Too good to be true??

U

Ucicelos

Hi ET Gurus,

My first post here. I have been working on a building a system / strategy for some time. Its essentially combining Elder's impulse system with Support/Resistance. The system gives me an Entry, Target and a Stop loss and Exits the trade if Target or stop loss hits or if the entry criterion is voided. In a backtest for over 2 years I am getting 70%+ profitable trades with Avg Win/ Avg Loss of 2.5:1. Most of the trades last for few days and some for about a month.

Before I dive in with this system, I wanted to check with ET gurus here if these numbers are are too good to be true and I may have made error in the back test. Any advice would be appreciated.

Thanks,
Ucicelos
 
Quick research on Elders, very basic trend following so that meets approval, in a trending market ofcourse.

If you just using the S/R to find places to enter with Elders then fine, but ET's right, S/R being tradeable on its own huge myth.

So in the right market conditions, yes perfectly possible!
 
Ucicelos said:
Hi ET Gurus,

My first post here. I have been working on a building a system / strategy for some time. Its essentially combining Elder's impulse system with Support/Resistance. The system gives me an Entry, Target and a Stop loss and Exits the trade if Target or stop loss hits or if the entry criterion is voided. In a backtest for over 2 years I am getting 70%+ profitable trades with Avg Win/ Avg Loss of 2.5:1. Most of the trades last for few days and some for about a month.

Before I dive in with this system, I wanted to check with ET gurus here if these numbers are are too good to be true and I may have made error in the back test. Any advice would be appreciated.

Thanks,
Ucicelos
More...

You didn't use the word automated but instead used the word "system".

I've been telling this "story" to many traders here that behave as if they are in disbelief. The story goes like this. A lot of traders come here and talk about their "positive expectancy" in their backtest results or their great profitable results. Some of them then start journals here or even start a thread like you did about "advice".

Why do you need advice ?

Just trade the method via the smallest position size as possible and then see what happens. That's the problem, continuing this story, there's most likely a psychological element involved and its you. Once again, you didn't mention the word automated therefore you're still the primary key in executing your "system". Simply, if you don't have all the critical pieces to the puzzle put in place...you're incredible system will struggle or not work in real money trading conditions because its missing other key elements and one of those elements is psychological...its a big reason for most like you.

If not psychological...there's other key issues why profitable backtest systems fail in real money trading. Other pieces of the puzzle are risk management, trade experience, ability to adapt when market conditions change and several other key pieces of the puzzle.

Another way to look at it, there's more to successful trading than just a 70% win ratio.

I hope you test your system out on simulated trading prior to any real money trading for final adjustments. If your system is automated...please ignore what I said above.

Happy New Year and good luck.

P.S. There are no gurus...only people that call others a guru.
 
Last edited:
Turveyd said:
Quick research on Elders, very basic trend following so that meets approval, in a trending market ofcourse.

If you just using the S/R to find places to enter with Elders then fine, but ET's right, S/R being tradeable on its own huge myth.

So in the right market conditions, yes perfectly possible!
More...
Thanks ET and Turveyd,
Yes with trend I am using S/R for entry and ATR for my stop loss.
 
wrbtrader said:
You didn't use the word automated but instead used the word "system".

I've been telling this "story" to many traders here that behave as if they are in disbelief. The story goes like this. A lot of traders come here and talk about their "positive expectancy" in their backtest results or their great profitable results. Some of them then start journals here or even start a thread like you did about "advice".

Why do you need advice ?

Just trade the method via the smallest position size as possible and then see what happens. That's the problem, continuing this story, there's most likely a psychological element involved and its you. Once again, you didn't mention the word automated therefore you're still the primary key in executing your "system". Simply, if you don't have all the critical pieces to the puzzle put in place...you're incredible system will struggle or not work in real money trading conditions.

Another way to look at it, there's more to successful trading than just a 70% win ratio.

I hope you test your system out on simulated trading prior to any real money trading for final adjustments. If your system is automated...please ignore what I said above.

Happy New Year and good luck.

P.S. There are no gurus...only people that call others a guru.
More...

Thanks WRBTrader, Yes I didn't use automated as in I don't have a chops to build automatic execution, but I am planning to stick with the recommendation and automate as much as possible with Bracket Orders (Target / Stop Loss OCA)....though I'll have to manually input orders and adjust the stop loss based on the system.

You are right in that I faced some psychological challenges in the past, where I built a mechanical system and couldn't stomach the ups/downs, but that system was only recognizing the entry points / ATR based stop loss and no targets, so I ended riding up and down with the momentum. I am hoping that with Entry/Target/ Stop in place before the trade should help me to stick with the system. The reason that I asked for the advice is that I have never really traded successfully and wanted to be sure that the system expectancy is inline with what other successful traders see, so that i don't go down a wrong path.

Thanks and Happy new year to you too :)
Ucicelos
 
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