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Trade Planning and Testing


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3 hours ago, Caseynotes said:

worked out the stats that predicts the success of that game plan over x number of plays, they play a numbers game

ūü§Ē

Reminds me of the 'probabilities' attached to Signal Centre trades, they say things like '70% certainty' and then the price goes in the totally opposite direction at least nine times out of ten.  :D

Edited by dmedin
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1 hour ago, dmedin said:

ūü§Ē

Reminds me of the 'probabilities' attached to Signal Centre trades, they say things like '70% certainty' and then the price goes in the totally opposite direction at least nine times out of ten.  :D

as explained earlier in the thread the cumulative risk reward ratio (auto calc'd on a spread sheet) plotted on the chart with the win rate is absolutely fool proof in revealing if a strategy is profitable of not. Also if you make any changes to the strategy the result will show up quickly in the stats so revealing whether the change was advantageous or not.

Without hard statistics people have a habit of misleading themselves as to how well they and their strategy are really doing.

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  • 3 weeks later...

This is what you look like when you jump into live trading without a tried and tested plan.

Are you really feeling that lucky?

atpandt1.thumb.png.0920538bf3c1f83c8a849dfa8e46ed1b.png

Perhaps better off by first looking at the start of this thread for a guide to defining your preferences, devising an appropriate plan and then the 3 key stages of testing that plan to give you the statistically backed edge you will need to survive and win.  

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Short video on the importance of recognised market levels and how to employ them in providing a rationale for a trade entry plus stops and targets.

The key to everything is to have risk defined in a process driven by a systematic approach before you even get in.

 

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2 minutes ago, dmedin said:

Maybe this is something that's best left to the professionals.  I just feel worthless and inadequate.

I think I might have just spotted your problem, it's an 11 minute video and you've just responded to it less than 7 minutes after I posted it. 

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1 minute ago, Caseynotes said:

I think I might have just spotted your problem, it's an 11 minute video and you've just responded to it less than 7 minutes after I posted it. 

I just needed to look at the title and the introduction, it's the same thing as what's being said in 'Trading in the zone' - 'you need a winning attitude' - well in that case I'm f*ked :D  And I have no idea how you build a statistically valid system without doing proper statistical analysis, and if so then I will need to spend 6 - 12 months re-learning that stuff.  But I will watch it later when I have no 'work' to do (by work I mean filling out a spreadsheet and replying to emails)

Edited by dmedin
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5 minutes ago, dmedin said:

I just needed to look at the title and the introduction, it's the same thing as what's being said in 'Trading in the zone' - 'you need a winning attitude' - well in that case I'm f*ked :D  And I have no idea how you build a statistically valid system without doing proper statistical analysis, and if so then I will need to spend 6 - 12 months re-learning that stuff.  But I will watch it later when I have no 'work' to do (by work I mean filling out a spreadsheet and replying to emails)

no it's about using recognisable market levels to define risk so you don't keep watching trades reverse into big losses, something you repeatedly complain about.

Again I'm still not sure why you don't just read the OP of the thread, doing the stats is easy.

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3 hours ago, Caseynotes said:

I think I might have just spotted your problem, it's an 11 minute video and you've just responded to it less than 7 minutes after I posted it. 

The guy cherry picks (as does everyone when they post charts) an example where price bounced off an upper trend channel line and fell drastically, this does not happen very often and more often is simply moves sideways for a protected period of time after bouncing off a trend line.  Hence you lose money trying to go long or trying to go short.

Edited by dmedin
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1 minute ago, dmedin said:

The guy cherry picks (as does everyone when they post charts) an example where price bounced off an upper trend channel line and fell drastically, this does not happen very often and more often is simply moves sideways for a protected period of time after bouncing off a trend line.  Hence you lose money trying to go long or trying to go short.

err, when giving an example people tend to¬†show one that demonstrates the points they¬†are making rather than an example that doesn't, I don't know why they do that, it's just a thing they do¬†ūüôĄ

as usual you missed the gist of it, that shows sheer determination on your part so well done there.

If price breaks or reverses at a significant level the level can then become a reference for a stop loss point. With the stop loss defined you can then consider entry and realistic target points, ideally looking for a risk reward of a min of 1:2 (amount stop loss v amount gained).

Many traders have a win rate of only around 50%, that's fine so long as you are using the method above of first defining an approp stop then checking the distance to an approp target (>1:2) then looking for an entry point.

A consistent win rate of just 50% and a running RR of 1:2 is all you need. That's it, that's the goal. That's what you are supposed to be working towards.

 

 

 

 

 

 

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  • 2 weeks later...

Excellent 15 min video testing a simple PSAR with moving average filters strategy. Also links to other strategy tests from the Youtube channel.

Reiterates the theme of this thread which is the importance of having statistical backup to your strategy which is what differentiates Trading from Gambling.

Uses the same methods as in this thread of taking the cumulative win/loss ratio to plot against the cumulative risk reward ratio to ascertain whether the strategy is valid or not.

 

Edited by Caseynotes
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I do like this guy's videos, there are only a few and they are all new (this year). This video looks at a simple intraday strategy using VWAP with an EMA filter.

All the videos are delivered in the computer generated modal voice that highlights the few but essential components that makes for successful trading, they are repeated over and over, you can't miss it, there is no confusion.

