Possible duration for a winning strategy last?

Hello fellow Traders! Since this is my first post I will briefly introduce myself. My name is Benjamin, I’m nearly (a little over a month shy of) 21. I have been practice trading forex for a few months now, and live trading for three weeks tomorrow.

I have a question and would like to hear some feedback from the baby pips community. I will try to keep this short, so to skip right to the point… Let’s say I have a strategy and it currently runs an 80% win to losing ratio. How long can this strategy remain constant at 80% (overall) if I continue to follow it down to the T and do not change any of it now or in the future? Does it depend on how the strategy works itself? Or can an overall winning strategy actually become more accurate over time without modification?

Reason why I ask this is because currently me and a friend invented a strategy a weekend ago based solely off technical analysis. If you believe history repeats itself ( not exactly, but relatively speaking… Think fluctuation), then theoretically, technical analysis should work consistently. I believe numbers and data don’t lie, rather it’s the the data you are using to make a trading decision/strategy that can actively mislead you into making poor trades or have a low winning percentage etc. Also if the strategy is not followed exactly, then it’s not the exact same strategy anymore, still following me?.. Common sense to most of us right? Poor trades in my humble/newbie opinion are loosing trades. Even if by chance, accident, or planned, a winning trade is a good trade because a good trade makes you money. A win is a win!

Back on topic… thus far through forward testing (having actually used real money to test it this past week and a practice account) the strategy my friend and I have developed is currently running 100% winning to losing ratio on his practice account (only 11 trades so far via forward testing). My real account doesn’t reflect the strategy yet because we just added in our last Rule on Thursday, so I was only able to make one trade after the finished product thus far. But on the bright side I did win the trade so I was 100% on thursday :). Its rather a miracle that the strategy is still 100% on the practice account because even at the most basic level, the strategy was still able to push 100%. The only reason we added a new rule was to eliminate a questionable trade indicator or what I like to call a false indicator for entry or exit. the strategy doesn’t allow me to trade on Friday Monday or sunday :frowning: but before the new rules, even backtesting on any random day including the days I do not choose to trade, i was able to push 80%. I will have to go back and retest the same days with the new rules to see if it eliminates the losers on the past days I tried the premature strategy on… Could end up not entering a winning trade, but a safe win in my opinion is a planned win that adheres to a certain set of rules rather than a win that “lucked out” because it broke a rule and fortunately closed positive.

I’m getting too comfortable with 100% even though it’s only been 11 practice trades via forward testing… And a few live ones… I just would like to know how long it can occur for? The data doesn’t change… It still repeats the same message to me and my friend lol. Now we are getting several people on board.

I appologize in advance for the amount of time I have taken from you. I’m not boasting nor am I full of it. Just a Newbie trader looking for advice!

There are a lot of points here but i will do my best to address them. Can a system be profitable indefinitely without modification? It depends on the system what it exploits in the market. I believe a system can be profitable indefinitely, but also does it have different “modes” it must be adaptable not rigid. Most traders are humans so they are innately adapting to the market conditions even though they are still following their systems rules. I can say i know people who are still trading very profitably the same system for over 10 years. Have they made changes to adapt to current market conditions, yes. Is the underlying fundamental structure of the system the same, yes.

Now whats a good trade/bad trade. I believe that money gained or lost is not the measure of a good trade. A good trade is should solely be based on did it follow your trading plan 100% or not. if it deviated in any fashion it was a mistake even if it made money.

100% win rate, that will disappear don’t worry. how much data did you back test through and still maintain a 100% winning average? personally any new system i develop has been back tested over 10 years of data on multiple currencies. Are high win rates possible sure, i believe 80+% is completely possible to sustain. But lets put it this way Marty Schwartz (i believe it was him) one of the market wizards did not have a 100% win rate. After making a single modification i test against 3 years of data. also before going live i do an outside data set test. which is a random year of data for which you have never ran the system against before. if you still have a 95+% win rate after all that, go sell your system to Goldman Sachs for a couple billion dollars.

I believe mechanical systems work though i have never developed one myself, I suck a programming. I am a discretionary trader myself, but i use technical analysis as the foundation for my trading. I can honestly tell you this week i had a 83.33% win rate. But that was a good week for me I usually float around the mid-high 70s.

Alright lets get to the nuts and bolts, you and your friend came up with a system over a weekend. Maybe you did stumble upon a “holy grail”, but i would put money that you didn’t. Most people take years to develop systems that are constantly profitable. Do I think tech analysis works and gives you an edge over the market, Yes. Do i think 100% win rate is sustainable, absolutely not. Do I think high win rates like 80+ are. Sure if your really good. Way better than me. Unless you give me more information I cant help you anymore. I have had a lot of help and spent over 6 months and 8+ hours a day developing my system. And it is no where near done. Maybe i am just jealous and that’s giving me my bias. anyway good luck on your trading journey, i truly hope you found something. Cause that would be interesting if you could share it with us and see what you found.

