When Trading Meets DividendWarrior

[wahkao3]

If you want to be a trend trader, I suggest you learn how to live with at least 70% losing trades because you are going to get that much losers.

FYI,, but my RRR is 4.07 times. Meaning for ever my Success Rate is only 38%y 10 trades I do, 6 going to be losers and only 4 are winners. But, my one profitable trade makes 4 times more than the amount I loss in a trade. This is how trend trading is done, not by not cutting losses.

i thought i am the only one with these stats!
my back testing results got similar stats

 

[alexchia01]

Crikey. If you don't mind me asking: if you're making triple digit returns in your punting book, why are you holding anything in your investment portfolio at all? (If the answer is "because the triple-digit returns come with triple-digit volatility", that's a fair answer.)

Because trading is still a job.

No matter how much I make, If one day I stop trading, my income will stop coming in.

To build an investment portfolio is to generate passive income.

So if one day I choose to I stop trading, the returns from my investment can still continue to substain my lifestyle.

It's also something I can pass to my children and they don't have to worry about money in the future.

 

[alexchia01]

He is the god of trading, make 500% liao. LOL!

http://forums.hardwarezone.com.sg/89827356-post191.html

I've no relation with them and I hope you don't promote them.

They are dealers, not traders.

 

[wahkao3]

Well, thx for ur advice, but I'm doing discretionary trading now, and I believe I have a profitable method, based on contrarian as well as trend following methods. I have been able to pick swing hourly swing highs and swing lows with consistency. As for averaging, the method itself is meant for mistimed positions, not adding to losers, u still have to be right on the trend, otherwise it's martingaling a loser which is wrong. Say its an up trend, I only average long into a higher swing low, but if the swing low breaks the previous low to create a lower low, I cut the original position immediately, and so far so good, I can trade whipsawing markets, I can trade range bound markets, I can trade trending markets with a stronger lot sizing by scaling up trades, and with options to synthesize a long straddle with option + spot I mentioned, I'm able to handle counter trend moves. I mean, isn't that how dealers trade?

And if u believe ur current position is mistimed, u can spread it out with another pair with momentum on its side, take profit on that, then average the other one, and come out break even or abit of loss on that and end the day up.

Dealers have always been counterparty, the fact that they have survived this long must mean they are doing something right no?


And I know ur success rate is acceptable, as that is to be expected from trend following methods on a longer term.

i suggest u backtest your method

 

[CookieMonsta88]

I'm confused... Are you a trader or a dealer?

Traders and Dealers are 2 different group of people.

Trader makes money by buying and selling stuffs.

Dealer makes money by getting a commission for every action a trader makes.

Trader's objective is to make as much money as possible with the least amount of trades possible.

Dealer's objective is to encourage the traders to make as many trades as possible, so he can has as much commission as possible.

There is a conflict of interest here.

Don't believe a dealer can teach you how to trade. It's like believing a car sales man can teach you how to pass your driving test.

If you want to learn trading, learn from a trader.

Er, the main method is price action trading, but dealers themselves are a huge orderflow, and middle man, so analyzing their position and stop hunts show me more hidden information about the sentiment of the pair of currency and what large specs and corps may be sending orders to them.

Well, I won't say its a pure dealing style or trading style, its just a mix, whatever is in my advantage now I make use of it, if dealers are tanking and pushing price I go with it, if large specs come in, I go with them.

So I'm trying to read the dealer's hand not learning to trade from them, I trying to tie their interest to mine, if their supporting price, I would see how much the rebound is, and see if what's a better course of action

what im trying to do is create my own style of trading, which is evolved from afew very successful traders' styles.

 

[CookieMonsta88]

i suggest u backtest your method

the only way is to forward test a method, backtesting only works for mechanical methods not discretionary methods, the feel is totally different when u are sitting there waiting for the markets to move 1 way or the other or just range there doing nothing.