One of the vids looks at his process for trade selection but haven't found it again to post yet.

The link below is to the Youtube channel containing the vid collection.

https://www.youtube.com/channel/UCgY_eHY4NCTcRnU6CCZXWng

 

Edited by Caseynotes
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Another great video from Trading Rush;

'How to Grow a Small Account'.

Concentrates on the core issues, the make or break. A simple viable repeatable system tested on demo that uses win rate and risk/reward management  as the key features to determine the validity of your system before trying it out on a live account.

But don't be like Bill, Bill is retarded.

 

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Here is the download link for the Trading Rush excel spreadsheet (will open in Open Office).

Though all the platforms now have their own format for auto trade record keeping some like to keep their own. This one is very simple and easy to fill in though unlike the one linked at the start of the thread doesn't calc running risk/reward, this one only does win rate, profit and equity graph.

https://hihacker.net/download-forex-trading-excel-sheet-and-stock-trading-excel-sheet/

image.thumb.png.794a0b7f66405fd4614fd9ec4daae978.png

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  • 2 weeks later...
On 05/05/2020 at 20:18, Caseynotes said:

Here is the download link for the Trading Rush excel spreadsheet (will open in Open Office).

Though all the platforms now have their own format for auto trade record keeping some like to keep their own. This one is very simple and easy to fill in though unlike the one linked at the start of the thread doesn't calc running risk/reward, this one only does win rate, profit and equity graph.

https://hihacker.net/download-forex-trading-excel-sheet-and-stock-trading-excel-sheet/

image.thumb.png.794a0b7f66405fd4614fd9ec4daae978.png

 

 

My trading performance has improved pretty drastically :D Hope it's not just a passing phase of good luck ūüėģ

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So if you are testing with a backtester or a simulator it becomes more of a game than work and of course is so much faster than manual testing.

In the pic below is a $100 simulator (one off payment and life long program and data updates) that runs on the MT4 platform as an EX4 expert.

It will run most custom indicators and there is the choice of a few different data providers (not IG), this is using Dukascopy data which covers decades right up to the previous week. This is a Dax chart from 18/07/2018. There is data available for a large number of FX pairs, indices, gold and oil.

On this chart I have Renko overlaid with Heikin Ashi and a simple MA crossover indicator (lines not drawn, crosses shown by dots).

On the control panel is the usual trade buttons (note this data has 3 decimal point so the pips number is pushed along 2 places so 1 pip becomes 100). You can slow it down or speed up, stop, go back bar by bar. Put orders in and trailing stops etc and it will make up reports for your test runs. 

Not just for test runs of course, can be used for general trading practice and can be set to any time frame so you could do a months worth of trading on a daily chart in just an hour or 2.

All in all a very useful time saving tool, not essential but worth the money for the ability to test strategies quickly alone.

image.thumb.png.97ad05a45ad45ef72fef4d5b06364309.png

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Very good educational video on swing trading basics. Seems a little disjointed to begin with but ties up well into a complete package and shows how you should be planning each individual trade from start to finish before you even enter.

By Rayner Teo, those not used to his style might initially be put off but stick with it as he is a very good educator with over a hundred thousand views of this video which was published just over 3 weeks ago.

(30 min)

 

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  • 2 weeks later...

Good explanation of a simple intraday  trend following scalping strategy in this 15  min video which covers the 'must have' basics of trade entry and exits planned out before the trade entry. I haven't tested this exact strategy but it's very close to my own and looks very good.

 

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51 minutes ago, Caseynotes said:

Good explanation of a simple intraday  trend following scalping strategy in this 15  min video which covers the 'must have' basics of trade entry and exits planned out before the trade entry. I haven't tested this exact strategy but it's very close to my own and looks very good.

 

This is basically John Carters Propulsion trade set-up that he published in his book "Master the Trade" in the 2000's - Although the original method enters at the 8EMA with a 4% stop and 8% target for stocks and 1% stop and 2% target  for Index/forex

The money management is a little skewed in the video - It would make just as much sense getting out in full at T1, rather than selling 50% at T1 and the rest @ T2 as it's much easier to hit T1 than it is T2 for the same return

If it was me (and I DO trade this Propulsion set-up) I would trade in 2 units - sell 1 unit @ T1 and then trailing the remaining unit at a 2 or 3 trailing bar low as mentioned as it doesn't make sense selling at the 2 target levels he mentions as T2 is not always hit

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1 minute ago, THT said:

This is basically John Carters Propulsion trade set-up that he published in his book "Master the Trade" in the 2000's - Although the original method enters at the 8EMA with a 4% stop and 8% target for stocks and 1% stop and 2% target  for Index/forex

The money management is a little skewed in the video - It would make just as much sense getting out in full at T1, rather than selling 50% at T1 and the rest @ T2 as it's much easier to hit T1 than it is T2 for the same return

If it was me (and I DO trade this Propulsion set-up) I would trade in 2 units - sell 1 unit @ T1 and then trailing the remaining unit at a 2 or 3 trailing bar low as mentioned as it doesn't make sense selling at the 2 target levels he mentions as T2 is not always hit

Thanks for the reference, I don't think I've heard of John Carter before, will have to look him up.

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