What it takes to develop a profitable trading system?

[Aquarians]

Actually I just finished implementing the largely theoretical proof of principle (step #1 in my list) for the latest strategy ideas I have and the results are very promising. Next thing, #2: backtest on real marketdata and see if the promised opportunities are there, or darn market already knows what I just discovered. Will let you know, either glory or misery is possible at this moment

 

[lawrence-lugar]

theoretical proof of principle latest strategy
very promising
backtest real marketdata promised opportunities are there
Will let you know, either glory or misery is possible at this moment

I hope you make it Big Time.
So Much larger than life. I'm gonna watch it...grow. My eyes are getting bigger like my Bank. Account.

 

[Aquarians]

Ran another proof of principle test with improved hypothesis and some tweaks and results are so good that I'm almost purring like a cat. Even if backtests will be disappointing (although I seriously hope not), I've got enough material for a new PhD paper, at least I'm getting my coordinator off my back.

Although on a second thought, likely there still will be no paper but instead another incremental development based on the proprietary knowledge that I found so far. There's zero incentive to publish something that has even the remotest chance of being valuable for use by myself.

 

[Windlesham1]

I know a lot of failed traders, and I know I'm terrible but options for me are the only way to make profits. You need to work a bit harder but you do not have to be right most of the time- unlike forex or futures which are one dimensional and binary in nature. Most of those traders are quietly mounting losses and kidding themselves that a 'break even' trade is a win. You don't use stops with options and that's a huge plus. My UK site:
http://optionsinvesting.co.uk/ftse-whats-really-going/

 

[Handle123]

Here are the steps in my experience:

1) Initial know how (math, programming, financial markets).
2) Backtest system to research & develop trading strategies.
3) Live (auto) trading (even if #2 is not great, because present reality is often different from the past snapshots).
4) Analyze why you're not making money, tweak / improve and goto #1.

Question is how much time passes until you're consistently profitable?
Question number 2, how much money does that time value?
And question number 3, how and if $50k can significantly speed up the process?

Right now I'm entering another cycle starting from #1 (new knowledge), with high hopes this is the last time. If not, I'm thinking on hiring / collaborating with someone.

I'm thinking on posting an ad on UpWork but I see problems with this approach. Apart from the confidentiality of my stuff so far, main problem I see is that this is not the regular "fuck you, pay me" developer job you see there. You just can't "sudo make me a profitable trading system" someone, even if you pay them

It's pretty much a catch 22. The guy who's capable of developing a profitable trading system doesn't need a job on UpWork, he should be making millions with his own stuff. And the other guys I'm essentially having to teach them my system so they can leave and make their own millions with it when it's ready, all while paying them a living wage to do so.

When I was first learning to program, and I was God aweful the first three years, I went to local community college and I went to Computer Science Dean, I managed to talk the Dean into one class to program using Tradestation software on programming system I had been day trading for couple years, fricking difficult to work evenings/nights, grateful my two days off were Wednesday/Thursday to monitor students working it in lab, have enough time to trade and sleep. At end of semester, system was done but it was not working but 50% of how I traded it, but I provided huge pizza party, but did manage to have Dean give me couple of his lab tech students and they help a great deal, had each one doing separate areas so the other one didn't know what the other was doing. I kept both of them few years part time. My abilities to program went up much more rapidly as I was getting one on one help and they were doing anything I wanted to backtest. I found at the time, Tradestation had major flaws and never came up with 100% confidence. But as years have past, newer languages, and just about whatever you can dream up, programmers figure out how to do so.

I do see it best when there is a partnership, one guy who can trade and other program, but each should have ideas of how to continue if one gets ill, etc...Also, make it where whatever you doing-partner always be included, otherwise mistrusts form. You are so right, the guy who know how to trade is trading, but unless he also has all the hours to program, he is hugely limiting himself. Myself just too old at 61yo to manually day trade, can't remember all the rules nor all the systems. My best buddy, known him fifteen years, has full time plus job outside of programming, but he is very sharp at programming. So we formed Partnership, there are still areas of trading I like to explore, but can't trade as I once did, and why trade one market whereas programming can track 15,000 instruments, it a no brainer. His programming will get me over the next goal and my systems will allow him to attain his goals.

