Sorry you too ME,
how [B]many thousand times[/B] do you think that Dale (and myself, after having joined him as a friend) have made this exercise?
And, I assure you, also with “discretionary methods” as cited during this discussion…
bye
Fab
Ohhh, P.S.: our common experience is that probably you have to scroll back [B]much more[/B] than a year, because, by chance, it looks like that 2008 and 2009 (till now) are not [I]exactely[/I] the same markets as for instance 2006-2007…
I don’t think you understood what I was saying. I’m not saying one should not read the works of others before them(the facts of their work that is, for example to be a scientist you must know the scientific facts). I read the facts about forex trading just not the opinions of so called gurus who have some “system” that will make you money day in and day out. Most so called educated people are just just walking hard drives of collective memory.
Not sure if I smel a little sarcasm in your post here. Hey, just trying to help one out. I wrote ‘at least’ so you can see that as [B]a minimum[/B].
The point I was making, is that you would learn a lot more from that, instead of backtesting in MT4.
Anyway, if you guys tried it and even that didn’t work, and you still don’t have a clue what to change, then maybe Andre Mayer did have a point in post #4: [B]On a sidenote: You ever thought that maybe you�re just not cut out for this gig? [/B]
Hello,
OK well: this is the type of input I’m looking for.
Thank you.
I cannot say that I agree with EVERYTHING said so far though.
First: without me having read any books I’d NEVER have made any profits EVER (believe it or not: THERE WAS SOME PROFIT FOR A FEW CONSECUTIVE MONTHS ‘WAY BACK WHEN’ i.e. about seven or so months last year where things went VERY WELL). I believe that I HAD to get SOME kind of ‘education’ whether it be from the Internet or books. I opted for the ‘books route’ and chose those books that were written by people whose indicators are ALMOST ALWAYS included with a trading platform from ANY broker. Put another way: JUST ‘JUMPING IN’ without a CLUE cost ME MYSELF around $36 000 in my first year of trading. (And do not mention the ‘demo route’. I made $3 500 in about a week BEFORE I started trading live and thought ‘hey: this is EASY money’ so I opened a LIVE account with $500 AND LOST it in about half an hour WITHOUT doing ANYTHING DIFFERENT than I had been doing on my demo account)!!! That said: I DO NOW (two and a half years and a WHOLE lot more losses later) advocate demo trading!!!
Second: do not forget that ‘systems’ are based on certain underlying principles and concepts. As an example: ‘a swing point, is a swing point, is a swing point’. It does not matter WHAT OTHER name you call it. ‘A swing point is a swing point’. Bill Williams’ ‘swing points’ are known as or denoted by ‘Fractals’ (and there are even a few variations of these around but they’re all the same things). Wilder’s ‘swing points’ are indicated by his ASI. Larry Williams includes a lengthy explanation of what REALLY are nothing other than ‘swing points’ in his books (the two that I have anyway). As a matter of fact he is ACTUALLY explaining that these ‘swing points’ help you identify the ‘underlying market structure’. I COULD GO ON (but will not). The point I’m trying to make is that ‘systems’ ARE INDEED BASED on certain ‘common concepts’ (for want of a better description) and JUST BECAUSE they are referred to as ‘systems’ DOES NOT MEAN that they are far removed from, for example, ‘price action’. It’s just ‘price action’ PRESENTED in a different way. As a matter of fact: in the one example posted on this very thread ‘resistance’ COULD be denoted NOT ONLY by looking at the chart and recognizing it BUT by drawing a ‘Fractal’. As another example: Wilder’s ASI and RSI CLEARLY show support and resistance in exactly the same places as a ‘price action trader’ would identify them. They’re just not CALLED that. I hope I’m explaining myself clearly here.
