Dump it Here

Skate · 31 March 2023

Skate said:
Faulty thinking has no place in trading
In trading, faulty thinking can lead to poor decision-making & financial losses.

When you sick of reading
Youtube video is an alternative as there is less effort required. The video is all about how to make better decisions when trading.

Another "Better System Trader" Youtube video
In this episode, Matt Zimberg discusses decision-making, & what traders do wrong, (the main reason for my series of posts today) Also, Matt goes on to explain how you can be a more successful trader by making better trading decisions that will improve your trading results.

Matt Zimberg discusses these topics
The importance of decision-making in trading,
Common mistakes traders make,
How traders underestimate “the game of trading”,
Filtering out bad trading information & training your brain to make good decisions, & much more.

A video from Better System Trader to watch (if you aren't too time-poor)
You'll be wiser for it, that I can guarantee.

Skate.

rcw1 · 31 March 2023

Skate said:
... When you sick of reading
Youtube video is an alternative as there is less effort required. The video is all about how to make better decisions when trading.
...

Or alternatively take a break and have a rum or three hundred ha ha ha ha ha but if this methodology chosen, do not trade or gamble

Have a very nice day, today.

Kind regards
rcw1

Skate · 2 April 2023

There is a lack of new ideas when it comes to trading
I understand the frustration some can have when there is a lack of new or original trading ideas presented in some forums. It's even difficult to find fresh perspectives when many traders are relying on the same old strategies & information that has been around for years. But all is not lost. By studying various traders you can learn from their experiences, & you may be able to discover new ideas & fresh perspectives that can help improve your trading performance.

Another approach is to develop your own ideas & strategies
How? by experimenting with different trading techniques & analysing the backtest metrics. By taking a creative & experimental approach to trading, you may be able to discover new insights that can help you stand out from the crowd. While it can be challenging to find new & innovative ideas it doesn't have to stop you from thinking about how you should approach trading, you never know you may be able to uncover new insights that can help you achieve greater success.

Skate.

Skate · 2 April 2023

To further address the lack of new ideas
It's essential to cultivate a mindset of continuous learning & development. Rather than relying on outdated information or established trading strategies, traders should stay up-to-date with the latest developments in the markets & explore new opportunities for growth. There are some traders who are passionate about exploring new ideas & pushing the boundaries of conventional trading strategies in this forum who have shared insights & ideas from their personal trading. I have taken many of those ideas & run with them, helping me understand my own trading. This is why our community is so great as it allows us to connect with like-minded members.

Another way to develop new ideas is to leverage technology
With the advent of trading software, our trading ideas become limitless in the tools we can use to analyse data to gain deeper insights into market trends & patterns. By analysing market data in real-time, traders can identify emerging trends & opportunities that may not be immediately apparent through traditional methods.

Ultimately
The key to finding new & innovative ideas in trading is to remain open-minded, curious, & proactive in your search for knowledge. By cultivating a growth mindset & staying on top of the latest developments in the markets, you can position yourself for success & stand out from the crowd of traders who are still relying on outdated strategies & information.

Skate.

Skate · 2 April 2023

Technical analysis is one method of evaluating the markets
But it's a disciplined approach to evaluating the markets. Its goal is to forecast future price movements by examining historical market behaviour. Traders who want to take advantage of technical analysis need to learn a set of mathematical calculations based on price & volume data that can help identify trends, momentum, & potential reversal points. By combining various indicators & analysing charts, traders can develop trading strategies that can exploit market trends & patterns.

It is important to note that technical analysis is not a guaranteed method for predicting market movements
Even the most well-crafted trading strategies are vulnerable to market volatility or unexpected events that can disrupt the expected price movements. Therefore, traders should always use technical analysis in conjunction with risk management & other market indicators to make informed trading decisions. By combining technical analysis with sound money management, traders can increase their chances of achieving long-term success in the markets.

Skate

Skate · 2 April 2023

The goal of technical analysis is to predict future price movements based on past market behavior
To take advantage of technical analysis, you will need to learn & unfortunately, learning involves effort that dampens the enthusiasm of most. If you nut it down, technical analysis is just a bunch of mathematical calculations based on price &/or volume data that can help traders identify trends, momentum,& potential reversal points. By combining different indicators & analysing charts, traders can develop trading strategies that take advantage of market trends & patterns.

When trying to predict future price movements we are really trading in "probabilities"
By learning & applying different technical indicators, traders can identify trends & potential reversal points, by developing trading strategies to take advantage of market patterns. However, it's important to remember that technical analysis is not foolproof as it works on the idea of probabilities in conjunction with proper risk management.

Skate.

Skate · 2 April 2023

Knowing when to stop trading is a crucial skill for any trader
It's important to take a break from trading when you are experiencing significant losses so you can re-evaluate your trading strategy. It's best to step back & wait until you feel more centered & focused so you can make informed decisions. Re-evaluation of your trading strategy can go a long way in understanding what is leading to those costly mistakes. Remember, successful trading requires focus & mental clarity, & being able to recognise when it's time to take a break is essential. Don't be one of those traders who prides themselves on suffering great monetary losses while waiting for their convictions to be rewarded.

