Dump it Here

[Skate]

It's easy to start trading
I was listening to a Twitter podcast explaining how easy it is to start trading.

The podcast went on to say
(1) You may want to fly a plane tomorrow, but no one's going to let you do that. You're not going to be allowed to just get a plane & fly it, right? You're not allowed to do that. You have to go through extensive training.

(2) You might want to perform open heart surgery on someone tomorrow, but no one's going to let you do that because you have to go through many, many, many years of extensive training in order to be allowed to do that.

But you can trade the stock market on a whim
You can go & trade tomorrow all you want, & you could do all the technical analysis you want. But it doesn't mean that you're going to be good at it. Some say technical analysis doesn't work. No, maybe your technical analysis doesn't work. But maybe if you work at it for 5 or 10 years, maybe you'll suck at it less. Maybe you're not going to be great at it, but experience really helps. At the end of the day, some are "better at it" than others.

Skate.

 

[Skate]

What metrics drive a strategy & how do you learn which technical metrics to follow?
Well, that's the question we all ask ourselves as system traders at one stage or another. It's a human trait to see patterns when at times there are none. Manually assessing the markets take a great deal of time & skill. Using this method it's prone to misinterpretation at times. Not to mention it's extremely difficult & complicated trying to work out if there is a trend or a shift in market behaviour. Even slight shifts in sentiment, are hard to pick, even with hindsight.

The weight of the evidence
Using technical analysis with precise mathematical formulas, the strategy will pick even the slightest of moves.
Technical analysis is very much sentiment psychology driven. When trading trends it doesn't matter what you are trading. With technical analysis, you don't even need to know why there is a price movement rather understand why the signals are important & why they matter.

Skate.

 

[Skate]

Markets evolve but the one constant is us, human nature never changes
Our own makeup will decide what type of trader we will ultimately turn out to be. Our appetite for risk will be the driving force behind strategy development, or it should be. Those just starting out, trading systematically will go through a fast learning curve of disappointment if they believe their backtest results will be replicated trading live.

Being eager to trade is a killer in this game
The enthusiasm of new entrants never ceases to amaze me. I've yet to talk to someone new to trading that isn't eager to have a go. Education is normally dismissed as it's too time-consuming. We all tend to take shortcuts to speed up any new process we undertake to learn but trading is one process we shouldn't take shortcuts with. When your money is on the line trading will take on a new meaning. New traders concentrate more on how much money they will make not what they can lose.

Skate.

 

[Skate]

The bigger risk, the bigger the rewards
After a string of losses emotions will drive your trading. So, how do you go about protecting what you have? The simple answer is to control how much you are prepared to lose & stick to your guns.

It takes time to build experience & confidence
Until that happens trade lightly, the small losses will be the cost of your education.

Skate.

 

[Skate]

We all struggle
There is always constant doubt about whether the strategy we build will be up to the job. We all accept that we need to win more than what we lose to keep in the game. But how do you know the correct level of risk right that allows you to sleep at night?

Two goals in building a system
In building a trading system there are three goals you should have in your sights, (1) The ability to detect a trend as early as possible. (2) Your system must also be able to distinguish "false signals", so you can avoid taking the wrong position. (3) Get out when the going gets tough.

Skate.

 

[Skate]

Thanks for the response Skate.
If you don't have or don't want to share the Amibroker code for your "Final Version" of Nick's WTT Strategy (with Lipstick applied) then just say so. I'm a big boy, I can take it.

I'm going to call @MurariMikeTrader, Nick from now on
New members are joining our community every day & if their expectations are not met they will not hang around. When they don't get what they want they simply nick off. Nick was interested in my version of the 20-period breakout strategy (The Lipstick on a Pig Strategy) but there is a better version I wish to discuss.

"The Lipstick on a Pig Strategy" is nothing fancy
As @MurariMikeTrader was more interested in my final version of Nick's WTT Strategy I thought it would be the perfect strategy to display why it's important to be selective with signals. Concentrating on the WTT Strategy hopefully will encourage Nick back to the forum.

In the next post
I'll point out why being selective with signals can be an advantage in all trading conditions.

Skate.

 

[Skate]

Amibroker Backtest Report
The backtest period for the 3 separate versions of Skate's WTT Strategy is from the 1st of January 2022. They were all in profit with varying results.