Third (and this is, I suppose, the ‘mystery’ that I’m trying to ‘uncover’ here through constructive interaction with all of you): ALL of these ‘chaps’ have reputations to uphold. Wilder has retired (to the best of my knowledge) but his son is still trading. Larry Williams and Bill Williams are both VERY much active TODAY. I know that they charge quite a bit (even in dollar terms) for their courses and seminars. Do you not think that if everything they had written and everything that they were teaching was nonsense that you’d not have heard about it by now??? For the most part (and IN SPITE of my ‘little thread starter message’ which I’m SURE is not going to do any harm): there are only GOOD reports about these people. SO: WHERE IS THE PROBLEM??? Why do these ‘classic’ systems (which I’ll ALMOST GUARANTEE are NO DIFFERENT from ‘price action trading’ or ‘pattern recognition trading’) when ‘automatically’ back tested fail??? Could it be that the markets TODAY are better suited to these systems (quite the opposite of what you or I MAY believe)??? I make this statement for the simple reason that most of these systems IF NOT ALL of them performed VERY WELL from around the end of 2006 to date. But when tested FURTHER BACK than that they ‘fall over’ BADLY. So: I’m trying to figure out the reason for this phenomenon.
Let me put all of this another way:
There are as many trend following systems as there are traders (OK: I’m exaggerating for the purposes of demonstration but you get what I mean). THAT SAID: there are probably only SO MANY METHODS that could be used to detect a trend NO MATTER WHAT the ‘SYSTEM’ is called. SO: all back testing (and NOT ONLY on MT4 i.e. I’m not singling out Metatrader here) between 1999 and almost the end of 2006 tells ME that EVERY TREND FOLLOWING SYSTEM IN THE WORLD failed between 1999 and almost the end of 2006!!! Because this ACTUALLY is what this amounts to. I’m sorry: I just find that VERY hard to believe.
Maybe there is another way we (I) can ‘tackle’ this. HOW ABOUT I ‘invite’ my favourite ‘gurus’ to show us (me) EXACTLY how their systems would have / should have performed during those periods??? HOW ABOUT THAT IDEA???
Now PLEASE understand here: I’m NOT trying to cause a ‘furore’ between ‘price action traders’ and ‘systems traders’. I’m not trying to ‘prove’ that one is better than the other. This is NOT my intention. What I’m REALLY trying to do is MAKE SENSE of the fact that VERY CLEVER INDICATORS AND TRADING ‘SYSTEMS’ WHICH ARE LARGELY BASED ON ‘COMMON PRINCIPLES’ which have been developed by VERY CLEVER PEOPLE AND ARE BEING MARKETED TODAY AS I TYPE work WELL NOW but ‘fall over’ (apparantely) when tested prior to 2007!!!
Regards,
Dale.
Edit:
OK: I see some posts have appeared while I was typing this last one up. There seems to be a bit of confusion here about what I mean by the word ‘system’. I AM NOT talking about ‘black box’ things here. The indicators and ‘systems’ to which I refer ARE BASED on ‘price action’ and their formula and code are totally transparent. AGAIN: it’s not a ‘system’ I’m after here it’s an explanation for this ‘back testing failure phenomenon’.
And while some may THINK that this is a futile excercise: bear with me because this is NOT a ‘figment of my imagination’!!! IT EXISTS and I want to know WHY!!!
Another edit:
Let me put it another way: if I AM WRONG here then the markets are TRULY RANDOM and no matter WHAT you ‘throw at them’ it WILL ALWAYS EVENTUALLY FAIL which would then bring me back to my ORIGINAL hypothesis: I would then believe that one can make money INVESTING but there is a BIG DIFFERENCE between INVESTING and TRADING!!!
Hi Dale,
Wow… any way you can say more in less words?..lol
About backtesting on MT4…I’ve done quite a bit of it myself. Basically I created and used EA’s to help find out if a strategy would work or not vs using it to actually trade for me, which i couldn’t do anyways cause my live account isn’t with an MT4 broker. I’ve pretty much came to the same results that no matter what “system” I tried to test… they all seemed to fail. Some did ok depending on the pair, but couldn’t/wouldn’t find consistency across all pairs. How depressing! :eek:
I don’t know if you’ve tried the “visual” mode so you can see it run through it’s paces, but [B]price in action including any indicators is very deceiving compared to the completed charts we see after the fact[/B]. Then apparently the quality of the price history that is used to run backtests on is questionable as noted on the “report”.