When should you consider taking a break from trading
Well to state the obvious, when you are experiencing significant losses. We all know losing money is a part of trading, but if you're experiencing a string of significant losses, it's time to re-evaluate your trading strategy & take a break. It's hard to cut it any other way "trading when you are constantly losing" can lead to irrational decision-making, which can add to those significant losses.

Skate.

Skate · 2 April 2023

Trading requires focus & mental clarity
In trading, maintaining focus & mental clarity is crucial. When you're upset or emotional, it can lead to distractions that can cause poor decision-making, ultimately resulting in costly mistakes. It's essential to take a break from trading until you're in a better mindset, even evaluating why you're upset can be the start of the process.

If you're experiencing a string of significant losses, it's time to re-evaluate your trading strategy
Losing money is a part of trading, but it's important to assess your performance before continuing, as it could save you a ton of money. We all need rules when trading & one of those rules should be to stop trading when market conditions are unfavourable is a good practice.

Skate.

Skate · 2 April 2023

The market can be unpredictable
Sometimes it's best to sit on the sidelines & wait for better opportunities. Knowing when to stop trading is essential to success as a trader. By assessing the market conditions, you can make more informed decisions & avoid costly mistakes. A method I use to gauge if the market is favourable is my "PercentageUp" indicator that I have previously discussed at length.

It's worth repeating
Don't be one of those traders who are "proud of their ability" to suffer great monetary pains while they wait for their convictions to be rewarded.

Skate.

Skate · 2 April 2023

Skate said:
There is a lack of new ideas when it comes to trading
I understand the frustration some can have when there is a lack of new or original trading ideas presented in some forums. It's even difficult to find fresh perspectives when many traders are relying on the same old strategies & information that has been around for years.

The Hann momentum filter
Over the years I & others members have had an input in relation to their trading, trading ideas they have developed or improved on. One of those ideas I presented is a momentum filter that I use in my trading. There is no better momentum filter than the "Hann Momentum Filter", a filter that uses a weighting system for data points, which can be helpful in identifying strong momentum in the markets.

Improving upon existing tools to enhance a trading strategy
I trade using a modified version of John Elder, Hann Filter to smooth out price movements & filter out lagging data. However, I should warn you that before you modify a proven filter you should thoroughly backtest any modifications made before implementing it in live trading. This allows traders to see how the modified filter performs in different market conditions & to identify any potential weaknesses or risks when using this filter with modification. Overall, the Hann momentum filter can be a useful tool in any trading strategy.

Skate.

Skate · 2 April 2023

In addition to the Hann momentum filter
There are other useful tools that traders can use to identify momentum in the markets. For example, Relative Strength Index (RSI) & Moving Average Convergence Divergence (MACD) are popular momentum indicators that I've previously posted about that can also be used.

It's also important to remember
No single tool or indicator can guarantee profitable trading results. Successful trading strategies often involve a combination of different tools & techniques, coupled with strong risk management practices. In conclusion, the "Hann Momentum Filter", when properly backtested & implemented, can be a valuable tool in any trader's arsenal.

Skate.

ducati916 · 2 April 2023

@Skate

So FXCM ran a study of 12 million trades taken in a 1yr time period and found the following:

59% of entered trades were winners;
6% of accounts were in profit at the end of 1yr
Average win = 55 pips;
Average loss = 129 pips

The conclusion: the EXIT was where the traders blew themselves up. Their exit strategies were truly woeful.

Interesting.

jog on
duc

Skate · 2 April 2023

The 200K strategy isn't too shabby
It's a known fact that most traders are unwilling to share information that has helped them trade profitability. Well, I tend to overshare as I believe there is enough money to be made in the markets & what I share will make little difference to me. I've spoken about "Hann's Momentum Filter" & over the series of posts I'll explain other filters I use to help keep me on the right side of the markets.

My modified "Hanns Filter"
Using defined parameters "Length," & "Width," calculates the Hann filter using a cosine function that returns the filtered result. The filtered result of the difference between the Positive Directional Indicator (PDI) & the Negative Directional Indicator (MDI), using an Exponential Moving Average (EMA) assigns the result to a variable. When the variable is greater than 0 (True) a buy signal is generated

Skate.

Rabbithop · 2 April 2023

Skate said:
When trying to predict future price movements we are really trading in "probabilities"

However, it's important to remember that technical analysis is not foolproof as it works on the idea of probabilities in conjunction with proper risk management.

Another approach is to develop your own ideas & strategies
By taking a creative & experimental approach to trading, you may be able to discover new insights that can help you stand out from the crowd. While it can be challenging to find new & innovative ideas it doesn't have to stop you from thinking about how you should approach trading, you never know you may be able to uncover new insights that can help you achieve greater success.

When should you consider taking a break from trading
Well to state the obvious, when you are experiencing significant losses. We all know losing money is a part of trading, but if you're experiencing a string of significant losses, it's time to re-evaluate your trading strategy & take a break. It's hard to cut it any other way "trading when you are constantly losing" can lead to irrational decision-making, which can add to those significant losses.

