Dump it Here

@Skate,

Ok, now you are giving me cognitive dissonance!



The same issues magnified, will exist when in drawdown. Until the trader is taken out of the process entirely, ie. the mechanical system is given to a third party merely to execute the signals (or some AI bot) then the system remains 'discretionary'.

For those of you who remember Zip-Zap back in the day from ReefCap, he had a mechanical system that you could employ (put money into) and an independent 3'rd party executed.

Never underestimate the ability of a trader to f*** up a good system.

jog on
duc

ducati916 said:

The same issues magnified, will exist when in drawdown. Until the trader is taken out of the process entirely, ie. the mechanical system is given to a third party merely to execute the signals (or some AI bot) then the system remains 'discretionary'.

Click to expand...

@ducati916, I don't believe my views and posts are inconsistent in any way, they may be simply interpreted differently when read in isolation or in unison.

I understand your point that until a trader is removed from the decision-making process entirely, a trading system can still be considered discretionary. While it's true that a human is still involved in executing the trades, a systematic and objective approach can still be employed to minimise the impact of emotions and subjectivity.

While a trading strategy is important, a clear trading plan is essential for managing risk and staying disciplined. A trading plan can help you make informed decisions rather than relying on emotions or reacting impulsively to market movements. Trading requires patience, discipline, and a willingness to stick to your plan even during periods of uncertainty or drawdown.

Systematic trading can still benefit from a trading plan, which can trump a trading strategy in terms of decision-making. A trading plan can help you decide when to enter or exit a position based on your risk tolerance and current market conditions.

Also, I should mention that the SAP Strategy has not been put through the paper trading phase as I wanted to trade this strategy from the start of July this year. I was eager to start trading this strategy to complement my daily series of posts to display system trading can be simple and exciting.

Trading off "backtest results" can be scary as well as risky which may not guarantee success trading the SAP Strategy. But in saying all this, I'm trading the SAP Strategy with the same approach as I would with any of my other strategies while at the same time being realistic with the results I hope to achieve.

Updating the ongoing results of the SAP Strategy and keeping track of all trades and performance will be crucial in how the SAP Strategy will handle current trading conditions.

I just wish those involved in the SAP Strategy would have the correct mindset, realising that market fluctuations and losses are a natural part of the process. One, member of the group is focusing on short-term gains rather than the bigger picture over the longer term.

Skate.

qldfrog said:

I can not imagine how worry I would be to have such a phone exchange.
As we all know, there is no such thing as a linear win curve or a guaranteed win on any system.any period but on a term deposit
Having someone be it family, friend reacting like that would ring alarm bells right and left.

Click to expand...

While @peter2 has Bob
I have my own family member to contend with that I will also call Bob.

Bob's phone call this morning was filled with pure enthusiasm again. But in Bob's defense, his phone call this morning was more like the excitement of getting a new puppy. Those new to trading often experience a rush of joy when their trades are profitable, while seasoned traders have a more balanced approach, recognising that trading is a game of probabilities.

It's important to keep in mind that no trading strategy can be profitable 100% of the time, and there will be losing periods. One of the challenges for those just starting out is keeping their emotions to a minimum because it's easy to get caught up in the excitement of riding a roller coaster

Seasoned traders, on the other hand, have learned to manage their emotions and focus on the long-term results of their trading strategy and are able to stay calm and disciplined during periods of drawdown.

Another challenge for new traders is understanding that trading is a process that takes time and patience. It's important to have realistic expectations and to recognize that it may take several months or even years to see consistent profits from a trading strategy.

Ultimately, the key to successful trading is to develop a systematic approach focusing on a few simple principles knowing that Rome wasn't built in a day. Staying focused and committed to the process rather than the results will help in the challenging and rewarding world of trading.

Skate.

ducati916 said:

...
Never underestimate the ability of a trader to f*** up a good system.

Click to expand...

It never ceases to amaze me how often I have witnessed the truth of this!!

It seems some people, just cannot contain their enthusiasm, for adding their own personal refinements, to, what would, otherwise be, a perfectly good recipe, thereby causing an emergency evacuation of the kitchen.

ducati916 said:

Never underestimate the ability of a trader to f*** up a good system.

Click to expand...

cynic said:

It seems some people just cannot contain their enthusiam for adding their own personal refinements, to, what would, otherwise be, a perfectly good recipe, thereby causing an emergency evacuation of the kitchen.

Click to expand...

Gee, I hope that isn't a couple of cryptic messages directed in my direction.

Skate.

Skate said:

Gee, I hope that isn't a couple of cryptic messages directed in my direction.

Click to expand...

Reading between the lines of your writings Skate, I don't think you would be one of these traders.

Skate said:

Gee, I hope that isn't a couple of cryptic messages directed in my direction.

