Dump it Here

[Linus van Pelt]

@Linus van Pelt, thank you for your assessment of the "Dump it here" thread, it was a great post.

I really appreciate your kind words
I'm the first to help others where I can, every post I make is done with that sole purpose of helping others. There is no smoke & mirrors with me, I'm frank & honest & at times a bit too open, but that's just me. With every post, I'm just repeating information I already know. I keep reading this forum to learn what I don't. There are a lot of smart people in our community & when they start to speak I'm smart enough to "prick me ears" & listen.

Years of study
I had 3 years of constant study before placing my first trade so I understand the frustration knowing the amount of time it takes to learn how to trade correctly let alone to make money at this game. It pays not to rush the learning process. The financial markets are cruel, unkind, dangerous & it's not a level playing field, one place where amateurs are generally fleeced brutally.

What does PhD stand for?
It's an acronym - Persistence, hard-work & Determination (PhD) I have never met a successful trader who didn't have these qualities & qualifications in spades.

Let's not complicate trading
Trading is easy, making money trading is the difficult part. Trading consistently & successfully is even harder, which is why the majority of people who try to make money from trading fail. When you realise nothing works perfectly, accepting "that sometimes it works & at other times it doesn't" you'll become more accepting of handling a few setbacks. I say just "go with the flow". If you have the ability to delay gratification, stifle impulsiveness & shake off the market’s inevitable setbacks, will make you a half-decent trader. For those looking for the perfect strategy, there isn’t one, so in the meantime, pick an idea, backtest it to death leaving nothing to chance.

I'm like a Dog with a bone
I'm a compulsive learner & have a passion to share knowledge. I'm compulsive about most things & I study & write every day. I've condensed 5 years of trading knowledge into this thread, I thought it would be helpful for others to read the "nitty-gritty" of trading in a lighthearted way explaining what it takes to be successful.

Let me give you an analogy to finish with
I don’t care how often you read a "Boeing 747 instruction manual" or even a "Helicopter instruction manual" I can guarantee you that in the end you will not be a good pilot. If you ever get off the ground there would be no guarantee the plane or helicopter would be safe under your control. Reading my thread is just the same, this thread is a stepping stone to advance learning.

Summary
After reading some of my posts, hopefully it's the catalyst to learn more than the basics.

Skate.

Thanks @Skate. I'd still love to know the details of your educational journey, but I understand if you don't want to share the details. I won't ask again.

I do recall you saying you read so many books only to learn that most of them were irrelevant (or words to that effect). Perhaps that's a journey I'll also need to follow?

If other "gurus" reading this want to share their favourite books, podcasts, websites, ASF posts, etc, I'll be sure to take notes and start reading.

 

[Warr87]

You don't see who is on the other side of the trade or who you are competing against when you put in an order. Crowding is a thing and whether we like it or not we would be competing against each other (without knowing it). I don't mind sharing snipets of code, but I'm personally reluctant to completely use someone elses or give completely my own. And why? Well as you mention we would be competing.There is also the reason that you need to know your own system so if you use someone else's how will you know when it has gone outsider the parameters its supposed to be working within? Kind of hard to detect a broken system on a good day, particularly one your not familiar with.

That being said, with some people I am happy to give them the complete code of systems I have designed (but not yet trading). Perhaps not to the entire internet, but to a few close people.

 

[Warr87]

Skate has shared a few systems in his thread.

Infact I am trading one of them and so is @Saqeeb . I modified it and made sure it was different to anything @Skate personally trades (to make sure I didn't lower his effectivenss of his system). I definitely wouldn't have progressed like I have without Skate's disclosures of full systems within the thread.

It is also surprising how many systems you can download from the web! A number of them out there, though the majority are made for either the US market or the indian market.

 

[Linus van Pelt]

Skate has shared a few systems in his thread.

Yes but IIRC they were not systems he actively trades. Or there was the one $20K portfolio he did trade with about 8 others. But I got the impression that that was just "play money" for Skate and not a system he would trade with any large portfolio. I believe that system was shared privately with those who specifically requested it.

