Dump it Here

[qldfrog]

QF, I'm guessing if Skate ran a backtest from early Oct 2020 to now, then showed the monthly performance for Oct, Nov, Dec and Jan they would be much closer to the actual performance. The monthly backtest figures shown were from 1st month to end of each month individually, if I'm not mistaken.

Ok, if so yes so that's very different and just highlight the importance and luck attached to a starting date, even with a good system.
Not much to compare in that case

 

[Skate]

What's trading all about?
As traders, we buy a position in the hope that "sometime in the future" we will be able to offload the position to someone at a "higher price" than when we brought it. That's trading in a nutshell.

Traders make money in the markets by exploiting changes in the prices
Most traders put all their effort into buying, whereas successful traders put most of their effort into selling. While stock selection & timing of the entry is essential, selling is where we make our money.

Trading with the trend
Trends exist in all markets & can be traded profitably. Finding profitable repeatable patterns & then timing when to enter the trade is the primary concern of most technical traders. Technical traders spend an enormous amount of time on analysis, yet analysis is the easiest part of the trading process - whereas our primary objective as traders is to limit our losses. Also, it pays to stay with the trend, but get out when it clearly ends.

Trading is much more than analysis.
Trading is a very emotional experience & emotions can sometimes sabotage the best of plans, even when trading is travelling nicely it’s still difficult to follow the plan. Most losses are not the result of a poor plan, but of failure to follow it. In the long run, it will be more profitable to trade the market rather than try to predict it. We as humans are really good at one thing - selecting only the evidence that supports what we want to believe, ultimately leading us to react instead of responding.

Reacting versus Responding
Responding to a situation gives us time to think, reacting doesn't.

Skate.

 

[Newt]

Let's visualise weekly volatility
The HappyCat Strategy has had it's fair share of weekly volatility as shown in the Equity Curve below.

View attachment 119299

Skate.

Personally there has been amazing value watching the experienced traders on ASF share their decisions through thick and thin. Peter2 has been a rock over recent years staying calm in the very good times, but going about his "thing" tightening stops etc and continuing to post on bad days/weeks.

Likewise, find it both interesting and comforting seeing your post above today Skate. On a multiyear backtest this week was a 5% blip down. Totally agree its much more of an emotional rollercoaster over the few short days its happening though.

Makes ..... me...... think..........of............slow.................motion.........................boxing when things are s#$t

 

[silent1a]

Let's visualise actual results versus backtest results
The HappyCat Strategy actual monthly trading results versus the backtest results. The same HappyCat Strategy displaying the monthly volatility.

The strategy will probably better reflect your actual results if you instead tested the entire period it was trading instead of monthly tests so the suboptimal monthly sells (which also encourages more buys the next month due to zero positions) aren't skewing the result.

Which I guess Newt covered already.

QF, I'm guessing if Skate ran a backtest from early Oct 2020 to now, then showed the monthly performance for Oct, Nov, Dec and Jan they would be much closer to the actual performance. The monthly backtest figures shown were from 1st month to end of each month individually, if I'm not mistaken.

The profit table under charts will show monthly results but will require a little bit more work to figure out the actual dollar figure.

 

[silent1a]

I've been wondering how you exit out from an under-performing strategy?
Do you liquidate everything at the end of a certain week/month/year or do you wait for each Sell signal to come?

It could also be built into the strategy like the GTFO trigger if you didn't plan to take anymore buy signals.

 

[Skate]

On a multiyear backtest this week was a 5% blip down

Investing versus trading
Investing can sometimes be a little easier "mentally" to handle than trading & it has its place. Following well-designed strategies (to the letter) can have a similar effect. When it comes to trading, it's not a level playing field & it's more profitable to trade the market rather than try to predict it.

Pep Talk
My series of posts today were about emotions & how fear sometimes drives us in the wrong direction. The pep talk today was a way of saying "stay the course" & "roll with the punches". Systematic traders should keep trading the signals, those who do, make it.

When it comes to trading it's not a level playing field
There is no way any of us sitting at home with limited information, slow internet service, using off the shelf trading software can find better opportunities than the professional trader or the multinationals that spend millions of dollars on research having easy access to company management. These companies employ teams of traders who have the sharpest, fastest & sometimes the most "unethical minds" in the world - "that's who you are trading against".

Skate.

 

[Skate]

I've been wondering how you exit out from an under-performing strategy?
Do you liquidate everything at the end of a certain week/month/year or do you wait for each Sell signal to come?

It could also be built into the strategy like the GTFO trigger if you didn't plan to take anymore buy signals.

@silent1a that's a great question. To understand exits a little more search for keywords (Stale Exit, Exit, GTFO, etc) by Skate, as it will save me a lot of retyping.

