Yes....you want volatility for good intraday trade entries and who cares if you have long candles that go up and down....this is what you want. I do not want 3 and 4 tick (for the ES) candles on a 5 minute chart....that is just flat and dead IMO. Now I am not talking here about the VIX value either....that would be more for long term trading use. I just find that the DMI is very simple to use and it gives good information for system building....and it has an ADX line which can give a value for the current intraday volatility (I never use less then a 5 minute chart for system trades....the ADX value is better at 5 minutes and above to keep you out of the chop). Keep things simple and get in front of high or uptrending volatility values for trades that will average out bigger per trades moves.
The Flaw in Trading System Reasoning...?
- Thread starter Remiraz
- Start date
I've read the better a trader understands the root fundamentals that underlie a profitable edge - be it psychological, market, geopolitical, environmental or commercial - the less back or forward testing needs to be done in an effort to monitor it.
Any thoughts on that?
Of course, its impossible to completely know every direct and indirect factor that contributes to a profitable edge. But the general idea of having a profound understanding of what underlying factors make a system 'work', could ultimately prove priceless when anticipating future profitability.
And if some of those underlying factors have a timeless quality about them, even better?
Any thoughts on that?
Of course, its impossible to completely know every direct and indirect factor that contributes to a profitable edge. But the general idea of having a profound understanding of what underlying factors make a system 'work', could ultimately prove priceless when anticipating future profitability.
And if some of those underlying factors have a timeless quality about them, even better?
Keep on thinking. I'll keep concentrating on making money.
PS: don't forget to stay in the market to help providing some liquidity while you're thinking.
I think that the better a trader understands the root fundamentals in his own head, the better he can devise systems. What I have found to work best is simultaneously to watch pure price and volume on one tick, one second, and one minute time frames, formulating hypotheses on future price movement on the fly, imagining both that you were and were not in a trade both short and long. A difficult exercise, you say? It is a meditation. Try it for a day, all day, for 23400 seconds and see what happens to your head.
I wouldn't say that it comes down to some sliding inverse scale.
One trader will say trade X has never worked before, hence it will not work in the future.
Another trader will say trade X has never worked before, and hence on this occasion trade X will have even greater profit potential.
Quote from nononsense:
Keep on thinking. I'll keep concentrating on making money.
PS: don't forget to stay in the market to help providing some liquidity while you're thinking.
You the man. Why don't you explain the rationale for disagreeing instead of dazzling us with your success.
Ok. But doesn't there have to be some 'rhyme or reason' as to why an edge makes money in the first place?
Thats all im saying. In some instances, I agree with you. Introducing outliers and new circumstances to a proven system may only lead to - at best - purely speculative guesses on novel trade outcome.
But what about the core strategy. Doesn't it bode better for the future system profitability when the trader is aware of the root logic supporting that profitability; as opposed to blindly following a random mess of indicators and parameters that magically turned a profit over x days. Aka pure curve fitting using no logic.
Thanks for recommending that. Ill give it a shot.
In a round about way, this is sort of how i arrived at my own strategy. Staring at purely price action on different time frames to generate some tradeable ideas of market behavoir.
I havent imagined taking the other side of the trades tho. Perhaps it would foster a more contrarian perspective as my strategy is largely breakout/trend following.
An example: why is this price generating less volume NOW than it did THEN? I'm not talking rocket science here, just simple implied supply and demand communications between limit order and market order traders.