But I will certainly go back and grab those systems that Skate posted (I will have bookmarked those posts), if nothing else to have a starting point to learn Amibroker. There may also be other systems on the Amibroker site that I can use as a starting point to learn Amibroker.

Regardless, whether Skate or anyone addresses my post as to why, in my brief time here on ASF I've deduced that one is unlikely to get a complete system handed to him/her. And perhaps that's as it should be

 

[willoneau]

The 20k portfolio was to show what is involved in trading a system. When real money is used it isn't play money, not to me anyway.

 

[Skate]

Thanks @Skate. I'd still love to know the details of your educational journey, but I understand if you don't want to share the details. I won't ask again.

@Linus van Pelt it has all been disclosed in this thread. I've explained my trading journey so far as well as explaining my work experiences, going from debt collector to a Judge in the NSW Financial Courts. I've been a state educator (Mechanical Engineering) & a trainer at (train the trainer level). I have stacks of qualifications spending around 18 years collecting them "just to hang them on my office wall"

Degrees & diplomas Yep they are pretty common & they look good on your office wall. What impresses me are the successful business owner they have all the same qualification that assured success. PhD - an acronym that builds a successful business.Skate.

But I got the impression that that was just "play money" for Skate and not a system he would trade with any large portfolio. I believe that system was shared privately with those who specifically requested it.

I value money
I trade a variety of strategies & they are usually on the larger side, (one of my strategies trade in excess of 7 figures). I've made a bold statement that I intend to double my money trading the "Action Strategy" in the next 12 months (FYI: I trade the "Action Strategy" inside & outside my SMSF) Those trading along (if they follow what I do) I'm sure they will have a stressfree way of trading, a no thinking way of trading. $20k is a lot of money & each of my bet sizes exceed this amount but that doesn't diminish the "strategy's worth" or those members investing along with it.

Strategies that have made me money
I've posted actual trading strategies, strategies I've traded in the past & they have all made money. I've shared my trading equity curve once or twice before & I'm prepared to share it again. I've explained in minute detail how & what I trade, how I move in & out of the markets - all fully disclosed.

Equity curve from July 2018
I've got nothing to hide & nothing to gain. My equity curve may not hold any interest but it demonstrates what I had to endure trading the last few years (have a look at the hefty fluctuations within the curve). I thought this year was going to be my first losing year (of the five years I've been trading) but the trading gods have smiled on me.



Another analogy - this time about Peter Brock (otherwise known as "Peter Perfect")
Peter Brock won the "Bathurst 1,000" nine times, imagine if he gave you his winning car, do you honestly believe you would be able to win Bathurst even once? His 'ability', 'skill' & his 'mental toughness' decided the win, it's not when he got into the car, not even when he exited the car but how he handled the car during the race. Trading one of my strategies would be along the same analogy, meaning giving you one of my strategies to trade wouldn't guarantee success.

Intensity of psychological forces
Personality has a lot to do with the trader’s ability to grasp & properly execute a trading strategy or trading plan. The complexity of the markets & the psychological forces at work takes on a new intensity when your hard-earned money is on the line. Trading is all about human behaviour & perceptions.

Traders are all different
That is one of the nice things about traders "we are all so different", trading different styles & markets so "it shouldn't be a surprise to know that we all approach trading so differently". As traders, we all have a different level of risk tolerance, patience, activity but we all experience the same emotional ups and downs associated with trading. What is comfortable for one trader will drive another to distraction & if you can appreciate that fact, arriving at a style that works for you will be easier to handle in the long run.

Stay tuned
Tomorrow I will post my "Bollinger Bands Strategy" a strategy that I traded with success back in 2016. I'm hoping someone will backtest it & give an honest assessment.

Skate.

 

[qldfrog]

Hi @qldfrog,

Thanks for all your contributions to this thread.

You triggered another question I had for Skate, but I guess I can ask it to the group in general.

Why the reluctance to share a trading system with the wider ASF? I'm used to open source software projects, where individuals and groups contribute their expertise for the greater good of the world (so to speak).

