How to trade the Unholy Grails system?

[Trembling Hand]

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/

Nah if its got anything to do with wave theory its discretionary trading. My recommendation was along the lines of his coded and tested systems. There are dudes here that have been disc trading for 10 years and from my take are still at step 1!!! If you can find a system that is hard coded that interests you and can follow along you will learn a heap about trading and what works/doesn't while not wasting 1000s of hours.

And I say that as someone who is 100% a discretionary trader.

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.

Errr not really sure thats a true statement. There is certainly a robust way to go about system development to enable you to expect a give outcome from a set of events.

 

[ThingyMajiggy]

There are dudes here that have been disc trading for 10 years and from my take are still at step 1!!!

See, listen to these guys NT, you don't want to be another ThingyMajiggy!

 

[tech/a]

See, listen to these guys NT, you don't want to be another ThingyMajiggy!

Hasn't been from lack of trying Sam!

Some people are their own worst enemy.
The biggest draw back for most in your position is
Capital. When people don't have enough loss scares
the bejeezes out of them and holds them back.

Everyone wants the + and cant stomach the invariable -
Its trading---its a business and it needs capital.

 

[ThingyMajiggy]

Hasn't been from lack of trying Sam!

Some people are their own worst enemy.
The biggest draw back for most in your position is
Capital. When people don't have enough loss scares
the bejeezes out of them and holds them back.

Everyone wants the + and cant stomach the invariable -
Its trading---its a business and it needs capital.

Ahh not so much, I don't mind having losses, I'm young and can soon earn that back. Agree with the rest! I just feel I have no idea about an actual edge, plus I've spent most of these years focusing on the DOM/order flow but now knowing that it's not actually that useful, and wanting to know more HOW and WHY the market moves, find an actual edge, I have no trouble holding trades, entering, losses, beyond that. I just need to find something more concrete as far as entries and an edge goes. I like the idea of basing that off statistics as it's hard evidence/proof then, instead of some hair brain idea with waves and ABCs etc. but then I have no idea where/how to look for that, then you still need some trigger to actually enter.

Plus I've never actually tried properly, never done a solid stint of sim trading for say 6 months(feel I need the above first instead of throwing darts for 6 months?) but that is also partly because it's been tough to do for me as my shifts at work don't really allow me to stay up much past dinner time so I get like 10 minutes of Europe before bed, then no sim/demo accounts have access to any Asian futs markets so there's nothing I can do during the day either.....except mindlessly chasing my stupid tail around in circles and trying to learn how to find an edge. I'm off to South America on Monday and when I get back I'm going to nights hopefully which means I'll have access to the European session before work, so hopefully I can get my ar$e into gear in the mean time and have something concrete to work on for a long stint of sim trading so I can gather some stats on my trading, THEN I can work on the different areas to improve etc. but at the moment I'm back at square one after wasting so much time on order flow(it does have it's uses, but not how I was doing it) to find something decent/concrete that doesn't just feel like I'm throwing darts at a board.

Is the edge in the entry or is the edge in the management? Surely decent entries are the key to begin with, then its down to how you manage it, if you get rubbish entries then you've already put yourself in a hole and no management will get you out of it, so that's why I'm quietly trying to find something and reading lots in these forums, and going back over emails from yourself and TH from a blank mindset.

Basically, I'm an idiot who's wasted his time up to this point, clean slate and starting again. Just resisting asking for help because it appears I've been around for 10 years and done sweet f**k all so I'm a "has been" etc. Plus I've received lots of gems via email that I need to go back over. Plus I should probably keep a journal, or a playbook of some sort, but step 1 first. Then I can start on a long stint, some record keeping, some stats review and work on fixing things.

100% blame myself, have been my own worst enemy, wasted way too much time, procrastinated, haven't grown a pair and done anything properly. But I still do really really want to, more than ever. Enough BS.

Annnnnnnnnnd that post was WAY too big so I'll shut up now haha.

 

[Roller_1]

Ahh not so much, I don't mind having losses, I'm young and can soon earn that back. Agree with the rest! I just feel I have no idea about an actual edge, plus I've spent most of these years focusing on the DOM/order flow but now knowing that it's not actually that useful, and wanting to know more HOW and WHY the market moves, find an actual edge, I have no trouble holding trades, entering, losses, beyond that. I just need to find something more concrete as far as entries and an edge goes. I like the idea of basing that off statistics as it's hard evidence/proof then, instead of some hair brain idea with waves and ABCs etc. but then I have no idea where/how to look for that, then you still need some trigger to actually enter.

