now know know I've been there. More than once. Costliest trades I've ever had.

Once you ditch indicators and learn to trade price action, learn to follow a trend, learn what it means when price breaks out of a range or breaks through a major S/R level, you can just about extract money from the market at will.
 
Quote from j_hall82:

Hey everyone, thanks again for the continued advice.

snip.....

jack hershey - I had a little trouble understanding what you were trying to say but I get the general idea and it sounds like mostly what I am trying to do.

snip.....
More...

Read it over every six months for a few years......

Finally, you will get a spreadsheet that has the leading indicators of price for position trading with about four rules.

For intraday, you will find a one pager works and you will find just one pattern that combines V leading P.

The deal to be expert is to build the mind The critical path is to use expert drills and skip being an inventor.

It was all done by 1957 when I started.

Look up the word "logging" and see if you can begin to do that in a couple of years.

Read Mark Douglas "Trading in the Zone" and find out WHY he could never recover from the two laps he took where he failed in learning to trade technically. You are headed for "freakout" type trading.
 
Quote from cvds16:

well, I have found more or less my own thing after a few years of screen trading ... BUT ... it's somehow more or less based on candlestick patterns: engulfings are important and learn to look how tops and bottoms set up (this alone will have you looking at charts for quite a while), get Trader Vic the only real book worth reading and even then there's only 15 pages you need to know (those about 123's and 2B's) forget all the blabling about economics schools and so on, but you want those technical setups in your luggage with you. You could also use trendlines and look for tings like wedges, flags etc (I don't cause I have more sophistacated reading; to me these are just an expression of what I had allready seen through other things; and I know pretty well when they are gonna make or when they are going to fail or when I should reverse) Don't just discard this last stuff cause I have something better, you can and should use it on your learning road. Learning to read charts is a process where you add and delete things, you get more complex in the hope of getting more sophisticated, that turns out to work not too great after all, you get to simpler again, but more subtle somehow and then move forwards to more complex again often leaving you feeling like you are running around in circles but there will be progress if you do it right. This whole proces drove me crazy at times as I wrote here on ET before; but nothing new there; it's a common experience. I am into contact with several price action traders: we all trade a different version according to risk profile (I can predict to the pip were some traders will get in, but these are hero-trades to me, so I will pass and wait for the confirmation; that will get me in later, they will have the better entry, but a bigger chance of it going sour; nothing is 100% perfect and it's all a trade-off and that's personnal). They have things I don't use that work great though: I don't use channel tops or backside of trendlines; these work great thoug; it's just I don't happen to see them too great in realtime ... don't know why, not for lack of trying, so had to find a way around that to get me in with a different rule I had to come up with based on another pattern. So you see it's all very personal ...
To summarise: learn candlestick patterns, learn about 2B's and 123's, learn about basic chart patterns like triangles, flags and wedges then learn to read all of this into context of several charts. It's the last thing that will cause you more than one headache. I guess I just wrote the ultimate handbook for trading :D I guess it's Christmas
More...

Trader Vic, Methods of a Wall Street Master is a great read!

Btw, Alan is a great mentor! Great guy too!

Merry Christmas and Happy New Year to you!:)
 
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