Now, I think I may know the reason, but correct me if I'm wrong. Besides "do your own bloody work", let's say Skate, or anyone, shared his active trading strategy(ies) with, I dunno, say 10 people privately. Or with the entire forum. If 10's, 100's, or 1000's of people were trading his exact system, they would be competing with him in the market. Depending on when their trades ended up in the market, they could drive up his buy price, or drive down his sell price.

Besides protecting the *exact* intellectual property, there would be some real, actual detriment to someone sharing his/her strategy with a large group.

It is really the size of the group amount invested which matters
If you,play with small shares, it does not take long to change the market, my own order may influence it:
@Skate to his credit is sharing a 20k trend portfolio
Not the code but the actions ..but it is restricted to 20k total size, 1k parcels
If hundreds were playing it,that would be a disaster
Imagine, maybe open to manipulations
You release a system and maybe act a bar earlier so benefit from it
What if the system fails..are you getting sued?

Lastly, when the going get tough ,if you just cut and paste code, will your mindset be: i trust this, i have lost 25pc but i stay in..?
@Skate shared some code and that was a great starting point to build from, but as soon as i got that code, i quickly dismantled and changed it..made it mine before investing my first dollars..
Does that make sense?

 

[ducati916]

Morning Mr Skate,

That equity curve is amazing, particularly the recovery out of the crash. It underlines this chart which appeared in the 'Market Bottoms'.



Trading Bear markets is an absolute skill that must be mastered.

Probably more important than any system (although that is a pretty close 2'nd) is the mental attitude to wade into uncertainty with a plan. You have to believe that if your plan is indicating too early, whatever, that you will have the psychological fortitude to pull the plug and reset for the next entry point indicated.

As far as methodology (#2 on list) it has to take account of Bear market realities first and foremost and second keep you in the bounce and third (and finally) keep you in the trend if and when it develops.

The absolute SAFEST place is at (or near) the bottom in a Bear market (or crash). The worst has already happened. Nothing but gravy ahead.

This is the exact opposite of what people perceive. They convince themselves (through media contributions) that the bottom is dangerous.

Your system, methodology, tea-leaves, witch-doctor, must be able to distinguish NOISE from SIGNAL.

jog on
duc

 

[ducati916]

Regardless, whether Skate or anyone addresses my post as to why, in my brief time here on ASF I've deduced that one is unlikely to get a complete system handed to him/her. And perhaps that's as it should be

Mr Pelt, (clearly another Peanuts fan).

The reason (and this will stretch your credulity) is that if Mr Skate did provide his system, people would still f*** it up and lose money.

Impossible you say.

It is unfortunately true. A system that you have not developed yourself through the necessary contribution of blood, will not be traded as it should be traded when s*** happens. And it always happens. Or, even more oddly, when the system is making money, they short-circuit it thinking that a top has been reached, whatever and pull the plug.

As Mr Skate has alluded to many times: psychology is paramount. Without it, I can guarantee you that no system will save you.

jog on
duc

 

[ducati916]

I'm a computer programmer, and my degree was in physics. I think my nature will be more suited to mechanical trading. I love coding; I've always thought I'd continue programming even in retirement, just for fun. Maybe contribute to some open source project. I just never thought it would be AFL

I think I will get more excited about perfecting a new strategy than P&E, P&L, etc. Once I learn what a strategy is!

But perhaps it's best to know a bit of both? Hopefully if I read enough books (or peter2 and ducati's posts) that will happen organically.

A mechanical system is simply an ironclad method for entering and exiting the market. The strategy will dictate the type of system that you build. That strategy (at least in the early days) needs to be aligned with your psychology, otherwise you will never reap the benefits.

Therefore first stopping point: (a) strategy. Then (b) can I realistically trade this way (psychological assessment)? Followed by (c) building/coding the system, backtesting it and (d) finally trading it.

jog on
duc

 

[frugal.rock]

Therefore first stopping point: (a) strategy. Then (b) can I realistically trade this way (psychological assessment)?

