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Trade Planning and Testing


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New short video from Tradeciety on why traders fail, not the usual look at stop mistakes, stick to plan etc but looks at the learning curve and what to expect though the x and y axis scale will vary for different people.

 

 

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To make your trading plan and trade strategy just answer these questions then move on to the testing section below. 1/ TRADING PLAN a) System What type of trader will I be? Swing, trend trade

A few comments on the importance of execution.

see the importance of stats, without the full data picture you would have noticed that the win rate was low and just moved on to something else, forever going round in circles.

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I've tested out a few different systems, with MAs, EMAs, oscillators, Bollinger Bands, Itchi Cloud, etc and on various time frames, and so far I have not found anything that provides a positive expectancy.

Edited by dmedin
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On 13/07/2020 at 11:59, Caseynotes said:

Warren Buffett's 'Circle of Competence' 90 second vid message on trade selection.

 

 

 

I hate to break this to you, but brown-nosing billionaires won't result in some of their sh!t rubbing off on your nose.

If anything, traders should follow his advice to put money in an S&P 500 ETF and leave playing the markets to the insider professionals like him.

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6 minutes ago, dmedin said:

 

 

I hate to break this to you, but brown-nosing billionaires won't result in some of their sh!t rubbing off on your nose.

If anything, traders should follow his advice to put money in an S&P 500 ETF and leave playing the markets to the insider professionals like him.

oh dear, you can't even see common sense when it's presented.

I put all my money in a S&P etf in Feb, lost it all 2 weeks later.  

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13 minutes ago, dmedin said:

I've tested out a few different systems, with MAs, EMAs, oscillators, Bollinger Bands, Itchi Cloud, etc and on various time frames, and so far I have not found anything that provides a positive expectancy.

what are you doing? I may have mentioned before that you are not a good listener, you should be looking for 2 or 3 indicators that when combined during certain setups converge to give a signal that testing proves has a positive expectancy for your preferred market and time frame. you never seem to get the gist of anything?

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13 minutes ago, Caseynotes said:

I put all my money in a S&P etf in Feb, lost it all 2 weeks later.  

You feed money in every month.  But even if you put it all in in Feb, you'd have most of it back at this stage :)

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8 minutes ago, Caseynotes said:

what are you doing? I may have mentioned before that you are not a good listener, you should be looking for 2 or 3 indicators that when combined during certain setups converge to give a signal that testing proves has a positive expectancy for your preferred market and time frame. you never seem to get the gist of anything?

I'm trying :)

 

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Just now, dmedin said:

You feed money in every month.  But even if you put it all in in Feb, you'd have most of it back at this stage :)

yeah sure everyone just gonna sit there pumping more and more money in as the drawdown grows and grows.

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New blog on Steve Burns' web site on trade journaling with a download zip for the same excel journal file (free) I use in the start of this thread but looks like it's been updated for Apache excel.

A few simple inputs allows the excel to auto calc a running Win% and cumulative Risk/Reward (based on entry, stop and exit price) for plotting on a Profitability chart to see if the strategy is profitable or not. When you make changes to a strategy it's surprising how quickly the data responds (for better or worse).

https://www.newtraderu.com/2020/07/30/how-to-create-a-trading-journal-and-find-your-edge-in-the-markets/

image.png.2d599284fb4cdfc92031bc36d39fd681.png

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He's got a website now because YT deleted some of his videos.  http://www.tradingrush.net

 

I'm doing 100 backtests of Nasdaq (U.S. Tech 100) on the hourly time frame using TradingView.com.  It's surprisingly how few good trades come along.  I started at end of December 2019 and I've had 25 trades and it's now April 2020.  So I will probably have to go back much, much further (beginning of 2019 or earlier) to actually get 100 trades.

Edited by dmedin
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Got some exciting news Tom :)

I did 100 trades using TradingView.com backtest, hourly timeframe, starting from 2 January 2019 till the present on U.S. Tech 100.

1:2 risk/reward ratio on all trades (long and short)

Win rate 56% percent.

Total profit £6977.50 on the basis of £1 per point

Now need to do the same for other indices and forex pairs! :)

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For those that are new to backtesting and optimizing

Be careful with the "black swan" (corona) outlier

I personally would not use that data, (only pre and after)

 

SPX500Daily.png

Edited by Kodiak
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6 hours ago, dmedin said:

Got some exciting news Tom :)

I did 100 trades using TradingView.com backtest, hourly timeframe, starting from 2 January 2019 till the present on U.S. Tech 100.

1:2 risk/reward ratio on all trades (long and short)

Win rate 56% percent.

Total profit £6977.50 on the basis of £1 per point

Now need to do the same for other indices and forex pairs! :)

well done, you should start forward testing on demo to see if you can replicate the results. Sticking to a plan is nearly as hard as devising one in the first place.

Keep note of the stats to make sure you are on track as per the backtest.

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12 hours ago, Kodiak said:

For those that are new to backtesting and optimizing

Be careful with the "black swan" (corona) outlier

I personally would not use that data, (only pre and after)

 

SPX500Daily.png

 
 

 

Yes, in my backtesting (hourly Wall Street) 2020 turns out to be especially profitable because of that volatility.  Still, 53 trades in 2019 returns a net 5741points with a 48% win rate

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Still profitable (Wall Street, hourly) but not so good of a win rate, will need to try it 100 times on 4 hour time frame ...

Maybe on 15 min time frame too - although that would be unrealistic as I don't have the ability to be able to trade manually every fifteen minutes :(

 

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Well Tom, I'm still backtesting and refining this strategy.  I don't like that the win rate is under 50%.  Rather leaves me at the mercy of fate with little margin for error.  Need to make some tweaks.  🤔

Oh, if only I was clever enough to write a profitable algorithm :)

 

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100 trades on US 30, between 11 January and 16 November 2018.

Hourly timeframe.

1:2 risk/reward

Only 44% win rate, but a gain of 5606.8 points.

Hmm.

Let us keep testing through the rest of 2018 and into 2019 and 2020 using this method, Tom Bombadil 🤓

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27 minutes ago, dmedin said:

100 trades on US 30, between 11 January and 16 November 2018.

Hourly timeframe.

1:2 risk/reward

Only 44% win rate, but a gain of 5606.8 points.

Hmm.

Let us keep testing through the rest of 2018 and into 2019 and 2020 using this method, Tom Bombadil 🤓

Great but need to progress the process rather than repeat it, if backtesting is good then forward test on a simulator or a demo account, if that works out ok the test on a live account with minimum position size. 

Each stage teaches new lessons.

1485164353_aaa1.png.f4cbf684d1529bb0664c76317754204d.png

 

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I did the same thing on Dax, Tom, and got a similar win rate (49%)

This is the running equity position, based on points :D It's wonderful!  I'm already trading this system on multiple markets

2020-08-11_13-58-23.jpg.ea80a32100f1624d80865bdfe6183140.jpg

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The Pine editor in Tradingview is great!  Just tested the simplest strategy on daily Ocado share price: buy when 10 SMA crosses 50 SMA and sell the inverse.  Clicked a button and it ran a backtest and gave me the results: 619.00 net profit from 62 trades, of which about 34% were profitable.  :P 

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    • Thanks for your reply, I find dukas copy is great for forex, but the Wall Street index is proprietary to IG so the equivalent Dukas index is not close enough for my needs sadly. I have a node JS system receiving the feed from IG and am using Python for the rest API, I really need the tick data though, I was hoping some kind soul had recorded it for a few years and wouldn't mind sharing  
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