How to trade the Unholy Grails system?

[NewbieTrader1982]

At what level do you decide that the market has changed and the other system needs to be turned on? Probably after its clear and again about to change! We are talking about making predictions about future events.

Got it. Then I am confused, what use is a Systems approach? How do we know when to use it? When to not use it? According to Nick Radge (from my limited understanding) he uses it day in day out, he says " think of the next 1000 trades'. So then when is a Systems approach useful...?

Thanks

 

[pixel]

Would you then not go back to the System when the market goes back to similar signals that the System is designed to do well in?

Cheers

yes, you could. But "the market" has an infinite variety. You'd be busy forever, comparing and tweaking systems "just right" for current conditions. If you have to buy your systems, my guess is you'll have to spend more on a variety of systems than the average punter spends on trading.

 

[NewbieTrader1982]

yes, you could. But "the market" has an infinite variety. You'd be busy forever, comparing and tweaking systems "just right" for current conditions. If you have to buy your systems, my guess is you'll have to spend more on a variety of systems than the average punter spends on trading.

I don't mind spending more on systems if I know there is a PE in different markets and know which system to use for different markets. I'm looking at this from an entrepreneurial perspective on my part. Not sure if my approach is applicable to Systems trading though.. still very much trying to figure this mystery out.

 

[NewbieTrader1982]

It's not neccessairy less frequent DD but i've found DD to be shorter in duration because you are trading a lot more frequently and can dig out of drawdown quicker. If you have a longterm system that uses a index filter for example you might not place a trade for 6-12 months, while it may reduce the MAX Dd of that system it's hard to make money if you aren't trading.

does that then mean when you do have DD it eats up weeks or months of your profit in one go?

Not really but anything can happen. Sure you can go into a 10-15% DD and you don't make that over night or in a week clearly, but the PE comes from long term application of any system you have to stick at it. It comes down to your risk tolerance too.

Unless you have a 95% win rate (even then) there will be DD

Ok I understand that. So same frequency of DD but more frequent trading so quicker recovery therefore theoretically quicker returns of the PE process.

The System you are using, have you found it to be fairly robust over a period of actual trading time?

Cheers

 

[tech/a]

Would you then not go back to the System when the market goes back to similar signals that the System is designed to do well in?

Cheers

There are many ways people attack this.
From having a filter to semi turn off (No more buying if a long system)
To turning it off completely until some outside mechanism like an index filter indicates a time to return
OR
A favourite of mine.
Trading the system as you would in ghost phase---no money down
Until and if the system returns to an acceptable Drawdown or wipes off a drawdown.

I know of some systems which use the equity curve of the system as a filter in their system.

I would then be adding the period out of sync with my test results into the testing to be sure my system hasn't developed a flaw.

Systems take time to develop even trading plans take a while to look "Good "(Read earn equity).
Tech Trader traded for 2 years and it felt like a snail on holidays. But as 300 day old trades closed our
It soon had a dose of Viagra.
Pete's method here as a discretionary method was the same.

 

[NewbieTrader1982]

There are many ways people attack this.
From having a filter to semi turn off (No more buying if a long system)
To turning it off completely until some outside mechanism like an index filter indicates a time to return
OR
A favourite of mine.
Trading the system as you would in ghost phase---no money down
Until and if the system returns to an acceptable Drawdown or wipes off a drawdown.

I know of some systems which use the equity curve of the system as a filter in their system.

I would then be adding the period out of sync with my test results into the testing to be sure my system hasn't developed a flaw.


.

OK, so it seems some level of discretion is needed ? I am assuming the equity curve filter would be something like " if equity reduces from peak by X % then stop system'? Then once the market is back in sync using confirmation from broader market indicators and or your Ghost Phase method where DD are wiped off to then possibly get back in..

I wonder if Nick also uses discretion in his trading.. doesn't seem so from what I have read but I could easily be wrong. It sounds like...no matter even if you have a mathematical edge, markets change and you need to be proactive at some point and switch off, even though theoretically you should expect a PE if you continued based on historical testing.

Am I somewhat correct in my thinking..?