How do I exit an under-performing strategy?
Each strategy should have an exit plan. Multiple exits cover a variety of scenarios & I tend to use many. Trailing stops are "Index Dependant" & are the base ingredient for any decent strategy. Using a volatility exit gives stronger positions time to develop. Meaning, strong positions are held for a longer period because they are not subjected to a time-dependent momentum exit. My StaleStop is an example of this. The GTFO filter is another. Exit strategies are designed to do their own job independent of others. Basically when the momentum stalls or decreases I want to be off the sucker.

Some of my exit strategies
(1) Stale Stop Default Position exit
(2) Stale Stop Period exit
(3) GTFO exit
(4) Stale ROC Negative exit
(5) Stale Stop Hit Timer exit
(6) Volatility exit
(7) Two-stage Trailing Stop

Follow your plan
Mechanical Trading can be a simple endeavour if you are disciplined to follow the rules & stick to your trading plan. When the appropriate signal shows up, place your order without fear or trepidation. With a fully tested strategy, there is no need to second guess the signals.

The emotional spectrum
Multiplying the emotions of all the traders & you get a sense of the complexity of the psychological forces at work in the markets. Panic, depression, euphoria (the entire emotional spectrum) all take on a new intensity when your hard-earned cash is on the line which is why trading is so scary to beginners. These emotions consequently can generate similar strong feelings in us causing a reaction - that is, to buy or sell without following your trading plan or strategy. Traders tend to react rather than respond, which is a real shame.

Skate.

 

[Skate]

Momentum is important
I've previously explained the working of the "HappyCat Strategy" but as a refresher, the strategy uses volatility & momentum to enter & exit positions. There is a multitude of indicators that can help identify the direction, strength, momentum & volatility but the HappyCat uses only two indicators (ROC & ATR) to keep the strategy simple.

The “HappyCat Strategy” analyses momentum & volatility
Typically, most strategies gauge momentum & volatility in "certain ways" but the “HappyCat Strategy” analyses momentum & volatility near the top & bottom of a price range helping to identify where to enter & exit a trade. The two indicators even focus on the volatility & momentum during price consolidation & retracements which could be new to some.

Skate.

 

[Skate]

All strategies struggle under certain condition
The HappyCat Strategy will struggle if the markets decide to trend lower after the position is taken (event by this weeks performance). Trend trading system, in general, perform much better when markets are "buoyant" rather than the way they traded this past week, that's a given.

Between when you buy & when you sell a position
This period in between is out of your hand. Let me repeat that, the period in-between when you buy & when you sell is totally out of your control & the trading gods will sometimes use you as a punching bag.

Common Reasons for Not Selling (as a system trader)
People have a whole host of reasons they use to justify not exiting a trade when their trading system has given them a clear signal to exit. Some of the more common reasons are - "they believe" it will go back up again, sometimes they simply fail to follow their strategy exit signal promptly.

Opportunities in trading come all the time
If your stock is weak enough to generate a sell signal, then don't look for excuses, just sell. The money is better off invested in another, stronger position - if the market conditions permit.

Skate.

 

[Skate]

What's trading all about?
As traders, we buy a position in the hope that "sometime in the future" we will be able to offload the position to someone at a "higher price" than when we brought it. That's trading in a nutshell.

Trading successfully is not easy
While trading appears easy, few maintain outstanding results over the long term, as it requires time, focus, discipline, patience, & the ability to follow a trading plan perfectly. If you have a natural tendency for "loss aversion" avoiding losses rather than obtaining gains can lead to poor & irrational trading decisions. Loss aversion causes you to sell positions too early or too later as "loss aversion" works both ways. There are some traders who refuse to sell "loss-making" positions in the hope of making their money back while others sell too early missing out on longer-term gains.

Humans are wired wrong to be successful traders
Emotions can sometimes be our worst enemy. Successful traders are methodical in their procedure to analyse, rationally deciding a course of action while understanding the "limitations of their knowledge". Good Traders will continuously challenge their best ideas & will remain completely unemotional in their decision-making process. To remain unemotional in their decision-making is almost impossible. In times of "extreme stress" (such as the past week of trading) adrenalin releases, our heart rate & blood pressure increases, fogging our decision-making process.

As Albert Einstein said
“Everything should be made as simple as possible, but no simpler.” But the problem with some traders is that they have a tendency to oversimplify highly complex matters - as Confucius once said “Real knowledge is to know the extent of one’s ignorance"

John Kenneth Galbraith also said
“One of the greatest pieces of economic wisdom is to know what you do not know”. It's dangerous to be overconfident believing you know the answers with limited knowledge. Confirmation bias causes mistakes for many of us. Indeed, relying on information which confirms the decisions that we have "already made" leads to being overconfident. All mental habits & bias, "self-defeats" the best of us.

Skate.

