They all seem nice. That's not the problem. The problem is their fighting those who would provide them with the guidance they need. You say that knowing which suggestions are good is problematic. True. You also say that one can't follow everyone. Also true. BUT. One needn't follow anybody. One can backtest without following anybody and without developing a bias (which is after all a large part of the reason for doing the backtest). But no one wants to do the backtesting. They'd prefer to be pulled back and forth, here and there, following this suggestion or that suggestion, too often provided by somebody who can't trade his way out of a paper bag. So they trade day after day, making the same mistakes, or making a whole new set, continuing to fail, being told and often believing that they need more "discipline" or that they need to "control their emotions", neither of which is relevant to the central issue: a failure to do the research and backtests to develop a consistently-profitable trading plan.
The CL/NQ experiment
- Thread starter Gabe2004
- Start date
They all seem nice. That's not the problem. The problem is their fighting those who would provide them with the guidance they need. You say that knowing which suggestions are good is problematic. True. You also say that one can't follow everyone. Also true. BUT. One needn't follow anybody. One can backtest without following anybody and without developing a bias (which is after all a large part of the reason for doing the backtest). But no one wants to do the backtesting. They'd prefer to be pulled back and forth, here and there, following this suggestion or that suggestion, too often provided by somebody who can't trade his way out of a paper bag. So they trade day after day, making the same mistakes, or making a whole new set, continuing to fail, being told and often believing that they need more "discipline" or that they need to "control their emotions", neither of which is relevant to the central issue: a failure to do the research and backtests to develop a consistently-profitable trading plan.
Just wondering why people keep fighting her. How many hundreds of posts before you do the necessary backtests and begin trading in an ordered and calculated way? If you don't know how to do a backtest nor to keep the necessary records, there are a number of resources available. But it's up to you to decide to take that step.
Step on a gas DB
Gold.
It is simply not possible to guess one's way into sustained profitability, and yet this is what I see day after day.
The backtesting process costs nothing but time. But the returns are far greater than any expenditure of time.
I've talked with many people via Skype and I may be confusing you with someone else, but I'm pretty sure I spoke to you one day while you were taking serious heat on a counter-trend IWM position. Because it was trending in a such a well-defined manner, I described my with-trend continuation setup, which is an A+ trade because a) you're trading in the direction of a strong trend, so "they" (the market participants in control and making money) are defending their thesis and they got your back, and b) I tested this setup at length and no matter how you slice it and dice it, it has positive expectancy even if you only manage to trade 80% of the appearances of this setup and you use an equal R:R.
How did I test this setup to determine if what looked like an edge really was an edge? I opened a spreadsheet and logged data surrounding every appearance of the setup. I discovered that there were multiple ways to enter and manage the trade once the setup appeared. I also made notes about the context of each appearance of the setup (range of 1-min pullback bars, proximity to key S/R levels, degree of the rising or falling 20EMA, where technically feasible stops would have to be placed, price action that voids the setup, and so on) and discovered that if certain contextual filters were implemented the edge became even sharper.
This was a tedious and boring undertaking that I spent many hours on. I've shared various iterations of this setup on ET (and a few folks who explored it have thanked me) and I've shared it with dozens of people via Skype.
Psychologically, it's difficult to put on these trades. It feels very counter-intuitive. That's where studying a book like The Disciplined Trader with the sort of attention a law student pays to preparing for the bar exam can help you make the leap from frustration to relaxed and profitable trading.
Possibly you weren't able to focus on what I was sharing with you because your counter-trend position had placed you in the state of mind that Mark Douglas describes in the video Rashid posted:
"What does the typical trader do? The exact opposite of the professional. Once they make up their mind itâs a winning trade, they donât pre-define their risk and they also donât have a plan to take profits because they think itâs gonna go on forever.
We donât want to get into trading with the possibility of being disappointed, with the possibility of being dissatisfied, or being even betrayed, because a lot of traders feel that way; they really feel betrayed, and the problem is that when that potential exists it has the effect of affecting the way that we see market information in detrimental ways.
All of us have these mental pain avoidance mechanisms that affect our perception of information. So, for an example, if Iâm in a losing trade and I got into this trade thinking I was going to be right (in other words, I did all my evaluation, I did all my analysis, I did my work, I built a case), as the marketâs moving against me, Iâm going to have the tendency to focus on information that tells me that Iâm right and ignore the information that tells me that the market is actually trending against me.
I can identify a trend, but I wonât be able to identify that trend if Iâm putting an inordinate amount of significance on the information thatâs telling me that Iâm rightâ¦[and] ignoring the information thatâs telling me Iâm wrong. The problem is, if Iâm susceptible to being disappointed or betrayed, meaning I get into a trade expecting it to do what I think itâs going to do, Iâm going to have this tendency to distort market information, that causes me to hang on to my losers, and in a winning trade whatâll happen is that instead of letting a winner runâ¦itâs the retracements we focus on instead of the fact that the marketâs still trending in our favor.
Most traders, because they evaluate, because they judge and because they analyze, and build a case for the pattern being right, they actually talk themselves out of believing that the risk even exists."
Or maybe I'm confusing you with someone else I spoke to that day.
As I wrote somewhere previously, I have tried to back test different approaches programmatically and failed. I am not a good enough programmer.