So, now instead of writing EA’s, I’ve started using a simulator…(which is actually the backtester running in visual mode with some scripts to manually open & close trades, but with some limitations)…to make my own decisions based on what I see. 
Hello Sweet Pip,
(That post was the CONCISE version)!!! LOL!!!
Thanks for your input.
This is exactly the type of thing I’m saying (and by the way: let the record show that I DO NOT trade with MT4 either).
THIS comment of yours:
[B]
[B]price in action including any indicators is very deceiving compared to the completed charts we see after the fact[/B].
[/B]
is ‘in line’ with what I’m starting to believe to be honest.
I’ve used that ‘Visual’ mode for testing ‘systems’ (better be careful here) or ‘strategies’ and made extensive use of the ‘Optimizer’ as well (obviously in the hope that I’d find that ‘sweet spot’ and no pun intended) but I’ve found that you can ‘optimize parameters until the cows come home’ without getting any results at all. Then, of course, I find MYSELF wondering about the integrity of the historical data. We had an ‘incident’ the other day (Fabio and myself) where he sent me an EA to test. Using THE SAME BROKER and the SAME TYPES of account on the SAME pair for the SAME time frame OBVIOUSLY running the SAME EA and I can tell you that the results were TOTALLY (and I DO MEAN TOTALLY ‘out of kilter’ with each other). OK: a ‘fix’ was suggested by the broker but this worried me, and stilll does, IMMENSELY. I make a HABIT of clearing ALL data caches (with MY trading platform AS WELL as with MT4) before doing ANYTHING (I do this manually) and one would ONLY REASONABLY ASSUME that the data that is being downloaded is correct ALWAYS. I’ll tell you THIS: using AGAIN the EXACT SAME setup as above (I wont bore you with the details) ON ONE DAY and running the Strategy Tester a week later FOR THE SAME TIME PERIOD i.e. using the 'From and ‘To’ dates I GOT DIFFERENT RESULTS!!! ONE WEEK LATER!!! Already an ‘inexplicable issue’.
Regards,
Dale.
What do you classify what you’re doing…investing or trading? How many trades at a time do you enter…same pairs or across several? I take it you don’t just trade currencies either?
Hi Sweet Pip,
To answer your question:
I’d LIKE to be a successful TRADER and believe that this is what I am doing (or TRYING to do successfully). I guess definitions here are important. To me: INVESTING would be, for example, to buy a stock at a certain price and, if the company does well, the price of that stock will go up and, obviously, if the company does NOT do well, then the price of that stock will go down. The same would apply to commodities. To me: this is the ‘buy and hold’ strategy and you are buying VALUE. This is INVESTING (in stocks) to me. Now to me TRADING is the ‘art’ or ‘profession’ of ‘catching’ the price moves UP and the price moves DOWN REGARDLESS of VALUE. Obviously TRADING, to me, represents INCOME on a monthly basis whereas INVESTING, to me, would mean the ‘rainy day’ or ‘retirement’ thing.
Your NEXT question:
I WANT to be able to SUCCESSFULLY trade the Dow and the S&P and the other major indices. A PATTERN has developed with me i.e. the indices ALWAYS ‘cause me grief’ and I end up trading forex to ‘get myself out of it’ (although this has not been working EITHER for a GOOD while now)!!!
What do I trade???