One might also consider a psychological assessment (PA) first, then strategy logic? Then a PA again. There's no doubt that I started in the wrong order... and need to remove the damaging emotions from the equation.
Personally, am disappointed that I wasn't in a position to be able to join the action strategy, however, Mr/Sir Skate is now drip feeding the stragglers like me with another opportunity to build from.
Thank you Skate.

I believe he will post his previously traded Bollinger bands system soon, and I gather that he may move onto the next step we should consider implementation of.

Can only hope that these "baby" step guides continue, as they are giving me some confidence in myself; of developing a system that can be adapted to my own psychology and removing the pitfalls our emotions can trap us in, if allowed.

F.Rock

 

[martyjames]

Just wanted to chip in, for any new traders reading this great post, one of the must read trading books in my opinion is 'trade your way to financial freedom' by Van Tharp. In my previous trading life (20+ yrs ago), this was the book that set me on the path to trading success and i still follow the guidelines since i have re-entered the markets recently.

cheers

 

[frugal.rock]

Trading in the Zone by Nick Radge is also a book commonly mentioned.
I believe that Skates free ebook would probably provide the same or similar outcome of the aforementioned book though.
F.Rock

 

[Skate]

That equity curve is amazing, particularly the recovery out of the crash. It underlines this chart which appeared in the 'Market Bottoms'.

@ducati916 When to be in the market & when to stay out of the markets is a personal trading decision, one trader sees a buying opportunity of a lifetime, another sees the meltdown of the global financial system as we know it. Making a profit from trading is all about chasing stock that has momentum & volatility, a topic you have discussed at "ad nauseam". I'm smart enough to realise without either there is no money to be made & when my money is on the line I try not to leave anything to chance.

Elvis has left the building
When all the scared money has left the building “some buyers step in” & that's what I've done. Buyers will gradually return to the markets only after they perceive it to be safe to do so missing the bounce, another topic you have discussed, trading the bounce another.

It’s not "Rocket Science", it’s "Behavioural Science", predictable human behaviour of emotions.
The objective of trading is making a profit that requires careful risk assessment, disciplined money management, emotional & behavioural discipline but most of all you need the ability to execute a trading strategy flawlessly without hesitation. Sometimes we are our own worst enemy because we have a tendency to look for confirmation after confirmation before we make a decision.

Don't forget every trader loses money
When that happens 'suck-it-up' & don't panic, don't lose your nerve & stop trading, a decision you may learn to regret. Successful trading is not guaranteed but 'there-is-no-alternative' that gets 'better-than-average' long term returns than parking your money in the Bank. Taking hits every now & again is all part of the game (just like boxing)

Skate.

 

[Skate]

The reason (and this will stretch your credulity) is that if Mr Skate did provide his system, people would still f*** it up and lose money.

@ducati916 my analogy about being given Peter Brock's winning car doesn't assure a win at Bathurst, but your analogy is easier to understand (& direct).

Let me give you a few simple reasons why I think traders "fu¢k it up"
The reasons aren't in any particular order, they are as they have popped into my mind.

Timing the market
Most traders declare that timing the markets can’t be done, how ridiculous, that’s my job description being a trader.

Selling
Most traders don’t know how to time the sell successfully. Successful trading is largely the art of selling. Buying stock is easy. It is determining when to cut losses or when to take profits is hard. Because it is so hard to determine, many just don’t do it or "do it in time". Traders need an edge to beat the markets & selling the losers whilst holding the winners can, in fact, be a simple edge

Being disciplined
Most traders don’t have any discipline. They’ll watch stocks get destroyed without doing anything about it (the more they lose the more likely they are likely to persist with it, go figure.

Being vigilant
Most traders will not back themselves so they use a ‘set & forget’ style of trading. Meaning, they forget about their money! What universe are they are living in?

Having a Trading Plan
Most traders don’t have one. They let their losses run & cut their profits early being the complete opposite of how I trade.

Being emotional
Most traders believe the things that make them "feel good" and "disregard the things that make them feel bad" (confirmation bias). They listen to everyone & invest on the thinnest of evidence. It’s not rational, that’s boarding on crazy. After reading a few posts some members do "crazy well".