Skate's 3 WTT Strategies
(#1) The 1st version is basically the WTT strategy in its purest form (Left Backtest Report)
(#2) The 2nd version has a bit of LipStick applied to the purest version with increased results (Middle Backtest)
(#3) The 3rd version is the LipStick strategy being more selective with signals (Right Backtest)

Version (#2) & version (#3)
The results of version (#3) have been improved by simply being more selective in the signals it takes. Being more selective results in lower transaction costs, increased winners, lower drawdowns & increased expectancy. Being selective of the signals makes a difference. The red boxing highlights the difference in the backtest results.



Skate.

 

[MovingAverage]

I'm going to call @MurariMikeTrader, Nick from now on
New members are joining our community every day & if their expectations are not met they will not hang around. When they don't get what they want they simply nick off. Nick was interested in my version of the 20-period breakout strategy (The Lipstick on a Pig Strategy) but there is a better version I wish to discuss.


It is such a shame this thread has dissolved into a disingenuous pissing contest....oh well I guess it is easier to elevate your own prowess by bringing into question the credibility of others.

 

[Skate]

Clouds
I find some people are like clouds. When they go away, it's a brighter day.

Happiness
There are some members who have the knack for making me happy, some when they arrive & some when they leave.

Skate.

 

[DrBourse]

Nobody cares what others think
At the end of the day, it will make little difference what you say because if the information is outside one's belief it will be rejected. Some members have open minds & display varying degrees of openness accepting some views while rejecting others & that's healthy. But, I've found there are a few members who have a closed mind to new information rejecting everything that's contrary to their own. One thing I do know is "if something resonates" it can make a big difference.

Quality posts
When members make quality posts it really does influence how others think to some extent. Expressing alternative views in detail is more valuable than just making one-line statements.

Skate.

I like your quote M8, Great Content.......
Resonates well to a lot of post......
It explains a lot about human nature.....

Going on a few cruises during NOV & DEC.....
Might be back after Xmas.

 

[Captain_Chaza]

The Great Test / Back Test
How do you handle / record the GAPS

EG: Today's Iron Ore Futures Down ~ 14%
Where were you and all the other Back testers Stopped out?
What price and at What a % Loss?




NB: These Time Frames stamps do not allow for Daylight Savings

 

[Skate]

@DrBourse there have been some great contributions made in this thread, yours included. When members make quality posts it really does add tremendous value. With new knowledge it makes us re-evaluate what we believe or think.

Lucky bugger
Enjoy your cruise, it's a very relaxing way to have a break.

Skate.

 

[Skate]

How do you handle / record the GAPS

Hey Captain, gaps to a systematic trader are like potholes to a car driver. No matter the quality of the roads you are certain to experience one or two of them over time. When you hit a pothole you tend to swear at the time "but that's about all", they are quickly forgotten.

A Gap-up
These are not an issue for system traders as coding eliminates them completely. I for one have a set buy limit & I don't chase a price. Meaning gap-ups are eliminated from my trading.

A Gap-down
With prudent money management, they still tend to hurt, but gap-downs that catch you by surprise rarely take you out of the game. Both price gaps "up or down" are simply a part of trading. As a system trader, you just follow your signals. Some gap-downs hurt more than others but just like hitting a pothole I swear & move on.

Skate.

 

[Captain_Chaza]

What I am Asking is

With large gaps Down Who guarantees your Stop Loss Order in real $'s is REALIZED
IE : If there is no Buyer for your Falling Knives in sight
Who takes the Loss?
How do Back Testers log $'s lost into their Logbooks or do they?

"Have you Covered the 3 Day Rule Strategy?"
How do you escape the Margin Calls?
Or
Are you left Dragging a Wet Sail in your logs ?
Or
Do you assume your Stop losses were filled by an Angel?

Sailing the FGM in the Last 2 Days ------- 5 Minutes at a Time


Also What about

Sailing the Great AMZN in NY -----5 Minutes at a Time

To just mention a couple

 

[Skate]

What I am Asking is

1. With large gaps Down Who guarantees your Stop Loss Order in real $'s is REALIZED
IE : If there is no Buyer for your Falling Knives in sight
Who takes the Loss?

@Captain_Chaza let me answer these questions one by one, as in my style of trading. I'm a systematic trend trader that has filters & parameters that have to be met before entering a trade. First off all stock has to have great liquidity, & trading volume over a weekly period as that's the periodicity I trade. Getting out of these positions must be just as easy as getting in.

How do Back Testers log $'s lost into their Logbooks or do they?

Amibroker backtesting
You may not have read my series of posts today where I explain what you are asking in these few questions. System trading has three main goals & they are built into every system. The three goals are (1) The ability of your system to detect a trend as early as possible. (2) The system must also be able to distinguish "false signals", so you can avoid taking the wrong position & (3) Get out when the going gets tough. To answer your question simply "it's all in the mathematics" & it's done after the fact on known data (data from the past). PositionSize & PositionScore in conjunction with your buy formula determines the trade that is taken.