Plus I've never actually tried properly, never done a solid stint of sim trading for say 6 months(feel I need the above first instead of throwing darts for 6 months?) but that is also partly because it's been tough to do for me as my shifts at work don't really allow me to stay up much past dinner time so I get like 10 minutes of Europe before bed, then no sim/demo accounts have access to any Asian futs markets so there's nothing I can do during the day either.....except mindlessly chasing my stupid tail around in circles and trying to learn how to find an edge. I'm off to South America on Monday and when I get back I'm going to nights hopefully which means I'll have access to the European session before work, so hopefully I can get my ar$e into gear in the mean time and have something concrete to work on for a long stint of sim trading so I can gather some stats on my trading, THEN I can work on the different areas to improve etc. but at the moment I'm back at square one after wasting so much time on order flow(it does have it's uses, but not how I was doing it) to find something decent/concrete that doesn't just feel like I'm throwing darts at a board.

Is the edge in the entry or is the edge in the management? Surely decent entries are the key to begin with, then its down to how you manage it, if you get rubbish entries then you've already put yourself in a hole and no management will get you out of it, so that's why I'm quietly trying to find something and reading lots in these forums, and going back over emails from yourself and TH from a blank mindset.

Basically, I'm an idiot who's wasted his time up to this point, clean slate and starting again. Just resisting asking for help because it appears I've been around for 10 years and done sweet f**k all so I'm a "has been" etc. Plus I've received lots of gems via email that I need to go back over. Plus I should probably keep a journal, or a playbook of some sort, but step 1 first. Then I can start on a long stint, some record keeping, some stats review and work on fixing things.

100% blame myself, have been my own worst enemy, wasted way too much time, procrastinated, haven't grown a pair and done anything properly. But I still do really really want to, more than ever. Enough BS.

Annnnnnnnnnd that post was WAY too big so I'll shut up now haha.

Thingy,

Have you looked into Amibroker and coding systems? I saw you mention that you can code a bit. It wouldn't take long to get good enough to test certain ideas etc. If it's a EOD system, then you can papertrade it on a sim acc when you're working etc. Then you get all your stats on entries, exits whatever you want. I'm 25 and started looking into discretionary stuff but felt this suited me better as i don't want to be screen watching all day/night at this stage

 

[ThingyMajiggy]

Thingy,

Have you looked into Amibroker and coding systems? I saw you mention that you can code a bit. It wouldn't take long to get good enough to test certain ideas etc. If it's a EOD system, then you can papertrade it on a sim acc when you're working etc. Then you get all your stats on entries, exits whatever you want. I'm 25 and started looking into discretionary stuff but felt this suited me better as i don't want to be screen watching all day/night at this stage

Yeah I am looking into that a bit lately, I'm a Ninjatrader man though, thought I'd stick with it as it's got good stats and strategy testing etc. so there's a reasonable learning curve in learning C# then getting to know Ninjatrader's methods etc. but figured it might be a decent way of testing ideas if nothing else rather than trying to find something by staring at a chart.

 

[Roller_1]

Yeah I am looking into that a bit lately, I'm a Ninjatrader man though, thought I'd stick with it as it's got good stats and strategy testing etc. so there's a reasonable learning curve in learning C# then getting to know Ninjatrader's methods etc. but figured it might be a decent way of testing ideas if nothing else rather than trying to find something by staring at a chart.

Yea ok fair enough. A good thing about Amibroker is there's so much info/ideas out there. But it's prob the same for Ninja trader i just haven't looked

 

[NewbieTrader1982]

Nah if its got anything to do with wave theory its discretionary trading. My recommendation was along the lines of his coded and tested systems. There are dudes here that have been disc trading for 10 years and from my take are still at step 1!!! If you can find a system that is hard coded that interests you and can follow along you will learn a heap about trading and what works/doesn't while not wasting 1000s of hours.

And I say that as someone who is 100% a discretionary trader.



Errr not really sure thats a true statement. There is certainly a robust way to go about system development to enable you to expect a give outcome from a set of events.

Coded systems interest me, to be honest any system that 'works' interests me. If you like systems, then why are you staying discretionary? I know @tech/a is also discretionary and does well too.

Cheers

 

[Trembling Hand]

Coded systems interest me, to be honest any system that 'works' interests me. If you like systems, then why are you staying discretionary?

I like system development for the safety and learning process. I like disc for the out-performance.

 

[tech/a]

You'll be lucky to have consistent 25% with a good system (standard thinking)
Those who gain 30% and a lot more would be discretionary.
Creative long term systems could do better than standard thinking.

Single entity systems can do better than portfolio type.
Whole topic on its own.

 

[NewbieTrader1982]

I like system development for the safety and learning process. I like disc for the out-performance.

OK so it sounds like a good discretionary trader can outperform a Systems Approach but requires much more active trading/decisions/chart searching etc?

Is that fair to say?

 

[NewbieTrader1982]

You'll be lucky to have consistent 25% with a good system (standard thinking)
Those who gain 30% and a lot more would be discretionary.
Creative long term systems could do better than standard thinking.

Single entity systems can do better than portfolio type.
Whole topic on its own.