 

[ducati916]

Humans are wired wrong to be successful traders
Emotions can sometimes be our worst enemy. Successful traders are methodical in their procedure to analyse, rationally deciding a course of action while understanding the "limitations of their knowledge". Good Traders will continuously challenge their best ideas & will remain completely unemotional in their decision-making process. To remain unemotional in their decision-making is almost impossible. In times of "extreme stress" (such as the past week of trading) adrenalin releases, our heart rate & blood pressure increases, fogging our decision-making process.



Skate.

This one caught my eye. The reason that it caught my eye is because this is the generally accepted position. From Steenbarger:

"Any trade, however, is merely a probabilistic bet. Would I attach myself to a relationship if my wife was faithful 75% of the time? Of course not. I have to stay detached from my trades and their outcomes because I know that there will always be occasions when the odds fail to play out. I own my trades--I take ownership for them--but I cannot allow them to own me.

That is very different from staying emotionally attached to the market itself. That emotional attachment is similar to empathy: you're not just observing market activity, but *feeling* it. As a psychologist, I have to be fully attuned to the person I'm working with. I can't be distracted with thoughts about myself, how much money I'm making from my sessions, etc. In that emotionally attuned state, I can pick up on subtle shifts in tone of voice and shifts of topic that tell me what's going on with the other person.

Similarly, when we are emotionally open to markets and focused on them, we can identify subtle shifts of buying and selling that alert us to opportunities. That attachment to the market is vital to pattern recognition. When we lack that degree of emotional connection, we become tone-deaf to the market's communications. Later, we look back on poor trading decisions and wonder what we were thinking.

Emotionally detached from our trades and emotionally focused on the market--that is not an easy balance. The common element is that we remove our egos from trading. To the degree that you're wedded to an outcome, you can't be fully immersed in the process."

jog on
duc

 

[qldfrog]

This one caught my eye. The reason that it caught my eye is because this is the generally accepted position. From Steenbarger:



jog on
duc

It took me years to become detached to the market, yes pissed off by a 10k loss in a day but so different from 20y ago..with far lower at stake then.
I view that trading money very differently from the day to day coin.i will try to save 2$ here at woolies but do not hesitate to put 20k or buy 4 positions this morning as my system told me too.once you trust your system to be statistically right on the long term, it geels ok, could these 20k go in smoke sure
Difference between the coin in the pocket and the trading balance is probably helped by the devaluatio of money worth by qe universal income aka job keeper etc.this also greatly helped in turning to pre retirement..why bother

 

[Rsthree]

It took me years to become detached to the market, yes pissed off by a 10k loss in a day but so different from 20y ago..with far lower at stake then.
I view that trading money very differently from the day to day coin.i will try to save 2$ here at woolies but do not hesitate to put 20k or buy 4 positions this morning as my system told me too.once you trust your system to be statistically right on the long term, it geels ok, could these 20k go in smoke sure
Difference between the coin in the pocket and the trading balance is probably helped by the devaluatio of money worth by qe universal income aka job keeper etc.this also greatly helped in turning to pre retirement..why bother

I've just been practising my deep breathing every time I look the portfolio over the last week.

 

[qldfrog]

I've just been practising my deep breathing every time I look the portfolio over the last week.

Learn didgeridoo, double gains?

 

[peter2]

This is how system traders handle losing weeks.

 

[qldfrog]

This is how system traders handle losing weeks.

View attachment 119430

Just part of the drawdown stats we say but teeth are gritty with all this sand?

 

[Skate]

It appears I have issues with my Chrome Browser
Posting & responding to the "Dump it here" thread will be an issue until it's sorted. I have no other issues using the "Google Chrome Browser" other than being restricted from accessing the AussieStockForums website.

Skate.

 

[silent1a]

View attachment 119472
It appears I have issues with my Chrome Browser
Posting & responding to the "Dump it here" thread will be an issue until it's sorted. I have no other issues using the "Google Chrome Browser" other than being restricted from accessing the AussieStockForums website.

Skate.

I usually use Firefox but I have no issue with Chrome either.

Do you use a VPN?
Have you tried a different browser such as Firefox or MS Edge?

Could also check with Joe to see if your IP was blocked.

Could also be your cache is too large for ASF. You can clear this in Settings > Privacy and security

 

[DaveDaGr8]

403 - Forbidden is generally the server rejecting you.

1 - Launch an incognito chrome page and try from there. ctrl-shift-N
If that works you will have to clear all caches, history etc. in settings->Privacy and security.

2 - Reset the modem ... turn it off for a good minute of 2 to clear any caches.

 

[Skate]

@silent1a & @DaveDaGr8 thank you for your suggesting helpful hints. I've tried all that has been recommended without success. I'm now using Microsoft Edge without issue.

Skate.