The skinny on tape reading and trading

[IronFist]

Quote from jprad:

The dates of the backtest are included in the attachment I posted. It was a one year test of one minute data with trades active from 6am to 6pm ET.

What you're missing is that this is a trend-following scalper. Many small losses and a few big winners.

Just so no one thinks this is the Holy Grail, here's the key statistics when using a full pip: Profit Factor, 1.12, $80.9K net, $199K commisions and, if you can handle it, a $30K drawdown, more power to ya...

Is that scaling?

Was the last part of the last year super trendy and the first part super choppy and that's why it lost money at first?

 

[pismo10]

Big DD, ouch.

 

[jprad]

Quote from IronFist:

Is that scaling?

Was the last part of the last year super trendy and the first part super choppy and that's why it lost money at first?

Argh!

 

[pismo10]

Get's whipped to death in the ES.

 

[athlonmank8]

werd

 

[ljmlmvlhk]

I thought that the following below was a good point made by cutten on another thread:

Quote from Cutten:

Wrong - competition kills most edges. Edges are often incredibly lucrative and usually very hard to find. Almost all of them degrade over time due to increased competition for slices of the same pie. It is pure insanity for any profitable trader to teach a true edge - fees would have to be astronomical (way above what any learner could afford) for them to compensate for the loss of profits.

I've been in markets where there is no competition, and then seen 1 competitor come in. Right away that can reduce my profits 30%. Once there's a dozen+ competitors, often there is then *no profit at all* with the old method.

That's the flaw with your analogy. That's why good traders hardly ever teach people their methods. The only thing you can teach without fear of loss is the instinctive/experience-based stuff - but ironically that is impossible to replicate, since the student lacks the experience or market feel to pull it off. Buffett goes round telling everyone his approach, that doesn't help them outperform or even match his performance - they lack the judgement, knowledge, and experience he has. Ditto if George Soros mentored you for 2 years.

Saying that, the examples posted in this tread can make money but I believe it has a limited application.
Chop does kill it.
However chop can also be worked around if you know how and in the correct environment.

 

[pismo10]

This is another simple glorious mechanical system that may or may not work on a certain instrument on a certain time frame. It may work for a while or not or die soon, who knows. I see nothing special. Anyone can write a system in a few hours that makes money backtesting. Consistency is the problem and actual results going forward.

 

[IronFist]

Quote from ljmlmvlhk:

However chop can also be worked around if you know how and in the correct environment.

Any tips?

I've been dealing with this issue for years

 

[ljmlmvlhk]

Quote from IronFist:

Any tips?

I've been dealing with this issue for years

I’d like to give you tips, honestly, but I’ll give Cutten again credit for the following line of his wisdom:

“….It is pure insanity for any profitable trader to teach a true edge. “[/B]

It can be done – working around chop - but think laterally and away from conventional wisdom.

It has taken me months to work it out, but in essence it is simple.
Ideas often come when I'm in bed, half asleep, undistracted.

Write down your ideas, and edit those ideas again and again and again until it falls into place.

 

[Mr_Black]

Quote from IronFist:

Any tips?

I've been dealing with this issue for years

Learn to know where is the Right Side of the Market and your issue will not be a issue anymore