Some wise comments to remind oneself.

Skate · 2 April 2023

ducati916 said:
The conclusion: the EXIT was where the traders blew themselves up. Their exit strategies were truly woeful.

@ducati916 that's a great point
Indeed, talking about exits is an essential aspect of any trading strategy. As you mentioned, exiting at the right time can make all the difference between a profitable trade & a losing one. It's important to note that different trading strategies may require different types of exits, depending on the underlying market conditions & the individual trader's risk tolerance.

The 200k Strategy is one of my trading strategies
The strategy aims to capture the momentum of the stock as it continues to move higher using a variety of filters to identify the right stocks to trade. Discussing the filters that I use in a series of posts might make for interesting reading as I'll explain how these filters help in identifying potential trades.

Skate.

Skate · 2 April 2023

ducati916 said:
Alternatively, you can just use the ADX. Exactly the same principle.

@ducati916 drops another gold nugget
It's an ideal time to discuss how I use the "ADX" indicator to determine the strength of a trend in relation to a "Rate of Change" filter.
The average directional index (ADX) that "Duc" referenced is a technical analysis indicator that determines the strength of a trend.

So how do I use the ADX Indicator?
To further improve the Price, Turnover, & Volume filters we all tend to use, it's important to understand that some filters are timing filters, while others are conditional filters. Timing filters are used to determine when to enter or exit a trade, while conditional filters are used to confirm or invalidate a trading signal. Combining them with other indicators will increase their effectiveness. One effective combination is using the Rate of Change filter with an ADX indicator. The Rate of Change filter is a simple period filter that ensures that the later period's rate of change is larger than that of an earlier period. This can also help identify strong momentum in the markets. However, to confirm the trend strength, you can use an ADX indicator.

Skate.

ducati916 · 2 April 2023

ducati916 said:
@Skate

So FXCM ran a study of 12 million trades taken in a 1yr time period and found the following:

59% of entered trades were winners;
6% of accounts were in profit at the end of 1yr
Average win = 55 pips;
Average loss = 129 pips

The conclusion: the EXIT was where the traders blew themselves up. Their exit strategies were truly woeful.

Interesting.

jog on
duc

Which goes to the quote: "You can never go broke taking a profit."

Well, yes you can if your exit strategies result in the 55 pips win and 129 pips loss.

The exit strategy should allow for the (a) the strategy allowing the maximum profit actually planned for and (b) the occasional big winner that exceeds the planned for profit.

The cognitive wheels should already be turning.

jog on
duc

Skate · 2 April 2023

The Rate of Change filter is a simple yet powerful timing filter
Sometimes I'll throw words or acronyms around without an explanation. There are times when beginners have no understanding of these terms & it's a perfect time to remind myself to expand on those phrases. The Rate of Change filter (ROC) compares the current price or volume with a previous period's price or volume. It ensures that the current period's rate of change is larger than that of an earlier period, which can help identify strong momentum in the markets. To further confirm the strength of the trend, you can use an ADX indicator as @ducati916 has suggested.

Furthermore
The ADX is a popular trend strength indicator that measures the strength of a trend based on the price range expansion over a given period of time. By combining the Rate of Change filter with the ADX, you can increase the accuracy of your trades and potentially avoid false signals. It's important to note that combining multiple indicators can sometimes lead to conflicting signals, so it's essential to thoroughly backtest any trading strategy before implementing it in live trading.

Skate.

Skate · 2 April 2023

ducati916 said:
Which goes to the quote: "You can never go broke taking a profit."

Well, yes you can if your exit strategies result in the 55 pips win and 129 pips loss.

The exit strategy should allow for the (a) the strategy allowing the maximum profit actually planned for and (b) the occasional big winner that exceeds the planned for profit.

The cognitive wheels should already be turning.

jog on
duc

@ducati916 I appreciate your ongoing input in making valuable comments related to trading. Although some of the information overlaps with what I plan to post about, I believe you responding as you do, add value to these comments. Technical analysis using filters & formulas allows us to code precise mathematical conditions when to enter & exit a position, conditions we can take advantage of.

Skate.

Skate · 2 April 2023

Lets now turn to volatility
Volatility is a crucial aspect of trading strategies, & I believe that all strategies, including the 200K strategy, should have filters & parameters related to volatility & the VWMA. Technical analysis allows for precise coding of these variables, which can significantly impact portfolio results.

Three variables
ATR (Average True Range), ADX (Average Directional Index), & ROC (Rate of Change) do most of the heavy lifting in terms of volatility analysis. These variables are calculated based on the close price (C) over a defined period, d the parameters used should be optimized for all three, including the VWMA (Volume Weighted Moving Average). It's also straightforward to calculate the sum of volume & volume-weighted price for the VWMA over the VWMA range."

The Volume Weighted Moving Average
It is a type of moving average that takes into account the volume traded at each price level over a defined period. The VWMA is calculated by multiplying the price of each transaction by the corresponding volume & then summing up these values over the defined period. The resulting sum is divided by the total volume over the same period to obtain the VWMA. (Simple & effective)

Skate.

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