 

[Roller_1]

Ok I understand that. So same frequency of DD but more frequent trading so quicker recovery therefore theoretically quicker returns of the PE process.

The System you are using, have you found it to be fairly robust over a period of actual trading time?

Cheers

I'm still fairly new so i need longer to say it is robust i guess. I trade multiple systems but my first one has been live for 9 months, everything is tracking as it should in my opinion and returns are positive, in a bit of drawdown currently but that's ok.

A favourite of mine.
Trading the system as you would in ghost phase---no money down
Until and if the system returns to an acceptable Drawdown or wipes off a drawdown.

I know of some systems which use the equity curve of the system as a filter in their system.

This is hard to implement for longer term systems in my opinion because of their low trade frequency.
You can't jump into a trade half way through when the equity curve moved back above x%

 

[Roller_1]

OK, so it seems some level of discretion is needed ? I am assuming the equity curve filter would be something like " if equity reduces from peak by X % then stop system'? Then once the market is back in sync using confirmation from broader market indicators and or your Ghost Phase method where DD are wiped off to then possibly get back in..

I wonder if Nick also uses discretion in his trading.. doesn't seem so from what I have read but I could easily be wrong. It sounds like...no matter even if you have a mathematical edge, markets change and you need to be proactive at some point and switch off, even though theoretically you should expect a PE if you continued based on historical testing.

Am I somewhat correct in my thinking..?

You'll find Nick is basically 100% systematic. You should be constantly checking your systems and monitoring for any issues or errors.

Overrode my system during the brexit vote and didn't place my trades because of the uncertainty. I missed out on 7-8% return that day because of it!
Just follow the system.

 

[tech/a]

OK, so it seems some level of discretion is needed ?

No.
If its part of a tested system then its part of the system.
Absolutely no discretion.

 

[tech/a]

This is hard to implement for longer term systems in my opinion because of their low trade frequency.
You can't jump into a trade half way through when the equity curve moved back above x%

You wouldn't do that you'd just start new trades.

 

[NewbieTrader1982]

No.
If its part of a tested system then its part of the system.
Absolutely no discretion.

OK, so it seems people want to follow a System, only to not follow it at some point. Then how valid will their results be of that System...

 

[Trembling Hand]

OK, so it seems people want to follow a System, only to not follow it at some point. Then how valid will their results be of that System...

Mate there is a how heap of maths, stats and science behind proper system development. Its a deep rabbit hole to dive down to do properly but still I think a legitimate field to look into.

In fact I cannot see discretionary trading be worth anyone's time other than it being their fulltime job OR a hobby, and therefore a very low return if not a cost long term. For someone who has experience and a capital position in their main field of expertise I would advise them to use their time making money in that field. Trading has a very low barrier to entry but that doesn't mean its easy. The amount of time wasted on trying to 'make it' in the market is bordering on tragic within the middle age male demographic. I can see the merits in trying to develop a system that requires a low level of daily input as a secondary income source. Something along the lines of what Nick offers but something along the lines of a consistent index betting algo or disc approach is years in the development. Why do that if you can just employ a few more dudes in your main field and smash that out of the ballpark?

 

[NewbieTrader1982]

I can see the merits in trying to develop a system that requires a low level of daily input as a secondary income source. Something along the lines of what Nick offers but something along the lines of a consistent index betting algo or disc approach is years in the development. Why do that if you can just employ a few more dudes in your main field and smash that out of the ballpark?

Hi @Trembling Hand, great post. That's pretty much all I am looking for, something as a secondary income and in time if I get good at it then perhaps increase my risk level or numbers for greater returns. But its definitly not an avenue I am looking at to replace my main business. I understand property, I have an edge with property, eg negotiating, deal finding BMV, vast contacts in the industry and relationships etc. So I definitely have an edge against most 'players' in that game and that's what I will continue to do. But like you said, if I can develop or 'borrow' someone elses system and in time be able to trade certain patterns well then it would be a nice CF stream separate to real estate. That's really my main goal and I think in that sense I am quite lucky perhaps from a few others as I am not 'relying' on trading to be THE strategy/wealth creation vehicle to change my life. So much less pressure while perusing to try to develop the skills.

