The more I use Trading Blox the less I want to trade!

Discussions about personal psychology for the individual trader.
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Horizon21786
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The more I use Trading Blox the less I want to trade!

Post by Horizon21786 » Sat Jan 09, 2010 4:54 pm

Hi,

I feel that since using trading blox, I feel so much more like a gambler. I guess now I realise how hard it is to trade successfully and how important a long term proven system is.

At the same time, the more I try to 'design' a system the worst the results - even if I try to keep it really simple. So far I haven't been able to do better then First Strike Plus and One Night Stand which most people of this forum know about.

I do have a huge appreciation for any long term traders. It is both hard work and hard to find that 'edge'. I understand why only a tiny percentage make it.

I am sure I am not the only one that feels this way. I know this might be a 'how long is a piece of string question',but I'll risk it anyway:

How long did it take you to find an edge which you felt comfortable trading with real money?
How many different strategies do you actually trade with really money?
Do you still try and design new strategies onces you have found one you trade?

I know in an ideal world you should have a strategy for all the different market types (trending and sideways) but I can't see how that is possible (especially sideways and daily trading).

Feel like I finally saw the light and understand the immensity of the task. Even though I have been trading ONS and FSP for the short while and was happy with the trading blox results I got... this week I didn't place the trades. I kind of felt like a gambler

I am going to 'force' myself to place the trades this week as I have testing the strategies with decent historical data. It's just that I didn't expect to get this emotional reaction to the results generated by my using / testing strategies with 'trading blox'. I thought it would make me more confident about trading but instead, the more I test 'systems' that I think might work, the more it feels like trying to find a needle in a haystack

In a way I just wanted 'let my feeling out' to a community I knew would understand. Tomorrow I'll get back on that horse.

AFJ Garner
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Re: The more I use Trading Blox the less I want to trade!

Post by AFJ Garner » Sun Jan 10, 2010 4:02 am

Horizon21786 wrote: How long did it take you to find an edge which you felt comfortable trading with real money?
How many different strategies do you actually trade with really money?
Do you still try and design new strategies onces you have found one you trade?
I did back test one or other of Leonardo’s systems a while ago and placed my Blox in the Market Place. I was far from comfortable with the system and did not believe it was sensible or accurate to test it on end of day data. I do not have and do not intend to obtain intra day data. On end of day data and using spreads I took from Onanda, the system did not appeal. To me. Nor did I grasp the practical reality of using increased position size on promising or profitable trades as suggested by Leonardo. Perhaps if I had spoken directly to him I might have gleaned what he meant and how, in practice, he achieved this.

I did not spend nearly enough time on the system and I have absolutely no experience of trading in this time frame – so review my comments bearing these facts in mind.

I am a long term trader – I would go further and say that my style is more that of an investor. Judging by the publically available information concerning CTAs, I would guess that my style is closest to David Druz at Tactical. But of course that is only surmise and based on the very useful and revealing comments which can be found on his website. So let me put it another way – I am biased against Leonardo’s systems because (as regards trend following) I am more comfortable with a far longer term approach. My background has been largely analytical, starting life as a lawyer in finance and going on to analyse stocks and stock markets. I am therefore a sluggardly old toad and always have been; I have great difficulty even listening to fast talking dealers over the telephone quoting bid ask spreads at me. I do not appreciate being hurried and I therefore insist on slowing them down to my own snail like pace before confirming an order. There is great truth in what the likes of Seykota and Van Tharp say – you have to find a pace, a method, a life that suits you. It is no good “kicking against the pricksâ€

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Post by cliffg » Sun Jan 10, 2010 1:26 pm

Anthony,
Thanks for the 'expansion' of your background. Just received a copy of your book and had thought that your bio was probably one of the most condensed I've seen. Looking forward to a good read.
Flipping to page 22 now....... :D
Cliff

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Post by gunter » Sun Jan 10, 2010 1:41 pm

1. From the beginning I knew I needed to trade real money to determine whether the edge was real or not. I knew the basics of LTTF strategies, and it probably took me a month to backtest and decide on a strategy. At that point I risked real money.