Skate.

Click to expand...

Mine was more in reference to the way other people tend to behave upon being handed the reigns, and a map to Eldorado.

They somehow, always, manage to convince themselves, that, they've spotted a clever short cut to a more affluent destination, when what they've actually discovered, is a way to fast track themselves into great effluence!

DaveTrade said:

Reading between the lines of your writings Skate, I don't think you would be one of these traders.

Click to expand...

cynic said:

Mine was more in reference to the way other people tend to behave upon being handed the reigns and a map to Eldorado.

Click to expand...

@DaveTrade, thank you for the vote of confidence. However, I must admit that I'm guilty of jumping into live trading with the SAP Strategy without thoroughly testing it and relying solely on the backtest results without paper trading the strategy to ensure the backtest results align with live trading. I realize now that my over-enthusiasm to trade it early, especially when I was excited about the potential results, was a mistake.

@cynic, your post and @ducati916 tag at the bottom of his post about "Never underestimate the ability of a trader to f*** up a good system" definitely hit close to home for me. Despite the amount of effort, I put into developing the strategy and the use of various indicators and filters to make trading as safe as possible, not following my own protocols could lead to mistakes and the potential to mess it up.

That being said, I believe it's important to learn from our mistakes and move forward. If I could give myself and others contemplating the same thing some advice, I would strongly suggest taking the time to thoroughly test any new strategies before putting them into live trading. That way, we can be more confident in their potential success and avoid costly mistakes.

Skate.

It's only fitting that tomorrow's daily post will be about:

"Traits of successful traders"

Skate.

At times contrition can set you free
It can be tempting to feel overconfident when developing a trading strategy and I must admit that I am guilty of that, especially when leveraging off my previous experience. In addition, my excitement about the potential results clouded my judgment and led to hasty decisions, such as trading the SAP Strategy without thoroughly testing it.

It's important to understand you need to approach the development and testing of a trading strategy with a clear and rational mindset. Something I've neglected to do.

So, to alleviate any concerns others may have, I strongly recommend taking the time to thoroughly test any new trading strategies before putting them into live trading. By doing so, costly mistakes can be avoided. It's a lesson I've learned the hard way, and I hope others can learn from my mistake.

Skate.

Skate said:

It can be tempting to feel overconfident when developing a trading strategy and I must admit that I am guilty of that, especially when leveraging off my previous experience. In addition, my excitement about the potential results clouded my judgment and led to hasty decisions, such as trading the SAP Strategy without thoroughly testing it.

Click to expand...

@Skate I think that your excitement may have been generated by your previous experience with this type of system and the techniques it employs. So now you are live testing it but it's not the same as someone building a complete new system, if you have a problem it will be related to some detail about the way you have combined you previously tried and tested techniques. Stay emotionally balanced and clear headed as you live test your system and as each trade is made you will uncover any weak spots or verify there are none. You know what to do and how to do it so because of your previous experience, if there is something that has been overlooked it should be corrected early and the overall impact on the results of the system should be minimal.

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

66. Traits of successful traders
Successful traders have a few key features and important characteristics that help them navigate the market's ups and downs. Patience and discipline are crucial traits since they assist traders in resisting the temptation to overtrade or override their well-defined strategy. However, because the market can provoke emotions such as greed, fear, and anxiety, emotions are difficult to manage and may be the most difficult trait to conquer.

To lessen the impact of emotional biases, successful traders improve their trading knowledge and abilities, increasing their chances of long-term success by making time to self-educate at every opportunity. A methodical trading technique can aid in decision-making and reduce the influence of emotions on trading. By following a clear trading plan and adhering to set guidelines, traders can make well-informed decisions based on analysis and data.

Emotions are present even when using a mechanical or mathematical approach. It's essential to retain a long-term perspective and stick to the trading strategy, especially during difficult times. Traders can improve their chances of long-term success by keeping emotions under control.

Trading losses and making mistakes are both common components of the trading process and the idea is to learn from these. Fear, greed, and overconfidence are emotional biases that can lead traders to make poor decisions and incur large losses, particularly during periods of market volatility.

Another crucial characteristic of successful traders is risk management. To prevent possible losses, successful traders employ strategies such as establishing stop-loss orders and restricting position size. They also put in place measures to preserve their wealth and avoid catastrophic losses that could wipe out their trading account.

Successful traders are also very adaptable. The market is ever-changing, and successful traders adapt to new market conditions quickly. They maintain an open mind and are constantly seeking new ways to improve their trading.

Patience is an essential characteristic of successful traders. They recognise that trading is a marathon, not a sprint, and they are prepared to wait for the appropriate opportunity to reveal themselves. They don't chase after every trade and are content to stay on the sidelines if market circumstances aren't favourable.

