Being in control…

[barney]

Actually Rowes

To ask this Question is showing you that you are not as yet ready to trade.

The first hurdle to over come is your mindset


imo drop the paper trading but keep your position sizes modest.(large enough to sting but not do any financial damage)
and see how you react to a few adverse situations.

Remember the battle is with yourself and not the market.

Cheers

Howdy Rowes (and Coyotte),

This is good advice Coyotte, ..... (Rowes) you need to know when you are psychologically "ready" to tackle the market .......... I've been on the worst of both sides of this ...........if you are not sure you are ready to handle the psych. pressure of a difficult situation, you should be questioning whether you should be entering the position at all ! .......... Some people imo are just not cut out for trading , and should simply consider "value investing" over the medium longer term ............ I am still trading (even after some extreme losses) , but I do this because I believe I am developing the mindset to cope with the pressure ........... but, if you are suffering "stress" while paper trading, I would suggest a longer term investing strategy may suit you better ...........Only you can sort this out, but don't risk too much capital while you assess your "situation" ....... All the best, Barney.

Great advice here from many so far

 

[cuttlefish]

You cant trade on HOPE or LUCK.

All trading is based on hope and luck. That a trading plan is based on historical empirical evidence to the otherwise doesn't change that fact - back testing and trading plans are simply an attempt at improving the odds in the hope and luck game.

Which is why rules about protecting capital are important - just in case the luck (no matter how carefully calculated) runs out.

 

[tech/a]

That a trading plan is based on historical empirical evidence to the otherwise doesn't change that fact - back testing and trading plans are simply an attempt at improving the odds in the hope and luck game.

The more effort and research I place into these areas the LUCKIER I GET.

 

[coyotte]

The reasoning i can not follow is that some Analysts will condemn Indicators because they are based on "past results", yet go ahead and build a trading plan (SYSTEM) based on "past results".

This is the mentality that "racing system" developers used to thrive on.
As Don Scott points out in his book Winning any method built "around/fitted" to past STATISTICS will eventually fail when the condition/conditions change --- by the time the developer has gathered and analysed the data then developed the plan/system the conditions are most likely all ready in their final stages.

Scott maintained that the KEY to development was to find the COMMON DENOMINATOR.



Cheers

 

[theasxgorilla]

As Don Scott points out in his book Winning any method built "around/fitted" to past STATISTICS will eventually fail when the condition/conditions change --- by the time the developer has gathered and analysed the data then developed the plan/system the conditions are most likely all ready in their final stages.

Scott maintained that the KEY to development was to find the COMMON DENOMINATOR.

This is why my current area of system development at the moment is geared more towards economics rather than analysing indexes or individual shares. There have been combinations of economic conditions which historically have been positive for the sharemarket (eg. high growth/low inflation). That is the common denominator that you speak of. As those factors change I am hoping that it can give a fore-warning answer to the question, "is this market the place to be right now?".

 

[tech/a]

Coyotte.

A few things.
Firstly lagging indicators (in my view) are fine for positioning a stock/index/commodity in a pre trade condition. For trade execution I use price itself combined with pre trade conditions being met.

Entry is the least important part of a trade the longer term the trading method is.
It becomes more important as the timeframe shortens. Very short term methods can and are based purely on NOW price action.Swingtrading/Support resistance methods,Elliot,Steidlmayer etc.

True all methods will run into conditions not found in the sample of testing,a situation that ALL traders will have to deal with at the time it occurs,wether trading a system or in a discretionary manner.

If you can get your head around the following it may help.

"Systems are based around a vast number of singular trade events the positive and negative results of individual trades have very little effect on the short term success of the system or method. So in themselves they are only a snap shot of an overall event---the event being the positive performance of the trading system or method.

During the course of trading the system the overall performance will move from over performance at times to underperformance at other times. However whilst the method which is a singular trading event in itself---overtime it will win or lose---just as any singular event within it--

Each trade within a method OR system has a criteria which governs Entry/Stop/Exit/Moneymanagement rules,their success or failure is governed by their performance relative to those rules.

So to is a System as a singular event.
It has a Blueprint and like an individual trade event if the systems or method falls outside the blueprint it can be seen as failure---and yes it can occur.
However that failure can still mean that the performance of the method was well over the performance of random selection or say an Index benchmark.

Its failure in a situation (which once found can be included in refining of the method) can be alerted well before ruin--purely because the parameters in the Blueprint are clearly known."

As an example.
Maximum Peak To Valley drawdown of a method maybe 20%,is a system or method found itself trading at a 23% P/V drawdown all system trades would be terminated with a realised loss from peak open equity of 23%.

Still profit and far from ruin.

Same for initial drawdown.
If you start a method with a maximum say 12% initial drwadown then find it at 14% your out! 14% loss of capital but not ruin.

I follow 4 systems all have performd within their trading Blueprint over the last 4 yrs and if and when they all fail due to outlier conditions not seen in testing all will still be very profitable.

"is this market the place to be right now?".

This question is answered when a system or method falls outside its blueprint.
Once breached then the answer is NO.---relative to the particular trading system method your trading.
Until an event can be found that has a negative effect outside those which were included in any test period it cannot be forseen and or included in the design. Once it has then it can be included.

 

[coyotte]

This is why my current area of system development at the moment is geared more towards economics rather than analysing indexes or individual shares. There have been combinations of economic conditions which historically have been positive for the sharemarket (eg. high growth/low inflation). That is the common denominator that you speak of. As those factors change I am hoping that it can give a fore-warning answer to the question, "is this market the place to be right now?".

I could be wrong but i don't think this is what Scott was referring to .
What i think you will find he was was referring to to is similar to below.


Thoroughbred Racing has common factors in each race :
Class -- Weight-- Distance

Stock Analyst (T/A) has common factors in each stock :
Price -- Volume -- Trend


What Scott done (Worldwide, Racing is now based on this) is to take Weight as the Factor which could be used to bring everything else to a level playing field --- all other factors where given a WEIGHT adjustment .

It was there for decades but it took Scott to see it and nut out how to apply it.

As with Stock Analyst now at the time there was dozens of ways to analyis , there where even Patterns , Trends , Cycles -- this made them all redundant.



Just another approach Tech/A -- some future Wizz Kid will eventually do a Don Scott .


Cheers

 

[tech/a]

some future Wizz Kid will eventually do a Don Scott .

There are offices full of them as we speak.

Working for banks,Fund managers,Financial planners etc.
University graduates with more degrees than a heat wave.

On the Domestic front
TOP DOWN ANALYSIS has been around for years.

Its is a type of ranking.

Find the strongest Index then trade those stock performing the strongest in that index.

I have a number of searches which can do this using metastock.
qualifying outperformance can be done in many ways.

As Yet Ive not found an edge with this approach as by the time you can identify the outperformance the opportunity to take advantage of it has past.
If the outperformance continues then you can take advantage of it.

What you need then is continuing out perfomance to benifit.