2. I stick with one strategy. It is still trend-following, but has evolved from LTTF to something that suits me and my situation better. Using multiple strategies, can smooth the equity curve somewhat. However, I found that managing the trades for all of the systems took up a lot more time. Also, in backtesting, the smoother equity curve always led to a reduced return.

3. I always look for something new. If I see a behaviour in the markets, I believe I can exploit, I will test it. If I see a new indicator I didn't previously know, and it looks appealing, then I will test it. However, I found that 99% of the time even if something looks appealing to me, the backtested results will be disappointing.

One another note, once I read Mr. Garner's backtested result of Leonardo's system, I decided to test it myself. I tested the FirstStrike system on a bigger basket of currencies, assumed no spread and assumed that if a trade would not be stopped out on the day it is entered. Based on those results, I chose not to trade it.

Also, looking at Leonardo's blog (which I wish he would update), it looks like more that half the profits come from his silver trades. I tried also placing some silver trades, but mine never worked out. I believe this is where his experience provides him with a substantial edge. His timing on these trades was much, much better than mine.

Most of my trading is done with Oanda. One of the main pitfalls of backtesting with daily data (which I assume you did), is that when your stop is less than 1 ATR, you run a very real risk that trades might be stopped out on the day they're entered, but your backtest thinks the trade is still on.

The smaller your stop in ATR, the better your results will appear, but the bigger your divergence will be between your actual results and your backtested results. The wider the stop in ATR, the worse the results appear. However, this might lead to a lower divergence between actual and backested results. This is something I learned the hard way.

One of the risks with Oanda and their spreads is that you might be entered or stopped out of trades that are only triggered because the bid or offer are at your specified price. In real life, most of the time, I get the price I asked for on my trades. Thus spreads affect you differently here than perhaps on the CBOT or NYSE.

Good luck placing your trades.

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Post by AFJ Garner » Sun Jan 10, 2010 1:50 pm

cliffg wrote:Just received a copy of your book.
Funnily enough, writing that book and programming those systems was some of the most useful work I have ever done - for myself that is. I hope it provides some value of some sort for the reader also!

It sparked off some very useful thoughts which I have since developed a great deal further. The research certainly broadened my understanding of markets, programming and mechanical systems.

As I said above, for myself at least, the reality is that there is always more to learn. Thank heavens - life would be rather dull otherwise.

In any event, thank you for buying the book. It has been really rather an odd experience for me - I became used to publishing research for the investment bank I worked for in the Far East years ago but publishing a book is a whole different experience.

Having made any number of cheeky comments about the outpourings of certain others I will no doubt now receive my just desserts.

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Post by LeapFrog » Sun Jan 10, 2010 2:21 pm

Beware the traders that consider themeselves "Elite"...

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Re: The more I use Trading Blox the less I want to trade!

Post by cryder » Sun Jan 10, 2010 11:09 pm

Horizon21786 wrote:
I feel that since using trading blox, I feel so much more like a gambler. I guess now I realise how hard it is to trade successfully and how important a long term proven system is.
I agree with you completely. Two impotant things TB has taught me, its a gamble and importance of a good system. So far I have being using TB for almost 2 years and been learning from it continually. Still have not developed a really good system but my overall knowledge of the markets and my own comfort level has increased significantly since starting with TB. The latest learning curve has been money management / postion sizing /risk management - if I'm going to gamble I have to control the losses!! Stick with it, it comes with time and effort.

Horizon21786
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Post by Horizon21786 » Thu Jan 14, 2010 12:54 pm

Thank you for your comments. It really helps to get feedback.

AFJ, if the older you get the more you realise you don't know much then I am in real trouble. I really don't feel as if I know much at all.. :+)

Gunter, you are right. I do use daily data.

I have decided to stop trading money for a while. I have been trading for a few years and never made money. So at least the emotional lessons are there. I have gone through the emotional rollercoaster. What isn't there is the system so I guess …. At least I have TB.