Successful traders are also self-assured and disciplined. They follow a well-defined trading strategy, even when the market is volatile. They don't let emotions obscure their judgement which could lead them to make impulsive decisions. They also exercise caution when it comes to risk management and avoid taking needless risks that could harm their trading account.

Successful traders who exhibit these characteristics are able to navigate the market's ups and downs and achieve long-term success. While developing these characteristics is difficult, with practice and dedication, they can be learned and developed over time.

In summary, successful traders who possess traits such as patience and discipline, and by following a well-defined trading plan are able to reduce or eliminate emotions completely.

Skate.

DaveTrade said:

@Skate I think that your excitement may have been generated by your previous experience with this type of system and the techniques it employs. So now you are live testing it but it's not the same as someone building a complete new system, if you have a problem it will be related to some detail about the way you have combined you previously tried and tested techniques. Stay emotionally balanced and clear headed as you live test your system and as each trade is made you will uncover any weak spots or verify there are none. You know what to do and how to do it so because of your previous experience, if there is something that has been overlooked it should be corrected early and the overall impact on the results of the system should be minimal.

Click to expand...

Thanks for your insights, @DaveTrade. You're absolutely right, I was excited about implementing a new trading system that complements my series of posts aimed at eliminating fear around mechanical system trading. I have integrated my previously tried and tested trading techniques into the system, and I'm confident that it will perform well over time.

However, as @qldfrog alluded to, there is additional pressure when trading for others, and it's important for me to maintain emotional balance during the live testing process to avoid any potential mistakes or oversights.

I believe that through live testing and executing trades, I will be able to identify any flaws in the SAP Strategy. If there are any, I can address them before they have a significant impact on the overall outcomes. The strategy is designed to accumulate over time by being selective when taking positions and exiting them at the first sign of underperformance. All these features have been coded in, so there's no need for intervention.

I understand the importance of keeping my thoughts clear and staying focused on the task at hand, and I'm committed to this project. I'm looking forward to seeing how my new system performs during volatile trading, and I will continue to improve the strategy over time without anyone noticing those improvements. I believe that if anyone notices any changes, then I haven't done my job correctly.

Thanks again for your insights, @DaveTrade!

Skate.

@Skate Cheer up mate. IMO all your trend trading systems are very similar, so your experience justifies your present confidence. Don't let it waver due to short term market volatility or concerns of your "investors". You're there to do a job on their behalf that they're unable to do for themselves atm.

I trust that any future modifications would be minor. Like, including a close above the prior weeks high to be included with the 50% up requirement. However I would suggest that even this minor mod should be back tested to see if it does improve the system.

I was concerned by the systems first three entries (BOT, HAW, IPD) as I didn't think any of them were included in the All Ordinaries. IPD was included for a little while in 2022 and was recently removed from the All Ords in the March 23 rebalance. Keeping up to date with the constituents of the S&P indices is time consuming. I would eliminate the requirement to be in an index and filter by market cap or the weekly value traded to ensure enough liquidity. IMO, HAW didn't have enough liquidity for your system's position sizes.

peter2 said:

@Skate Cheer up mate. IMO all your trend trading systems are very similar, so your experience justifies your present confidence. Don't let it waver due to short term market volatility or concerns of your "investors". You're there to do a job on their behalf that they're unable to do for themselves atm.

I trust that any future modifications would be minor. Like, including a close above the prior weeks high to be included with the 50% up requirement. However I would suggest that even this minor mod should be back tested to see if it does improve the system.

I was concerned by the systems first three entries (BOT, HAW, IPD) as I didn't think any of them were included in the All Ordinaries. IPD was included for a little while in 2022 and was recently removed from the All Ords in the March 23 rebalance. Keeping up to date with the constituents of the S&P indices is time consuming. I would eliminate the requirement to be in an index and filter by market cap or the weekly value traded to ensure enough liquidity. IMO, HAW didn't have enough liquidity for your system's position sizes.

Click to expand...

@peter2, I appreciate your input, and you were completely correct in your judgement. Your sharp observation assisted me in detecting a potentially costly error before any damages occurred. Thank you for reviewing my work and providing constructive feedback. It's always beneficial to have a second set of eyes when analysing techniques. Without your keen observation losses could have accumulated very quickly.

# My First Error
After completing the SAP Strategy creation process, I made a mistake by not returning all of the parameters to their original settings before creating the APX file. The APX file is essential since it contains all of the programmed parameters required for the analysis. It contains all of the necessary settings and formulas to conduct the analysis in a single file. The APX file tells the Amibroker engine what steps to take. Unfortunately, due to my carelessness, I did not reset all of the parameters to their previous settings, resulting in inaccurate parameters in the APX file.