Yup OK sounds similar feedback on Systems with what TH is saying. Got it.

The only thing then is, a discretionary trader would have to 'hope' (probably test) that he is using a 'strategy' that ALSO has a positive expectancy long term like a Systems approach has. Is that correct?

 

[Newt]

Yup OK sounds similar feedback on Systems with what TH is saying. Got it.

The only thing then is, a discretionary trader would have to 'hope' (probably test) that he is using a 'strategy' that ALSO has a positive expectancy long term like a Systems approach has. Is that correct?

Hi Newbie
Glad to hear you're digesting Nick's work. Unholy Grails really is a beacon in the dark for those starting out - its hope and guidance that you can make systematic trading work (when the majority of conventional market wisdom says otherwise).
You should definitely get your feet wet with Amibroker and some quality data (Norgate?). Just be aware when you think you've found something doing better than the 25%'ish Tech/a describes you're probably just "curve fitting". There is a whole field of debate around daily versus weekly, complex versus more simple (hopefully more robust), acceptable risk and drawdowns (DDs have a habit of always eventually exceeding your worst case model). As you're already heard, there isn't necessarily right or wrong approaches to the above - instead its very important to find what feels right to you, do the hard yards to check how and why it works and what the risks you're taking on are. Only then can you have a reasonable positive expectation and faith to keep going through daily/weekly/monthly buffeting and doubts.

2 other tips from me would be:
- Enjoy the journey, but realistically expect to invest similar energy and time as you would for a tertiary degree to become profitable (which raises the question that perhaps most people would be better topping up their expertise in their normal area of work rather than dreaming about trading?!)
- Check out Andrew Swanscott's excellent podcast on systematic trading:
http://bettersystemtrader.com/

 

[NewbieTrader1982]

Hi Newbie
Glad to hear you're digesting Nick's work. Unholy Grails really is a beacon in the dark for those starting out - its hope and guidance that you can make systematic trading work (when the majority of conventional market wisdom says otherwise).
You should definitely get your feet wet with Amibroker and some quality data (Norgate?). Just be aware when you think you've found something doing better than the 25%'ish Tech/a describes you're probably just "curve fitting". There is a whole field of debate around daily versus weekly, complex versus more simple (hopefully more robust), acceptable risk and drawdowns (DDs have a habit of always eventually exceeding your worst case model). As you're already heard, there isn't necessarily right or wrong approaches to the above - instead its very important to find what feels right to you, do the hard yards to check how and why it works and what the risks you're taking on are. Only then can you have a reasonable positive expectation and faith to keep going through daily/weekly/monthly buffeting and doubts.

2 other tips from me would be:
- Enjoy the journey, but realistically expect to invest similar energy and time as you would for a tertiary degree to become profitable (which raises the question that perhaps most people would be better topping up their expertise in their normal area of work rather than dreaming about trading?!)
- Check out Andrew Swanscott's excellent podcast on systematic trading:
http://bettersystemtrader.com/

Thanks @Newt ..So I am just trying to understand what is actually being said then. Does that mean that all discretionary trading will eventually fail at some time? And therefore the only chance to be profitable long-term is from a robust System and no other way?

But then on the other hand, aren't there other types of traders out there not using a systems approach and being profitable for decades?

Thanks mate

*note to self, pick up the bloody phone call Nick to chat..*

 

[NewbieTrader1982]

A direct quote from nick " Discretionary Trading is the use of various chart patterns to identify low risk opportunities. These cannot be programmed into a computer, but by using correct trading principles we are able to create an edge over the longer term. Being a discretionary trader allows you to be completely in charge of the trading processes"

Comments?

 

[tech/a]

N/T
Every form of trading can fail from time to time.
Imagine in Property that every suburb valued differently from each other
and so did every street and every house in that street.

Price movements could be 3-30% every single day
Either up or down. With prolonged periods in either direction.
Imagine houses similar to each other varying dramatically daily even Hrly.
Even when it appears to be totally random with no reasoning.

Lets say developers like you and I are Systematic in our approach we have a proven method.

The general public are discretionary in their buying and selling.

Throw in that you could buy or sell at the click of a mouse!!!

How difficult do you think it would be to invest in property for either of us?

 

[NewbieTrader1982]

Yup I see your point and realise that the two assets are totally different beasts.

I think as you point out, being successful at trading is difficult and you have to be prepared for the swings, much more volatile than real estate.

 

[Wysiwyg]

Hey Wysiwyg,
I hope you are not suggesting that the code above represents the BBO system in Nick's book "Unholy Grails"!

Alright what have I done wrong?

 

[Wysiwyg]

Alright what have I done wrong?

Okay I see in the book the entry/exit is a close above/below rather than a cross.

 

[Wysiwyg]

Tested 01/01/2016 to Present = $1776 gain from a 100k start. Just need to be patient with it.