Just finished reading Krutsinger the trading systems toolkit. I will have a go at the Fabric of Reality.

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Post by AFJ Garner » Thu Jan 14, 2010 1:23 pm

Horizon21786 wrote: I have decided to stop trading money for a while. I have been trading for a few years and never made money. At least I have TB. Just finished reading Krutsinger the trading systems toolkit.
Hmm, I seem to recall Krutsinger is almost of the day trading variety? In any event, it seemed to me that the Krutsinger book I read was pretty thin, short term oriented, gimmicky - whatever. But that was years ago - I may be thinking of the wrong author. And I do realise that people can and do make money trading very short term - but I think you may well need intra day data to test some of that stuff. And I suspect it’s a lot more difficult and much harder work.

I think most of the people on this forum are probably trend followers of the longer term variety. Futures trading longer term requires a lot of capital; if you are able, I suggest you take a look at the spread betting sites. You can spread bet for peanuts and it may be a good way to start. IG Index has many, many of the markets I trade.

Your purchase of TB is a very good move. Many of the built in TF systems are excellent and can be made better using built in Blox and Blox you will find in the market place.

I hope that I have not discouraged you. It DOES take a long time to gain a level of expertise for many of us but it IS do-able and you CAN make money. Especially with long term TF. Or TF of a shorter or more medium term time frame but using longer term filters to permission trades.

Garble, garble, garble. Don't give up. Keep digging. You are on the right path.

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Post by Horizon21786 » Thu Jan 14, 2010 1:57 pm

You are right. Krutsinger is short term or day trading. I had bought the book before Christmas so I wanted to read it regardless. . I am going to go through the thread of good books to read.

Like you I am staying with Daily data. I purchased Pinnacle data a few weeks ago.

You haven't discouraged me. All this is really useful. Reaching goal is about setting realistic goals within realistic timeframes. But newbies don't always know what is realistic in either area. I now know that Cryder has been looking for 2 years, that most people in this forum do longer term trading and that Futures require a lot of capital. I don't think people tend to do Forex either..

… so I have two years of saving in front of me, while I search for a system

The money will come once I have the system but it will go if I don't.

Thanks

(got myself a nice shovel!)
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Re: The more I use Trading Blox the less I want to trade!

Post by Angelo » Wed Feb 10, 2010 7:54 am

Horizon21786 wrote:Hi,

I am going to 'force' myself to place the trades this week as I have testing the strategies with decent historical data. It's just that I didn't expect to get this emotional reaction to the results generated by my using / testing strategies with 'trading blox'. I thought it would make me more confident about trading but instead, the more I test 'systems' that I think might work, the more it feels like trying to find a needle in a haystack
Hi Horizon21786,

I understand and – to a certain extent – concur with your feeling.

Below, I join a little simulation of what I normally get when testing a diversified portfolio of futures on what I consider the “more robustâ€
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Post by td80 » Wed Feb 10, 2010 1:58 pm

You may want to consider a few things here.

1. Your approach could be simpler. I consider a 3 EMA system to be overly complex. I'm not saying you need a 1 parameter system (although they are my favorite!), but there should be some diversity in your multi-parameter systems. I think you will find that the long EMA dictates just about everything in your (optimal) results. Less is more.

2. Your results over the long term are, dare I say, normal! Please reference large/long-standing CTA'/CPO's. Please note their results may be net of fees.

3. I have a theory for LTTF success that the more "realistic" and "hard to trade" systems are most likely more realistic in terms of future results and more likely to stand the test of time.

I have a system that only has 25% winners on a large basket. Drawdown is in the 40% range, CAGR in the 35% range. 1 Parameter. To me this is a very attractive system. How many people could stand 25% winners if they happened across this approach? How many people want to trade something with a historical MAR < 1? I submit to you that over the long run, at least on a single-system basis, you will go below 1 on your MAR. Even if it is showing some mega MAR > 2 right now.

I think it may pay to be a bit contrarian on the quest for maximum MAR/CAGR. Particularly for pure systematic trading with no special edge or non-technical inputs.

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