Well. I USED to trade ‘everything and anything’ if I had a valid signal (from whatever trading system I was using at the time BUT MOSTLY ‘Wilder’ back then). BUT seeing that THIS YEAR I DISCOVERED this thing called ‘money management’ I realised the ‘error of my ways’. So on my platform NOW I have ONLY the major pairs and the ‘exotics’ and (of course) the major indices (ALL of them) as well as Gold and Silver and Oil. Why the ‘exotics’??? Because in SPITE of the HUMUNGOUS spreads: they trend FAR better and FAR longer than ANY of the majors (just look at EUR/SEK as an example although I’m not ENTIRELY sure that this could or should be classified as an ‘exotic’).
Typically: I’d have quite a few positions open (well: UP UNTIL NOW i.e. I guess another ‘evil’ of mine has been exposed so I am NOW ONLY ALLOWED to have a MAXIMUM of three positions open since starting this thread WHICH IS GOOD). I’ve never concerned myself with ‘hedging’ of currency pairs or anything like that.
Put it this way: MY ‘FIRST PRIZE’ would be to become a successful equities TRADER (and IN PARTICULAR be able to trade the S&P 500 and the Dow ‘LIKE A PRO’)!!!
Now it is I that has a question:
Why do you ask (as a matter of interest)?
Regards,
Dale.
dpaterso
You are not asking for help (that part is done) you are using this place to write a blog/book “Style Woody Allen”.
:rolleyes::rolleyes::rolleyes:
Sorry, but was that REALLY necessary???
First: it was not ‘help’ that I was asking for. I made some statements when I started the thread and I was just interested in some ‘outside views’ is all.
Second: Sweet Pip asked me some questions and I answered them.
Now I don’t know exactly what YOU were trying to accomplish with your last post but if you don’t mind too much: please would you at least shorten your message i.e. remove all the question marks. It causes a problem with scrolling.
Regards,
Dale.
hey dale heres my take.
the ema thing would prolbably work well in a trending market more so than a ranging market allthough one would think the ema would be flat in a sideways market. maybe when the ema drops and if you wait for price to cross it than wait for a pullback to enter short this way you can filter out the false breaks.
i have limited experiance with ma’s but i am checking out keneth lee’s favorite thread which is
Trade what you see NOT what you expect @ Forex Factory
he uses a few different ma’s and seems to be quite successful at it. i have followed him while he trades live and he is very good!!!
anyway dale i hope the best for you whatever you endevour but now it is friday have a glenlivit “neat” or a nice cold one and cheers monday will be here soon enough
Hi dale,
excuse me for not reading through all this thread…but I have read your first post.
Just a question if it’s ok…
I have noticed that you have talked about all those indicators and systems.
Did you ever tried to trade with a chart totally clean from indicators…I mean using support\resistance and price action only?
Thanks,
Ben
Good (Saturday) morning everyone.
Hey johnnykanoo,
Urghhh… I took your advice and now I’ve got BAD headache this morning!!!
Thanks for the post and the link. I will take a look. Have a nice weekend.
benji533,
Thank YOU for posting as well. I appreciate you trying to help but this thread is not so much about me finding YET ANOTHER trading system or methodology: it’s more about the fact (well: it’s SUPPOSEd to be more about the fact anyway) that most, if not ALL, trend following trading systems or indicators as designed by very well known authors on the subject do not appear to work over time and the big question is: do they REALLY know what they’re talking about or are they just ‘pulling the wool over our eyes’ OR is there some type of ‘phenomenon’ that exists that would explain the fact that HISTORICALLY i.e. prior to 2007 these systems actually LOST money (for many consecutive years). The point is that I don’t believe that ALL of them could be wrong (for reasons already given in a previous post) so there is SOME problem SOMEWHERE and I started this thread to get some other peoples ‘take’ on this is all. Unfortuanately the real point of the thread seems to have been misunderstood (although I have to say that in spite of this: some very good people HERE have given me some very good advice anyway for which I’m grateful).