What I have found about trading systems, easier they are or K.I.S.S., seem to do the best, the more complex I made systems, less likelihood they be profitable. Then come the "whys", why is simple works and complicated don't work as well. After many years you learn to not make something so abstract that big money are not doing it. You want to design something that either gets you in seconds before or during HFTs/Hedge funds/ big brokerage, that's it. Whoa, but what works? That can be the hard part, and the most practical area of a system is definition of TREND and make yourself dozens of examples that clearly show start of trend. Don't want anything too fast cause whipsaws, and too slow, little left cause getting in too late. There simple is too much information on the web, but great place to start is charting, support and resistance, have well defined trend rules and have 3,000 sample size of trend for starters.

 

[ironchef]

I don't know what you do for a living, but for sure it has nothing to do with trading. No offense.

If you read qxr's other posts, you will realize he knows more about trading for a living than many of us here.

 

[ironchef]

Here’s a start -

Price is the dependent variable of the independent variable volume.

The market’s system of operation follows a sequence of events.

The sequence of events unfolds in a fractal branching pattern.

The basic grandularity of the market’s price action is a finite permutation of 10 unique price cases and 11 volume elements. These combine to create 56 posssible unique price and volume combinations.

The market is fractal with symmetry. The basic pattern is composed of two interlocking yet opposite price trends.

The beginning of the next trend is contained within the present trend. The present trend began in the prior trend.

Trends are composed of at least three alternating trend segments.

This can be coupled to the three moves of a trend.

A trend begins with coherent price direction with increasing volume - this is known as Dominance. The next segment is a non- Dominant retrace of price with decreasing volume. The third segment is a return to Dominance with increasing volume.

This pattern can be observed in a single bar or clusters of bars contained within each segment.

Trends can be interrupted or progress to completion.

The market operates in an orderly manner to provide opportunity to fulfill the needs of all market participants. We know this because all participation is voluntary.

There is no noise, anomalies nor flaws in the market’s system of operation.

Many would refute the above collection of statements as not true which points to the math most appropriate to understand market dynamics, participant sentiment and orderflow.

The math of the markets operate on Boolean algebra with a bias toward negative logic.

In other words, one can know a thing by knowing what it is not.

All the above are observable and definable concepts with the ability to be tested as a True or False condition.

Testing follows the form; If,... then,...

Solutions exists outside the domains of the problem and require a different perspective to be perceivable.

What separates the two is the engagement of purposeful learning through work

Two broad classification of traders would be the informed and the un-informed. Another is the profitable and un-profitable.

Two polar extremes are defined - the informed and profitable engage the un-informed and un-profitable whenever the former wants to trade. The former only trades when it’s profitable, they are aware of fundamental values that the latter is not. Their trading is informative. The latter being un-profitable engages in trades when prices are not informative, thereby being un-informed.

Fundamental values are not well-known, if they were there would be no profitable trades since everyone would know the fundamental fair value.

Fair value and market value are not the same.

.

I need to get a PhD in TA to understand what you are saying.

I think I will stay with staring at charts.

 

[rb7]

If you read qxr's other posts, you will realize he knows more about trading for a living than many of us here.

Maybe, but in some posts in this thread, he seems to say that trading for a living was impossible. But maybe I understood him incorrectly.

 

[ironchef]

PS. If you go to an interview and see a guy that has zero understanding of your IT skills but knows how to make money, that’s the job you want “we have a trading strategy implemented in Excel/VBA and want to make it a bit more robust”

This year I finally figured out how to program in Excel/VBA. You are telling me that is insufficient?

 

[sle]

If you read qxr's other posts, you will realize he knows more about trading for a living than many of us here.

He's a smart guy but pretty closed-minded. That usually is a bad combination. I don't know what to think of him, to be honest.