 

[wahkao3]

the only way is to forward test a method, backtesting only works for mechanical methods not discretionary methods, the feel is totally different when u are sitting there waiting for the markets to move 1 way or the other or just range there doing nothing.

you program your discretionary methods as an algorithm and back test lah

 

[CookieMonsta88]

you program your discretionary methods as an algorithm and back test lah

if u can, i give u my trading method and u can keep the algo for ur own use also, but its not like my method isn't already in this forum, just that it keeps evolving as i understand more about the markets and how other professionals trade.

fyi, i have a background in computer science, and its far easier and more profitable to trade manually for discretionary style trading than to go code a program to back test then trade then debug the program till its workable. u need at least 2 years of full time coding, and thats 2 years of money and opportunity cost for something which may or may not work, because the computer does not understand the market as well as the trader himself does, all the computer really is, is the hands and legs, the trader is the brain.

big data "maybe" have potential in this area, but if u have the money to buy servers that big size, and data feed and maintenance and stuff, u are better off just manually trading from a laptop that cost 1k or so, and all ur money as capital, u'd get rich faster, unless ur head of technology of a bank/hedge fund and 1mil or so to throw around is nothing to u.

 

[focus1974]

if u can, i give u my trading method and u can keep the algo for ur own use also, but its not like my method isn't already in this forum, just that it keeps evolving as i understand more about the markets and how other professionals trade.

fyi, i have a background in computer science, and its far easier and more profitable to trade manually for discretionary style trading than to go code a program to back test then trade then debug the program till its workable. u need at least 2 years of full time coding, and thats 2 years of money and opportunity cost for something which may or may not work, because the computer does not understand the market as well as the trader himself does, all the computer really is, is the hands and legs, the trader is the brain.

EH.. you dont really have to code from scratch the whole trading program. There already exists program like metastock, metatrader, ninjatrader which has all the things you need to backtest your trading rules. You just need to learn very simple script syntax (if you are comp science..should be no problem) and codify your rules.

I Think wahkao meant using those programs to backtest.

 

[wahkao3]

EH.. you dont really have to code from scratch the whole trading program. There already exists program like metastock, metatrader, ninjatrader which has all the things you need to backtest your trading rules. You just need to learn very simple script syntax (if you are comp science..should be no problem) and codify your rules.

I Think wahkao meant using those programs to backtest.

yea, use this can back test
I personally use metastock+tradesim

 

[frenchbriefs]

Since I wrote my year-end piece two weeks ago that number's gone from five-and-three-quarter percent to nine-and-three-quarter percent. It's been a good couple of weeks (mostly thanks to the bounceback in SPY and VEA from their mid-December puke).

And this is like the second or third time you've asked how big my portfolio is. Stop asking.

whats wrong with asking what ur portfolio is?people share their million dollar portfolios all the time,its for retirement purposes,for reference and shyt.for critique.u know ur return is 5.6% but u cant tell us what ur portfolio is?

wtf u talk like im asking u ur secret shyt,are u the mafia or something?the boss of gambino?the italiano mafioso?am i asking which swiss bank account u keep ur million dollar drug moneys?

 

[private_invest_sg]

*frenchbriefs - Its privacy, though I can assure you that its not a small one.

 

[CookieMonsta88]

EH.. you dont really have to code from scratch the whole trading program. There already exists program like metastock, metatrader, ninjatrader which has all the things you need to backtest your trading rules. You just need to learn very simple script syntax (if you are comp science..should be no problem) and codify your rules.

I Think wahkao meant using those programs to backtest.

that will mean that the method is a mechanical method already, because u can only backtest mechanical methods accurately, but this method is not a mechanical method its a discretionary method, 2 same price action, i might take different actions if the feel is different, and also, i do take into account news and sentiment say gdp, unemployment or interest rate numbers and see if the volatility fits the expected move or not, say if we get a up stick which is only a little bit stronger than the other candle sticks before that, in a bearish d1 trend, while the news is producing bullish numbers, it tells me the market is still weak, and can be expected to break lower, and i fade the news move when it shows me a turning point. price action has to be seen relative to the other bars preceeding it with a general feel to it, its not something computers are good, because humans are just better at pattern recognition, even pinbars have their differences, some pinbars have small tails, and i just let it skip by, other pinbars with very long tails then i fade it if there is no news near it or if we are at very near some speculated stop levels, pinbars forming in slow markets are not good to take because it may very well be noise, while pinbars in violent markets are extremely informative, and good to trade, these are things which i won't say is impossible to code, but is just very difficult and cumbersome and needs alot of finetuning to express in code, i might as well trade manually, plus i love trading also so its a fun thing for me to do, as there is no incentive for me to code an algo as its taking the fun out of trading for me.

i have coded EA on metatrader 4 also, anything slower than price action is not suitable for intra-day trading, which is my scope for analysis, and my sole focus, however for indicators if u want to use them, should be on higher timeframes of at least daily backed by macro factors, or use the hourly charts, but with say 5*24 periodicity to peg it to the weekly.