I suppose I’m getting as bad as some other people (in not ACTUALLY answering YOUR question): you’re talking (I’m assuming) about ‘price action trading’. Well first of all: no I have not tried trading with, and do not trade, using price action. I trade trends. Again:with the exception of Pivot Points / Levels every single indicator on every single trading platform are geared toward trend trading and I find it a total ‘stretch’ to believe that none of them made any money prior to 2007. In other words: EITHER ALL of these well known authors are ‘bullshi*ters’ and cannot make a living trading using the very same trading systems and indicators that they’ve developed and ‘palmed off on us’ for YEARS AND YEARS OR there exists a thus far inexplicable phenomenon for the fact that back testing these trading systems and indicators shows annual consecutive losses prior to 2007.
Before I get another ‘sad’ post from someone (I’m not referring to your post benji533): let me reiterate the fact that I HAVE trading systems that did make (should have made i.e. my own personal shortcoming aside) FORTUNES from 2006 to date. These same systems, however, if back tested (particularly when using MT4) never made any money for a good few years prior to this period and it is an explanation for THIS that I am (was) after. It’s the ‘bigger picture’ that is at stake here because if back testing is INDEED exposing the truth and the failure of these systems AND there authors then there are any number of very WORRYING conclusions that can be drawn NOT ONLY about this entire business of trading but also about a lot of very well known and well educated people and it would REALLY mean that actually: if you’ve been trading successfully (and by that I mean not as a hobby but actually trading for a living) for the past few years you are BOUND to EITHER ‘wipe-out’ OR you will eventually get to a stage where you trade for consecutive years without making ANY profits. Now I don’t know about YOU all but that prospect, if my ‘myths’ are not dispelled here, is a very WORRYING prospect!!! (Let me just add that this would apply to any trend trader and, lets’ face it, most of us are and what’s more, there is not a book on the subject of trading nor a trading related website that does NOT tell you that ‘the trend is your friend’ and unless that statement is supposed to read ‘the trend is your friend but only since 2006’ then ‘Houston: we have a problem’ and one big massive and unexposed ‘con’ on our hands)!!! This is the REAL point of this thread.
Regards,
Dale.
Edit:
johnnykanoo:
I ‘moseyed on over’ to that thread on FF and saw this guys (30XTCi) signature that made me laugh (and is very ‘befitting’ this thread):
[I]“There are two types of analysts, those that don’t know, and those that don’t know they don’t know.”[/I]
ROFLOL!!!
Dale, billions of questions you’ve got, so I’ll tackle just one of them:
“most, if not ALL, trend following trading systems or indicators as designed by very well known authors on the subject do not appear to work over time”.
Correct.
You see a system based on overbought and oversold conditions? It works when the market’s ranging. You see a system based on breakouts and trends? PSAR, SMAs, EMAS, they will all work in a trending market. In a stocks and shares bull market, you get to see all kinds of trend systems, and BS spun around it how it’s taking advantage of complicated mathematical structures etc etc. Cobblers - it’s based around a simple concept that the market will go up more than it will go down when everyone’s buying.
I don’t care for the authors you’ve mentioned, and I can’t imagine Golman Sachs knocking down their doors to get them to come and play either. But, looking through your posts I think your biggest issue is that you’re determined to use the methodical systems approach (mixed in with all the worst traits of natural human behaviour - increasing position size after a streak of wins perhaps?), when perhaps you’re better suited to discretionary trading. Play to your strengths and all that…
Hey triphop,
Nice to hear from you after such a long time.
mixed in with the worst traits of human behaviour
LOL!!! I like that one.
That said: of course I’d be increasing position size but NOT based solely on the account balance or a percentage thereof i.e. Larry Williams (none other) has a very sound risk / position / money management system (based on the historical accuracy of your trading system and largest loss realised and all that).
But (and in keeping with the purpose of this thread): it’s not looking good I’ll tell you and I’m now starting to see why THOUSANDS (if not HUNDREDS of thousands) of people are getting LEGALLY ‘fleeced’ the world over on a daily basis. It’s no wonder that in most of the ‘educational material’: the ‘disclaimers’ are almost ENTIRE CHAPTERS ON THEIR OWN!!!