I tried Walk Forward techniques which I think are the closest to real time as one will get. (Traditional back testing will lead to curve fitting which is useless for a trade.)
Nothing helped so I started to rely on visual pattern recognition (I have a good visual memory) and I managed to find patterns by observation.
My performance in the past week got me to the point that I am re-evaluating my approach.
I think that what I did is a keen to the New Car Syndrome. (once you buy a new car, half the city is driving the same car).
The analogy to trading is that once I assimilated a pattern, I started to see it everywhere an I thought that I have an edge.
The problem is that I am finding out no that this edge works only in trending market and in chop, my account is being chopped so I am trying now to find a solution to this problem and I will see next week what the results of this re-evaluation will bring.
The following are my charts and trades from Friday.
Basically I did not have a single signal that I was waiting for, yet I traded (and came out ahead)
Gabe
Attachments
examples;
Trading plan
Journal
Platform
Chart(s) (assuming a TA/PA trader)
Indicators (if one is predispose that way)
Tools are what one uses
Method is what one follows
Trader is the one who uses the above to manage risk first / exploit P/A conditions for gain second - sans all the bullshit personal baggage
Gabe, I'm not questioning you... but here is a question (rhetorical)
If you know this.... and I mean really know this to your core...
Why not exit when a trade stops working.., and the loss still small / or better still B/E
RN
The fact you came out ahead simply reinforced the negative mindset that's holding you back.
You actually had a losing day.
You could've said "I traded every valid appearance of my setups according to the rules of my plan and had a net loss of N." and that would've been a winning day.
I've talked with many people via Skype and I may be confusing you with someone else, but I'm pretty sure I spoke to you one day while you were taking serious heat on a counter-trend IWM position. Because it was trending in a such a well-defined manner, I described my with-trend continuation setup, which is an A+ trade because a) you're trading in the direction of a strong trend, so "they" (the market participants in control and making money) are defending their thesis and they got your back, and b) I tested this setup at length and no matter how you slice it and dice it, it has positive expectancy even if you only manage to trade 80% of the appearances of this setup and you use an equal R:R.
How did I test this setup to determine if what looked like an edge really was an edge? I opened a spreadsheet and logged data surrounding every appearance of the setup. I discovered that there were multiple ways to enter and manage the trade once the setup appeared. I also made notes about the context of each appearance of the setup (range of 1-min pullback bars, proximity to key S/R levels, degree of the rising or falling 20EMA, where technically feasible stops would have to be placed, price action that voids the setup, and so on) and discovered that if certain contextual filters were implemented the edge became even sharper.
This was a tedious and boring undertaking that I spent many hours on. I've shared various iterations of this setup on ET (and a few folks who explored it have thanked me) and I've shared it with dozens of people via Skype.
Psychologically, it's difficult to put on these trades. It feels very counter-intuitive. That's where studying a book like The Disciplined Trader with the sort of attention a law student pays to preparing for the bar exam can help you make the leap from frustration to relaxed and profitable trading.
Possibly you weren't able to focus on what I was sharing with you because your counter-trend position had placed you in the state of mind that Mark Douglas describes in the video Rashid posted:
"What does the typical trader do? The exact opposite of the professional. Once they make up their mind itâs a winning trade, they donât pre-define their risk and they also donât have a plan to take profits because they think itâs gonna go on forever.
We donât want to get into trading with the possibility of being disappointed, with the possibility of being dissatisfied, or being even betrayed, because a lot of traders feel that way; they really feel betrayed, and the problem is that when that potential exists it has the effect of affecting the way that we see market information in detrimental ways.
All of us have these mental pain avoidance mechanisms that affect our perception of information. So, for an example, if Iâm in a losing trade and I got into this trade thinking I was going to be right (in other words, I did all my evaluation, I did all my analysis, I did my work, I built a case), as the marketâs moving against me, Iâm going to have the tendency to focus on information that tells me that Iâm right and ignore the information that tells me that the market is actually trending against me.
I can identify a trend, but I wonât be able to identify that trend if Iâm putting an inordinate amount of significance on the information thatâs telling me that Iâm rightâ¦[and] ignoring the information thatâs telling me Iâm wrong. The problem is, if Iâm susceptible to being disappointed or betrayed, meaning I get into a trade expecting it to do what I think itâs going to do, Iâm going to have this tendency to distort market information, that causes me to hang on to my losers, and in a winning trade whatâll happen is that instead of letting a winner runâ¦itâs the retracements we focus on instead of the fact that the marketâs still trending in our favor.
Most traders, because they evaluate, because they judge and because they analyze, and build a case for the pattern being right, they actually talk themselves out of believing that the risk even exists."
Or maybe I'm confusing you with someone else I spoke to that day.
And more gold.
I'd suggest, however, that those who consider Douglas to be boring start with chapters 15 & 16. Thirty pages. And if those don't resonate, there's no point in forcing oneself to read the rest of the book, much less Zone.
Most people don't know how to properly back-test.
That assumes that most people are masochists and I disagree.
That is typical
I agree that a viable trading plan is essential but this raises the chicken or the egg dilemma.
If you don't know that you have an edge (because you don't know how to back-test), you are not going to trust your system, executing poorly and thus you will fault the system and modify it continuously.
Maybe someone would post what they believe is the proper procedure to do back-testing.....
Gabe