Ok; show me a system you backtested that didn't work.
Actually I find that the best way to test any system I come up with. Try to find proof that it doesn't work. If I can't prove it doesn't work then I forward test it.
since we know that all trading courses are bullshit, what would you actually look for in one?
- Thread starter 1a2b3cppp
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Actually I find that the best way to test any system I come up with. Try to find proof that it doesn't work. If I can't prove it doesn't work then I forward test it.
Personally I don't put much faith in simplistic "indicators" or bs systems.
As a former statistician (Ford) I'm a hardcore numbers guy. Trading is Very much a multivariate puzzle with many moving parts. Looking for squiggly line signals in isolation = epic fail.
Daily, it's critical to factor in:
Now I drill down to find strongest individual gap and breakout charts. Trade markets first, stock etc entry setups second.
Blindly taking trades on isolated technical signals is bad. I teach traders to factor in market signals first, like HFT/algos do.
You can't use simplistic crossover etc setups in isolation. Which is critically important, and why most systems and educators are bs.
I set entries further away in moderate-strength markets and trade less, vs strong volatile markets. That is authentic trading.
As a former statistician (Ford) I'm a hardcore numbers guy. Trading is Very much a multivariate puzzle with many moving parts. Looking for squiggly line signals in isolation = epic fail.
Daily, it's critical to factor in:
- What's the spooz/S&P futures gap telling you re premkt bias?
- Market recent price action: strength of current trend etc
- # of strong premkt gaps
Now I drill down to find strongest individual gap and breakout charts. Trade markets first, stock etc entry setups second.
Blindly taking trades on isolated technical signals is bad. I teach traders to factor in market signals first, like HFT/algos do.
You can't use simplistic crossover etc setups in isolation. Which is critically important, and why most systems and educators are bs.
I set entries further away in moderate-strength markets and trade less, vs strong volatile markets. That is authentic trading.
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My point is indicators are tools. It depends on how you use them. To come out and say they don't work is like saying a hammer doesn't work. I'd like to see how you use it to see for myself that it doesn't work.
Tweak the above system by either going long or short only depending on the trend and see what your results are.
Le sigh. MACD shows you what price did. Just because when MACD does a defined pattern price rallies, doesn't mean price is going to rally when MACD does that pattern. This is why MACD and every other price based indicator doesn't work. Ever. It literally shows you nothing useful at all. Because, at the root of it, MACD is basically saying "because price went up a certain amount, it's going to keep moving in that direction" which we all know is false.
This applies to all other indicators. Overbought Oversold is the same, they just show you what price did now relative to what it was doing. That doesn't mean anything. These indicators work just as well (read: worthlessly) for trends. Half the time they get to the top and price reverses. Half the time it keeps going.
Unless you fundamentally believe that because price did y, now it's going to do b, indicators are worthless. And if you believe that, you don't need indicators. 100% of indicators can be reduced to give exactly the same signals. MACD, Stoch, CCI, etc. They are all the same thing expressed differently. Price now vs. price then.
The onus of proof is on the person claiming indicators work.
Edit - I mean price based indicators and stuff, not things like volume and jigsaw tradr, obviously @JigsawTrading
edit 2 - the closest I've ever seen to a non-bullshit indicator based system was this https://www.elitetrader.com/et/threads/daytrading-2-1-for-small-traders-the-complete-method.282485/ posted by @IronFist a while ago. It's moving average, not really indicators. Claimed to be profitable during a test period. It's 100% mechanical unlike most of the bullshit out there and brings price action(?) concepts as well.
This applies to all other indicators. Overbought Oversold is the same, they just show you what price did now relative to what it was doing. That doesn't mean anything. These indicators work just as well (read: worthlessly) for trends. Half the time they get to the top and price reverses. Half the time it keeps going.
Unless you fundamentally believe that because price did y, now it's going to do b, indicators are worthless. And if you believe that, you don't need indicators. 100% of indicators can be reduced to give exactly the same signals. MACD, Stoch, CCI, etc. They are all the same thing expressed differently. Price now vs. price then.
The onus of proof is on the person claiming indicators work.
Edit - I mean price based indicators and stuff, not things like volume and jigsaw tradr, obviously @JigsawTrading
edit 2 - the closest I've ever seen to a non-bullshit indicator based system was this https://www.elitetrader.com/et/threads/daytrading-2-1-for-small-traders-the-complete-method.282485/ posted by @IronFist a while ago. It's moving average, not really indicators. Claimed to be profitable during a test period. It's 100% mechanical unlike most of the bullshit out there and brings price action(?) concepts as well.
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Precisely my point. Did Jim Simons spend most of his time making money from the markets using his algos or teaching his algos after he discovered his money-making algos?
Successful practitioners spend most of their time trading instead of teaching. If you make most of your money from trading instead of teaching, does it make sense to spend most of your time teaching instead of trading?
Think of 'Indicator tools' like maybe an ambulance.
An ambulance can save lives. Right?
But why place an ambulance at the bottom of a cliff?
Prevention is better than needing a doctor or ambulance.
Indicators give the impression of curing a sick trading system or methodolgy. The more you need to pop an 'indicator pill' the more prolonged the sickness.
However, sick patients are ok because doctors need to get paid.
I don't disagree with anything you said.
Indicators manipulate price and/or volume to make them more visually pleasing. Price has to move before the indicator moves. No one knows what tomorrow will bring.
You trade price based on what it has done in the past. No guarantee, only a probability that if price acted this way before then it might act this way again. You enter a position based on what price is doing and manage the trade.
Indicators reflect what price has done and you play the same probabilities.
I disagree with blanket statements that indicators don't work. More better would be indicators don't work for my style of trading.
A guru who is a retired teacher and simply enjoys teaching, but has achieved real success in trading since retirement and takes genuine pleasure in sharing knowledge and improving noobs' skill sets. There are too many wannabe prima donna maestros who are all about their ego, and too many hucksters just using teaching to make a buck cause they really aren't all that hot at trading or for some strange reason don't have the capital to trade. A good trader can always trade up from just $1k or so, given time. Anybody who can't do that or isn't smart enough to figure out a way to fund up, is no great shakes as a trader and I don't see why I would ever want to "learn" from him, especially if it costs me as much as some guys are charging. And yet, the old adage, which has a firm basis in fact behind it, that "those who can, do, and those who can't, teach".