Regards,
Dale.
Likewise Dale, good to hear from you.
As a matter of interest, of your losses how much would you attribute to your system not working vs you changing the system. By that, I mean when you either broke your rules, meddled with the system or did something that was never specified at the start?
dpaterso,
You are right man.
Systems do not work, niether indicators.
Most people fail cause they don’t know how to manage a sideways market. The problem is that the market spends most of it’s time sideways. Here you have your 95% failure and the 5% success.
Indicators and systems work only when market is trending. That’s the reason most of the time they actually don’t work.
There are smart traders out there that can and know how to get their money out of these sideways markets while others get their launch eated.
I am not the big man. I am new. Check the james16 group thread and guest area. You have tried so many things, why not giving it a shot?
Hope it helps.
Ben
PS - I can just tell you that personally I do not have even one indicator on my screen, and I know exactly which levels will may make trouble for price. IMO all those indicators are mainly serving their developers who make the real money out of their client pockets.
This thing really isn’t rocket since. Keep it simple. Understand what price tells you.
Hello again triphop.
LOL!!! It would seem that you KNOW ME WELL!!! LOL!!!
Here’s ‘the low down’!!!
I have to admit that almost 100% of the time when I’ve had a ‘wipe-out’ it’s been due to one (or most, or all) of these factors:
[ul]
[li]Not concentrating (even although JUST BECAUSE I sit in front of charts the whole day I think that I have been).[/li][li]Overtrading.[/li][li]Second-guessing my very own trading systems.[/li][li]Bad (or no) money management.[/li][li]Realising a loss and then immediately jumping to another system.[/li][li]Getting ‘spooked’ by the back testing results of my trading systems by others (and sometimes by the results of my very OWN paper trading).[/li][/ul]The point is that at NO time (at least since I started trading anyway) were the SYSTEMS THEMSELVES at fault i.e. ‘paper traded’ since the end of 2006 till present they could / should have performed very well (my own shortcomings as noted above aside). ‘Sub-prime’ and the ‘Credit Crunch’ ACTUALLY were a ‘God sends’ for these systems.
I believe I’ve learned (the hard way) to NOT repeat any of the above mistakes and are quite OK in those areas NOW BUT back testing shows (APPARANTELY) that had I ALREADY learned to NOT make those very same mistakes two or three years PRIOR to me starting to trade then these very same systems would have failed dismally. In other words (and assuming I knew BACK THEN, when I first started trading, what I know NOW): my trading systems would have made a lot of money (and DID for a short while when I was ‘behaving myself’). The REAL problem NOW is that GOING FORWARD from here: there is NO guarantee that these very same systems are not going to get to a point where they will start failing year after year after year (as this is what back testing SUPPOSEDLY shows WILL EVENTUALLY HAPPEN). SO: does one go forward based on what could / should have happened in the past two and half years or so (in which case there is no problem) OR NOT??? THIS is the issue!!!
Regards,
Dale.
Hey benji533 (Ben),
Thanks for the post.
You’re right in everything you say of course. Let me put it THIS way: if I could find a way to STAY OUT of markets that are trading in a range and only trade markets that are trending I’d be quite happy with that (this based on the assumption that there is always a trend SOMEWHERE).
But see my previous post (in response to triphop’s post to me) and you’ll see where I’m coming from here.
Regards,
Dale.
Ha ha! Bang on the money there Dale. Have you ever read Way of the Turtle? If not, it’d be right up your street - great book that talks a lot about the different biases that makes you do things like jump systems.
Like you say, it all boils down to how can you have confidence in a system going forward when you don’t know what’ll happen in the future? Especially if you’ve seen the system perform badly in the past? Markets change, so systems need to change.
The only way I know (other than stopping when you reach X% DD) is that you have to recognise when market conditions change and therefore when to change your system. Judging that is the holy grail of system design in my opinion.