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.
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.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.
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
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.
.
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
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.
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..?
OK, so it seems some level of discretion is needed ?
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%
No.
If its part of a tested system then its part of the system.
Absolutely no discretion.
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.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...
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 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/
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.
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