Skate.

 

[Skate]

Another analogy - Trading & Boxing
Its been many years (many decades actually) since I jumped into the boxing ring but there are comparisons between boxing & trading I wish to make. When it comes to boxing you need to have confidence you have "done the work" to give yourself a fighting chance of success. Boxing is seen as a "brutal sport" but it's game of "strategy, timing & persistence", much like trading. Boxing is all about executing a plan whereas "trading is the brutal sport between the two".

Boxing & trading
No matter how good you are at "boxing or trading" you'll still take your hits, we all feel pain at some stage. Paper trading is similar to condition yourself in the gym, honing your power & skills, but once you step into the ring it feels totally different, especially when the bag hits back. (the opponent I mean) It's the same when you start live trading, the risk of losing your money is very real indeed & when you do, you'll experience emotions you never thought you had.

Words from my old Boxing coach
You couldn't make this stuff up. My old boxing coach is the "grandfather" of my "daughter-in-law". Change the word from "boxing" to "trading" & the analogy will become clear.
1. My coach expected me to time-my-punches (trading is all about timing), boxing is a game of skill (so is trading)
2. Don't get in the ring if you don't want to be hit (it's exactly the same when it comes to trading, taking hits along the way is part of the game)
3. Don't let him put you on the canvas & "ALWAYS" keep throwing punches (With trading don't allow yourself to be knocked out of the game, keep stepping up to the plate & keep on placing the trades)

In trading, you have one job
It's to "PROTECT YOU TRADING CAPITAL" if you don't protect your capital you'll be knocked out of the game.

Analogy to trading
When you take a few hits, making the next trade becomes much harder as you won't be thinking clearly. To stay in this game you need to keep taking the trades as they come along because no one is interested in "how you feel" or "what you might think" will happen next.

Summary
There is a major difference between boxing & trading, with boxing "even when you win" your body always feels like "it hasn't".

Skate.

 

[Skate]

Skate.

 

[Saqeeb]

@Skate, Thank you for the Saturday update of Action Strategy
I have a question and wonder if you have any rules to action when a security you hold is subject to a takeover offer. Obviously this question is pertaining to CDV as this was subject to a takeover offer on Friday.
Thanks

 

[Skate]

I believe he will post his previously traded Bollinger bands system soon, and I gather that he may move onto the next step we should consider implementation of.

In keeping with consistency
The (AFL) that I'm uploading all have the same $20k Portfolio template holding 20 positions the same portfolio values of the "Action Strategy"

Some like to "Backtest" a larger amount
All the signals for the "Bollinger Bands Strategy" are generated using the "Exploration Analysis". So others can select a higher value to backtest I have included a parameter function so the bet size (trading Funds) can be adjusted on the fly. Meaning, the "user-definable parameter" is accessible via Exploration parameters - changes are reflected immediately. (Default $1k bets).

How to change my bet size?
Follow my instruction below & change the "Trading Funds" amount, the strategy will make the adjustments to the Number of shares to buy, the price to offer in the pre-auction & a running tally of the dollars you are planning to invest.



Skate.

 

[Skate]

@Skate, Thank you for the Saturday update of Action Strategy I have a question and wonder if you have any rules to action when a security you hold is subject to a takeover offer. Obviously this question is pertaining to CDV as this was subject to a takeover offer on Friday.
Thanks

@Saqeeb, that's a great question. I do have a rule when a security is subject to a takeover offer. First off, we don't panic, we let the position digest the information & give other traders wriggle room to make their judgement call. If the announcement is detrimental to the share price we still give it the wriggle room. The position deserves to be digested by the markets before we make our decision, it's important to respond to announcements rather than reacting as "responding gives us time to think". (I have one takeover rule that applies before we buy a position & another rule that applies when the position is currently held in our portfolio)

General advice
You also need to understand how to deal with the stress of trading - stressful situations & how you "respond" rather than "reacting" will eventually decide your trading fate, concentrate on this & you're partway there to being a half-decent trader.

Skate.