To avoid this problem in the future, I will ensure that all parameters are reset to their original values before producing the APX file. This straightforward step ensures that the APX file contains the necessary parameters and settings for the analysis.


# My Second Error
During the development of the SAP Strategy, I made an error by failing to reset the index back to the "All Ordinaries" index when conducting backtesting across multiple indexes. This mistake was made while creating the APX file.

Amibroker users will understand the significance of this error. Fortunately, thanks to Peter's keen eye, I was able to catch this mistake quickly and avoid more significant issues down the line. I appreciate the importance of thorough testing and will strive to be more diligent in the future to ensure that my strategies are error-free and optimized for success.



Skate.

Skate said:

I appreciate the importance of thorough testing and will strive to be more diligent in the future to ensure that my strategies are error-free and optimized for success.

Click to expand...

Skate, as you correct these errors create 'check lists', it is unprofessional not to use them.

Ahoy there Captain Skatie

If I am permitted
My advice is simple
Keep your great work up and IGNORE the IGNORANT

What would they know!
Academics are a Dime a Dozen!

I lost money today in Good Seas and Weather Conditions
and
YOU DID NOT!

Well Done and Stay the Course

Salute and Stay Well

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

67. Drawdowns are scary
Losses and drawdowns are unpleasant for any trader, especially those who are new to trading. A drawdown is a percentage fall in the value of a portfolio from its peak to its trough. It can happen for a variety of reasons, including market instability, economic downturns, or poor performance by individual companies.

But unfortunately, drawdowns are a regular and expected part of the trading process. Traders can learn from their mistakes and build emotional resilience by embracing losses and adopting a growth mentality. Simply, drawdowns can be a major difficulty for even seasoned traders.

Drawdowns are a source of anxiety for traders since they can have a substantial influence on the overall success of their portfolio. If a trader suffers a significant loss, it may require a significant gain to regain the lost value. For example, if a trader's portfolio falls by 50%, a 100% gain is required to restore it to its prior worth.

Reducing the stress from excessive drawdowns requires a precisely timed exit strategy. If you elect to use a multi-stage exit strategy it needs to respond to changing market conditions. For example, if volatility increases, the exit strategy must adapt to avoid potential losses. If market conditions stay consistent, traders may choose to give their positions greater leeway.

Overall, a timely exit strategy and risk management can help traders limit losses and increase their chances of success in the market. Being a "good loser" entails accepting setbacks gracefully and trading with discipline and consistency.

In order for you to get a good night's sleep, your positions should be reduced until you can sleep soundly through the night. This entails keeping a well-diversified portfolio that can withstand market volatility and overexposure.

Fine-tuning your risk management is an ongoing process. When this part of trading is tuned correctly it will allow you to avoid making emotional or impulsive decisions by remaining committed to your trading strategy. Doing so will restrict drawdowns to a minimum. To accomplish this, traders must have a well-defined trading strategy and risk management approach in place that complement each other.

It is critical to be patient and disciplined when enduring ongoing drawdowns. Avoid the desire to sell in a panic, as this can often result in even higher losses. Consider lowering the size of your bets or taking a break from trading until market circumstances improve.

When it comes to trading, being proactive helps in keeping up with any trends and developments that can have an impact on your portfolio. However, it's also crucial to go cautiously, when starting a new strategy especially until you have a clear indication of its performance.

For those new to trading, drawdowns can be a beneficial learning experience as this can help traders grow and build their skills by reflecting on previous losses and identifying areas for improvement.

Overall, traders can improve their chances of success by accepting losses and drawdowns as a normal part of the trading process, exercising patience and discipline, being informed, and reflecting on past experiences. Traders who use these tactics can increase their emotional resilience and overall market performance by regularly reviewing and adjusting their trading strategy as required.

Skate.

DaveTrade said:

Skate, as you correct these errors create 'check lists', it is unprofessional not to use them.

Click to expand...

@DaveTrade, thank you for your useful advice. I immediately improved my trading process by integrating an auditory and visual warning as a checklist before creating any signals to avoid making similar mistakes in the future. Furthermore, with the assistance of @peter2, both holdings in the portfolio were quickly sold in the pre-auction today to correct the error that was pointed out.

Maintaining a high degree of professionalism is important to me, and I accept full responsibility for any mistakes that have occurred. Nonetheless, I am committed to continuously improving my processes in order to avoid such issues in the future.

I genuinely appreciate both of your comments, and I'd want to thank you for bringing this to my attention. Your eagerness to help me improve is very admirable, and I appreciate the chance to learn from my mistakes.

Warning

View attachment IMG_7258.MOV

Skate.

Being excited about implementing a new trading strategy I made a few rookie mistakes. Once those mistakes were pointed out the two positions in the SAP Strategy were sold in the pre-auction today.

Skate.