Hello,
( I may have accidentally submitted an incomplete version of my question):
I am an intermediate-beginner in the process of trying to develop a trend following system. While I have gotten pretty good at eliminating some very bad trading ideas (considered good by some trading gurus) and making some obvious improvements, my dilemma is the following:
1. How do you decide when to end the research/optimization process and actually start trading? It seems that there is always another way to "improve" or change the system.
2. If you have several systems to choose from with mild to low-moderate differences in profitability, how do you choose which system to utilize:
This question is harder than it sounds.
I will clarify:
Currently, I am researching two trend following trading based systems:
A faster one and a slower one.
On a given move, it appears that the faster trend system is the winner: It managed to catch the one minor breakout bar right before a big spike up!! The slower system would have still been short during the big spike up!! Loss versus profit. Also, for two moves before hand the slower system entered a trend late after 30 percent of the move was underway. Finally, you notice the slow trend system entered a move just as it was ending and reversed too late
However, scroll back and discover that:
A. On another trend move the slower system stayed in for the whole move, without being faked out, while the fast system made three false moves during a mid trend consolidation!
B. Paradoxically, the slow system actually got was able to get into a powerful uptrend "faster than the fast system. "How? iI caught a slowly developing trend and did not fall for a fakeout bar (before the big upward spike bar).
C. The Fast system had a set of three whipsaw trades in a row, that the slow trend system did not.
However, on many other trends that developed more slowly the difference between the two systems was negligible.
It appears for every negative price shock that occurs with a system, you can always find some variation that would have avoided the price shock ( as in sudden spike in the wrong direction) or even entered the spike in the right direction.
For every choppy period or trend in a system, you can find a variation that would have done better.
How does one avoid the trap of deciding to add a rule or remove a rule every time some variation would have done better at handing a specific situation?
If one system had two price shock moves and another had three within a given time period, how do you know if the results ( that favor the system with only two price shocks) are material or randomness.
While one should discard inferior systems, as one becomes better at making genuine improvements to systems and adding genuine improvements based on material factors does have a place, how does one know when to stop looking for a better system, accept one of the developed systems that is net profitable, and shut up and trade.
To conclusion, I don't want to of course utilize an inferior system, when several choices exist, but I don't want to fall into the trap of traders who always jump around from system to system, looking for "something better."
Any thoughts on handling this matter would be tremendously appreciated.
Thanks very much
( I may have accidentally submitted an incomplete version of my question):
I am an intermediate-beginner in the process of trying to develop a trend following system. While I have gotten pretty good at eliminating some very bad trading ideas (considered good by some trading gurus) and making some obvious improvements, my dilemma is the following:
1. How do you decide when to end the research/optimization process and actually start trading? It seems that there is always another way to "improve" or change the system.
2. If you have several systems to choose from with mild to low-moderate differences in profitability, how do you choose which system to utilize:
This question is harder than it sounds.
I will clarify:
Currently, I am researching two trend following trading based systems:
A faster one and a slower one.
On a given move, it appears that the faster trend system is the winner: It managed to catch the one minor breakout bar right before a big spike up!! The slower system would have still been short during the big spike up!! Loss versus profit. Also, for two moves before hand the slower system entered a trend late after 30 percent of the move was underway. Finally, you notice the slow trend system entered a move just as it was ending and reversed too late
However, scroll back and discover that:
A. On another trend move the slower system stayed in for the whole move, without being faked out, while the fast system made three false moves during a mid trend consolidation!
B. Paradoxically, the slow system actually got was able to get into a powerful uptrend "faster than the fast system. "How? iI caught a slowly developing trend and did not fall for a fakeout bar (before the big upward spike bar).
C. The Fast system had a set of three whipsaw trades in a row, that the slow trend system did not.
However, on many other trends that developed more slowly the difference between the two systems was negligible.
It appears for every negative price shock that occurs with a system, you can always find some variation that would have avoided the price shock ( as in sudden spike in the wrong direction) or even entered the spike in the right direction.
For every choppy period or trend in a system, you can find a variation that would have done better.
How does one avoid the trap of deciding to add a rule or remove a rule every time some variation would have done better at handing a specific situation?
If one system had two price shock moves and another had three within a given time period, how do you know if the results ( that favor the system with only two price shocks) are material or randomness.
While one should discard inferior systems, as one becomes better at making genuine improvements to systems and adding genuine improvements based on material factors does have a place, how does one know when to stop looking for a better system, accept one of the developed systems that is net profitable, and shut up and trade.
To conclusion, I don't want to of course utilize an inferior system, when several choices exist, but I don't want to fall into the trap of traders who always jump around from system to system, looking for "something better."
Any thoughts on handling this matter would be tremendously appreciated.
Thanks very much
Funny but true......................................................