I will keep on the journey mate and I appreciate everyone's great feedback. Probably will get Am broker in the near future and start looking at charts.

Thanks again

 

[tech/a]

T/H
Espouses wisdom

 

[Trembling Hand]

@NewbieTrader1982 in that case I would definitely look at stuff similar to what Nick does. I think its relatively cheap and will not require week after week of screen time. It will probably not make you rich (again ) unless a roaring bull market comes along (thats doubtful) but as far as a learning experience -certainly will teach you the fundamentals of trading, whether you eventually decide on a systematic approach or disc. (fundamentals as in what makes a profit and how to go about it. Not fundamentals as in Warren Buffet stuff though you should probably have a look at that too)

 

[Trembling Hand]

T/H
Espouses wisdom

Yeah me in my trading room,

 

[NewbieTrader1982]

@NewbieTrader1982 in that case I would definitely look at stuff similar to what Nick does. I think its relatively cheap and will not require week after week of screen time. It will probably not make you rich (again ) unless a roaring bull market comes along (thats doubtful) but as far as a learning experience -certainly will teach you the fundamentals of trading, whether you eventually decide on a systematic approach or disc. (fundamentals as in what makes a profit and how to go about it. Not fundamentals as in Warren Buffet stuff though you should probably have a look at that too)

I was looking at Nick talk about a simple strategy he has for swing trading using the ABC wave with an indicator on the bottom such as RSI or slow stochastic. Looks very simple but the pattern does seem to be all over the place. So with a good money management system i'm gonna try it out to see howi go with it. He says to use a risk/reward ratio of at least 3.

Any opinion on this? Its the last video in the link.


Swing Trading - how to trade swing patters.
https://www.thechartist.com.au/Videos/

 

[Valued]

I was looking at Nick talk about a simple strategy he has for swing trading using the ABC wave with an indicator on the bottom such as RSI or slow stochastic. Looks very simple but the pattern does seem to be all over the place. So with a good money management system i'm gonna try it out to see howi go with it. He says to use a risk/reward ratio of at least 3.

Any opinion on this? Its the last video in the link.


Swing Trading - how to trade swing patters.
https://www.thechartist.com.au/Videos/

Anything using an ABC pattern or elliot waves etc seems all over the place because it is all over the place and everyone looks at it and sees a different pattern or sees patterns when none are there. At worst it is completely arbitrary.

 

[NewbieTrader1982]

Anything using an ABC pattern or elliot waves etc seems all over the place because it is all over the place and everyone looks at it and sees a different pattern or sees patterns when none are there. At worst it is completely arbitrary.

Thanks for your feedback. So then the question in my mind is, how do I reconcile your opinion with Nick's...It almost seems everyone has a different take/opinion/truth from much of trading.

I must say though, from a newbie's perspective, the ABC correlation with a below 20 line on SlowK, on good volume plus a tight bar... does seem to see price action bounce the way you plan many times. Couldn't a robust risk management plan perhaps see consistent profits?

 

[Valued]

Thanks for your feedback. So then the question in my mind is, how do I reconcile your opinion with Nick's...It almost seems everyone has a different take/opinion/truth from much of trading.

You can't. No one can prove to you their system works consistently since it is likely their sample size is way too small and a successful back test doesn't mean anything. You might have a system that happened to work well in the past but people only pick systems that do well in back tests so it's like a survivor bias in a way.

You can consider what a profitable system may look like though and try to replicate that. This is difficult to do. In say poker it is easier since there are some hard mathematical truths you can work out e.g. you must call a bet at least x% of the time facing a turn bet of $50 into a pot of $100 and so you know if you're under that percent you're incorrect. Unfortunately, the market doesn't provide you with such precise mathematical rules. For a system to be profitable though when you enter the trade at some point you must be in a trend (assuming you're trading some basic directional strategy, this may not apply to some options strategies). Therefore, if you need to be in a trend you need the price to move and so you need some volatility. You can come to some conclusions like that.