"Have you Covered the 3 Day Rule Strategy?"
(a) How do you escape the Margin Calls?
Or
(b) Are you left Dragging a Wet Sail in your logs ?
Or
(c) Do you assume your Stop losses were filled by an Angel?

Your question - "Have you Covered the 3-Day Rule Strategy?"
I don't trade daily strategies, I have in the past but I prefer the slowness of trading longer time frames. There are advantages as well as disadvantages to trading longer periodicities. I trade weekly strategies these days on the ASX All ordinaries only. Getting into a trend is easy, getting out at the right time is in my opinion the hardest part of trading systematically. The exit makes the money "trading my way".

Now to answer question (a) - How do you escape the Margin Calls?
I don't trade on margin,

Your question (b) - Are you left Dragging a Wet Sail in your logs?
Losses are a part of trading & being the best loser you can possibly be, allows you to able to trade without emotions.

Your question (c) - Do you assume your Stop losses were filled by an Angel?
When you are trading highly liquid securities there is always someone looking for a bargain. Exiting is always easy. Stock with low volume or low liquidity, penny stock, I don't entertain these at all. Basically, I trade in a narrow range of the ASX All Ordinaries.

Historical drawdown of a system
The maximum historical drawdown is simply the percentage drop from a high in the equity curve to a subsequent low at any point throughout the whole backtest for every single bar. This metric is one of the most important metrics when developing a strategy.

Drawdowns are what cause your emotions to spiral
Gap-downs is percentage drop from the high point to the low & they can take on a new meaning after your backtesting is completed. I'm just saying, make sure you can handle this percentage when trading your system live as it takes on a new meaning when you do. Just don't be flippant with this backtest metric. If you do, you'll quickly find out that drawdowns will cause your emotions to spiral out of control.

Trading my way is simple
If you can press a button you can trade systematically. The coding does all the heavy lifting.

Let's show a chart of FMG
In the last two years, The Panda Strategy nibbled twice at (FMG) for two wins. I'm sure if there is perceived value in the future, the PANDA Strategy will be all over it.



Skate.

 

[Captain_Chaza]

Apologies I forgot the Greatest Loser of them All

Sailing the once Great META /FB ---- One Day at a time
Down 24% in ONE Day


Do any Stop losses work here and How are they written up in the Logbooks in any Back Testing by ANYONE?
I mean Every One of Them

Nothing personal here Officer Skate
I Love your work and
I Love a Good Read

But I Hate GAPS

 

[Skate]

Do any Stop losses work here.

@Captain_Chaza they certainly do
A trailing "Stop" is the exit of last resort. Looking at your chart you were given multiple signals to exit this position that you neglected to action.

How are the written up in the Logbooks in any back testing by ANYONE?

As requested
The PANDA Strategy "Excel log" of trades for the last two years.

 

[Skate]

What's trading all about?
Trading is like playing pool, it's not about sinking the ball, but lining up the next shot. Traders are often paralysed into inaction by the way they are thinking about the markets at any given moment. This way of thinking keeps you emotionally & financially tied to "that line of thinking". Without new ideas, the cycle won't be broken.

There is a fine line between enough information & information overload
The series of posts today were designed to encourage others to think of alternative ways to gauge market sentiment. By filtering those sentiments we can take advantage of trading opportunities in a more efficient way.

Most people really aren't smart enough to deal with the overload of information that now exists
Even intelligent people with good critical thinking skills, suffer the same fate. It's even exhausting trying to keep up with the volume of posts made in this forum each day, even lengthy posts can be a turn-off. Trying to grasp how others trade can be a minefield of information to absorb & understand.

Skate.

 

[Captain_Chaza]

@Captain_Chaza they certainly do
A trailing "Stop" is the exit of last resort. Looking at your chart you were given multiple signals to exit this position that you neglected to action.

View attachment 148565



As requested
The PANDA Strategy "Excel log" of trades for the last two years.

I have only ever been a spectator On Meta/ FB
But that last Yellow Trailing Stop you pointed to is the Day the Ship Sank and Opened Down 24%
How would you log this entry?
It GAPPED Down AFTER HOURS
EVERY ONE LOST 24% if they Sold

 

[Skate]

How would you log this entry?

@Captain_Chaza I don't understand your question. Since August there have been many exit signals.

Skate.