when to stop trading per the system

SimpleMeLike

SimpleMeLike

Hello,

Just a general question as this is an area of weakness in my trading so far I struggle with alot

If you back test a system from 8:30am to 3:30pm (market open and close time) and the results are positive expectation (profitability).

1. Do you take all the trades going forward for that system trading live?

2. If personally decide to trade til 11am and stop or stop trading after 3 trades or some profit target, am I trading within the system profitability that I back tested?

3. For true accuracy, should I back test the system for the time span and daily profit or trades i wish to trade in the future live?

In other words, if you back test a system, should the system be live traded exactly how it was backtested for?

Thanks for all the questions. I really struggle with this logic.
 
Let me get you to answer these questions yourself: If you do something else live than you did in your backtest, are you really trading your backtested system?
 
Simples said:
Let me get you to answer these questions yourself: If you do something else live than you did in your backtest, are you really trading your backtested system?
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Thank you Simples for response.

To honest answer your question, NO.


If I want to know how to the system will perform based on me stop trading for X amount of reasons, then I need to go back and determine what are the performance metrics of the system if I stop trading after 3 trades, X amount of profit, X amount of losses, or stop trading at 11am?

Is my logical or understand correct?
 
SimpleMeLike said:
Hello,

Just a general question as this is an area of weakness in my trading so far I struggle with alot

If you back test a system from 8:30am to 3:30pm (market open and close time) and the results are positive expectation (profitability).

1. Do you take all the trades going forward for that system trading live?

2. If personally decide to trade til 11am and stop or stop trading after 3 trades or some profit target, am I trading within the system profitability that I back tested?

3. For true accuracy, should I back test the system for the time span and daily profit or trades i wish to trade in the future live?

In other words, if you back test a system, should the system be live traded exactly how it was backtested for?

Thanks for all the questions. I really struggle with this logic.
More...
There is no law that says you have to trade from market open to market close and take every signal. Your backtesting just simply says that, overall, the system is profitable taking every signal that occurs all day. You are trading an overall profitable system. Not a profitable every trade. Naturally, you may lower the expected rendering of the profitabilty by not taking all the trades but the chances of you hitting just all the bad trades every day when partial trading is probally low. If you just simply want to trade every signal every day then you will have to automate it so it can trade will you are doing errands..etc
 
pinabetal said:
There is no law that says you have to trade from market open to market close and take every signal. Your backtesting just simply says that, overall, the system is profitable taking every signal that occurs all day. You are trading an overall profitable system. Not a profitable every trade. Naturally, you may lower the expected rendering of the profitabilty by not taking all the trades but the chances of you hitting just all the bad trades every day when partial trading is probally low. If you just simply want to trade every signal every day then you will have to automate it so it can trade will you are doing errands..etc
More...

Thank you pinabetal for your response.

I understand your input and it makes sense. Or I can look analyze the data I have from 400 trade sample and look at the perfomance metrics for trading under different scenarios (market open to lunch, P/L=$X no more trading, after 3 trades, after so much loss, etc.)
 
wintergasp said:
The whole point of a backtested system is to trade it unconditionally.... if you're 99% systematic and 1% discretionary then you're discretionary...
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Thanks wintergasp,

1% discretionary meaning I choose to trade til this time even though system was backtest for a different range of time.

Thanks,
 
wintergasp said:
Yes, why don't you just backtest until time T and see the difference in P&L ?
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Thank you wintergasp,

My biggest problem is I can not trade all day because I have to leave for work by 10-11am. I can not go to full time trader yet cause not profitable trader yet.

Yes, this is good idea for me. So along with backtesting all the signals for the day,
is it wise to backtest for all difference P&L scenarios if ?:

1. Stop Trading at 11am only
2. Stop Trading when Profit target of $X reached
3. Stop Trading when Loss target of $X reached
4. Stop trading after X amount of trades

Does this makes sense what I am thinking? I am sure this sounds simple to some, but I just learning so i don't make many more mistakes going forward.

Thank you
 
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