Hours of daily meditation. And no small amount of duct tape.
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same here
i use one SMA to close some trades (not to open any), and an off-chart ATR as a partial aid to determine targets and stop-losses for some trades (not for all of them), and horizontal lines to mark out areas of interest (always) and select entries
sounds like i’m maybe using a similar trading style to Mr Sandwich
in general, I believe that for most struggling traders, removing indicators is more beneficial than adding them
more specifically, i think that people who are trying somehow to confirm what one indicator is apparently telling them by using additional indicators, in the hope that they’ll have a higher win rate and thereby do better, overall, that way, are actually combining two very different mistaken approaches at the same time, almost inevitably with poor long-term results, and that they’re totally barking up the wrong tree
unfortunately, though, that’s a very common philosophy in forum discussions about how to trade, without its combination of two very misguided premises usually being examined or noticed at all
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Care to share how one can accomplish this? I understand what ATR is, but applying it to my trades is mystifying.
Quick q, does this mean it’s not an overlay e.g. it’s at the bottom of the chart or do you mean you have this completely somewhere else?
yes, just an ATR displayed under the price chart will do it
as an example: some people set a stop-loss of twice the ATR (measured over something 15 periods) when they enter the trade
it’s only one method - and as with all indicators, there are loads of different ways of using it
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I use several indictors in order to define my entry points. I am waiting to get combined signal from all indicators included in my analysis. Of course, I am using several ordinary ones like MA, RSI and Bollinger Bands. In addition I have support/resistance lines always on my chart
Trend following approach is tricky you think you follow the trend but all available information about the price you receive through indicators is lagging hence you bet on past market events. The solution for this is backtesting or combine technical analysis with naked eye analysis which is based on intuition and experienced. Unfortunately this powerful tool is not available for rookie traders
Doesn’t that have the same issue, it’s data from the past, and not reflective of real-time movements?
Nah. Take every single market situation in the past where the pattern were observed as a random experiment (coin toss). The more experiments you make the more data you have to estimate relative frequency of pattern success which converge to true probability. Remember that some characteristics of random experiments tend to become non-random as you increase the number of tests so you can get unbiased data from such research.
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no, it doesn’t
it reflects what were real-time price movements in the past
obviously it doesn’t reflect current price movements, but it isn’t meant to and that isn’t what it’s used for
it doesn’t (quite) follow that a thoroughly backtested method which would have made consistent profits in the past will necessarily still make them tomorrow, but it’s still way better than trying to trade with a method you haven’t becktested by running it over a decade’s data: that would be “strongly inadvisable”, to put it very politely indeed
there are people (especially in forums) who will try to convince you that because backtesting is done on historical data and your trading will be done on future data, backtesting has no value
that view is total rubbish, of course, but probably they believe it themselves, on some level, or at least they hope it’s true, and sometimes (actually quite often) when people believe total rubbish, they want other people to believe it, too
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Any trading strategy or approach should be based on backtesting simply because we have no other data (about future for example) to use it for forecasting. I don’t believe that all past data is priced in the market so it is fully efficient. There are a lot of inefficiencies which we have to avail of exploring them.
Is this your preferred method of setting stops? Sorry to hijack the thread!
Any good resources on how to go about backtesting? Don’t think you can do this with broker platform software, right?
Luckily, broker platform is enough, especially if it is MT4. There is strategy backtester in it which basically simulates trading activity according your EA on past price feed. The lower is timeframe, the longer will be the process. For more advanced trading strategy which are spread or execution sensitive backtesting can be problematic since correct transaction costs are not incorporated (you have only tick data from Metaquotes, not history of broker spreads and execution). That’s why final results should be adjusted for transaction costs and usually their size is unknown and can vary.
Ah thanks. I’m using my broker’s web platform. Or more like skin on top of tradingview charts. I couldn’t remember seeing anything that screamed backtesting, but it appears that Oanda has something called the Algo Lab, where you can backtest on tick data going back to 2004 I think it said.
But it looks like you need to know C#, Python or F#, whatever that is. Hmmmm, I’ll check this out further, and then maybe try to fire up my account on Oanda’s MT4. Thanks!
For MT4 yes, it’s internal programming space is based on C language. But if you go with Python or R then probably you have to buy tick data or download somewhere for free. The problem is that finding quotes for forex pairs (CFD data) will eventually bring you to the choice among FX brokers since they hold a kind of exclusive rights for offering trading services to retail traders.
I’ve heard of R, but not applied to forex. Interesting. Did you mention who your broker was that you backrest with and get that data? Or is it possible to get a tick data provider AND a separate broker? Or are they one and the same?
I am a little bit old-fashioned, so I prefer using indicators and charts to define my entry and exit points. With time and experience, trader could be able just to spot these points on any chart, but still, I would like to be precise and know exactly what am I doing