also, there are somethings, which as a trader u can pick out, like background buying or selling, which are hard to code algos for. trading is just like playing dota 2, there is always the uncertainty there, so bots are easy to game and manipulate as well. if u want to see how stop hunting can be done, i can show u 1 example if i were a market maker how i will do it.

say we are in a slow ranging market before the opening hours of frankfurt, sgt 1.30pm, and the overall daily trend is bearish. however, since im a market maker and i am interested in getting more shorts open to fill large orders coming in for the day so i don't have to be net long which is dangerous for me to be against the trend. there are stops above the current range, so i want to hunt them and establish my position, first, i put limit longs below the market, then i hit the bid to attract in indicator guys to fill my longs, then i see them also putting more stoplosses up there, so i establish sell limits above, and then i sell massively into the stoplosses and stop orders above, and become net short, and simply wait for the large guys to come in, and i can just take profit from the large specs by quoting them a price which is better than my net short position price, and i can then ride a small short position into profits while being squared, all the time collecting scalp money or spreads. this is 1 way to do stop hunting from a flat position, and make money to the up side and down side.

this is a 1 off scenario, and there are many more variations of how market makers trade, and by understanding how the various participants are acting, its possible to deduce to a high degree of accuracy what the next move is, because they already showed their hand, if they want to do something funny it will be at their own detriment lest they invite other sharks to go after them, all u need to do is go with the price action.

with all that being said, i don't think scripts are sophisticated enough to model for these kind of stuff, essentially ur creating a very sophisticated AI capable of studying human crowd behavior and predicting to a high degree of accuracy what the next most probable course the market might take, it will have to be a standalone program coded in c for speed.

 

[wahkao3]

never test how u know your method work?
if u dunno, then its no different from gambling
what if this happens?

 

[private_invest_sg]

Wow, a market maker spotted!

 

[CookieMonsta88]

never test how u know your method work?
if u dunno, then its gambling
what if your equity curve looks like this?

its possible to still lose money on a backtested method, simply because the market environment back then maybe drastically different from the market environment now and if u curvefit ur method to the environment, its also gambling, because u didn't account for all possible market environment, just those u backtested on, u need a plan for all kinds of market environment, backtesting only has a smalllimited snapshot of the market environment.

if u want to see how well ur method hold up against market environment changes as to the 3 main types of environment, a slow rangy one, a strong trendy one, or a violent whipsawy one, the best way is to forward test it, either by using a demo account or by putting in very small amount of money which does not hurt u if u lose everything, because this is the cost of doing business, lose small amount to test out, its acceptable and desirable. the key is to already plan ahead how much is acceptable which is money management.

 

[CookieMonsta88]

Wow, a market maker spotted!

im not a market maker, i just study alot focusing on market microstructure and market making and had to dig alot of info and figure out how market makers trade, thats how i derive my edge for trading, if i were a market maker, i won't be telling u my bread and butter.

 

[wahkao3]

its possible to still lose money on a backtested method, simply because the market environment back then maybe drastically different from the market environment now and if u curvefit ur method to the environment, its also gambling, because u didn't account for all possible market environment, just those u backtested on, u need a plan for all kinds of market environment, backtesting only has a smalllimited snapshot of the market environment.

yep, u are right. The solution is to back test on as much historical data as possible. add in filters to stay out of those market environment that are not suitable for the method.

its also gambling

when you gamble with a statistical edge in your favor, its no longer gambling

 

[focus1974]

I think backtesting is good... those are in-sample data which can comprise of a 10yr fo up/down/sideway.
then you do a walk forward test... to see how the result differs when system is traded from the start of different periods....
and a monte carlo sim (like wahkao mentioned using tradesim)...
then you can run an out-of-sample test which has not been containminated by your optimization(if any) on the strategy during in-sample testing.

then of coz.. you put it to live testing... with a smaller account.

 

[CookieMonsta88]

I think backtesting is good... those are in-sample data which can comprise of a 10yr fo up/down/sideway.
then you do a walk forward test... to see how the result differs when system is traded from the start of different periods....
and a monte carlo sim (like wahkao mentioned using tradesim)...
then you can run an out-of-sample test which has not been containminated by your optimization(if any) on the strategy during in-sample testing.

then of coz.. you put it to live testing... with a smaller account.

well, if the simulation is done using chaos mathematics to replicate the fractal nature of the markets, it would provide a solid foundation for backtesting with some tweaking to test out specific extreme scenarios.