I agree with you about a good trade being one that followed your system 100%. I would rather lose a trade than win a trade by breaking rules I worked very hard to form. Yes it was in one weekend but that was 10 hours on Saturday at and 10 on Sunday. 20 hours still isn’t much but time doesn’t matter as long as the end product works to your desired demands.I really hope I did stumble upon something, and if so, I would love to share it, I just have to get the ok from the friend who ended up spotting the significant find. If I don’t tell you the exacts, I’m not really giving out what’s not entirely mine. But I can give you some really nice pointers to hopefully allow you to come to the same conclusions. Basically in the beginning I picked a random hour and broke it down into 5 minute segments. Hence, I trade using the five minute chart. By writing out the open and close for each candle from the open of that hour to the close of that hour, we where able to see a pattern in how the direction of price changes consistently either by an extension in the same direction or by a reversal in direction. The key is entry and exit points. If you know price moves in a trend every 20 minutes then you know exactly when to enter a trade… At the beginning of the trend. Make sense so far? The entry is already predetermined (which by the way if your off and start at the wrong minute, then it completely throws off the strategy making the strategy void). Once you figure out the few possible entry points per hour (in this case there are only three possible entry points per hour) those exact times are always going to be the same no matter the hour. There is a Max of 2 trades per hour because even if it’s a 20 min trade, we wait a full 20 mins before reentry. The exit is equally as simple. If the price is continuing in your direction after 20 mins have passed then you are either looking to exit or hold onto that trade for another 20 minute cycle. I already have rules that have to be met that tell you whether to fully exit or hold onto a position, so the guess work is taken out. It’s just very surprising that it seems to work so consistently. Keep in mind I only trade the euro/usd because of how much and how frequent that currency pair fluctuates. Fluctuation is your friend. If not enough, you don’t trade it’s that simple. See why I only trade Tuesday’s weds and thurs? I’m pretty positive the strategy will work with any pair but I haven’t been able to test every pair yet.

If your still curious and want to know more, I’m sure I can share more via email. It’s not overly complex I can assure you that. But it’s not extremely simplistic either.

The chances are that it will start falling over after a few months at best, I am talking from experience. In the past I have come up with a multitude of systems that do exactly that, some simple idea’s some more complex and some quite sophisticated garbage, many had the same thing in common, they would perform quite unbelievably well for a period of time, before falling over, some slower, some would fall off the cliff.

However don’t get disheartened by my post, you definitely show an aptitude for trading, and you seem to have the right ideas, but don’t be surprised if what you are doing falls apart, just accept it as part of the learning process.

There really are only a very few ways of making consistent profits from the markets using TA, it always strikes me that traders always want to re-invent the wheel as it were, I’ve done it myself only to find that I wasted a lot of time.

Thank you for spending the time to read my post. What you said is exactly what I’m afraid of. But the more people following this strategy (I’m going to create a trading group) the more of an advantage it will be as a group even if it only remains 100% for 12 days (one month of trading)

Someone spared quite some neurons on this!

Its amazing, sounds complex and really worked on,BUT, a big but, this market is one that is moved by people, and by people i mean us, the small traders that each have 10000 euros in this, not that bank with 52662kazilions, particular traders tend to not complicate things so much, meaning? The simpler a system the better, i read your system and just the writing down all the numbers and stuff just seems complicating things, dont takemeserius as it might be something very simple as you barely revealed two pips of the system, but just by reading it popped in my mind, dis is jarD!

I would like to know more about the sistem, im also 20 and spend over 14 hours a day trading (scalping and dreaming), i tend to keep things simple, and up to date its working aparently, just have some problems with money management as im very ambitious, i want a billiongazilion by yesterday x) but generally, i keep a float,

Good Luck!
Nabil

Haha that’s what I like to hear Nabil! How about this, I won’t tell you exactly what I do, I will take pictures of a couple days I paper traded. I will jot down some rules so you can see why I would have done certain trades etc. But yeah Its pretty simple. I just ask that you don’t try to sell it? You can use it whenever or as often as you like. If you change anything it won’t be the same so you could make it your own possible. Want me to pm you a few pics of the data and the piece of paper with the rules on it?

Surething, please do!

If i sell it i promise to forward u 5% of the profit :blush: :stuck_out_tongue:

Why not start a skype group? A lot of members have it, im personally a very social person and love having a lot of peopple trading and giving opinions on trade and stuff(twitter is my friend :P)

Apply your system for system of the week, the more peopple see it, the more its read, that way any “mistake” or improvement u passed by could be remarked by some other member, surely not me, im a scalper trendfollower, support resistance hardcore 1 minute chart is my thing, and hey, it works xD, id liketo have some fancy shmenzy system tho

Itried fundamental with all this greek messup with a long eur usd trade this week end, sl is 3120,watch it get hit :frowning: spent so much time to put that trade, wn it usually takes me 6minsto determine an entry and a 5-10 pip exit u.u

Looking firward to knowing more about you making me a gazilionair x)

Haha. I don’t care about the money. It’s just fun to beat the game as much as you set yourself up too. Anything is possible, just because other’s have failed doesn’t mean it is impossible to achieve.

I just found something impresive out, i dont know why but in this website that gives live rates, theyre moving, can anyone explain how come? The market is closed :confused: the website is greatlakesforex.com.

I know it has nthing to do with the thread but i had the thread open so might as well share it with you.

Anyone know why its moving? How come?:confused: seems like eurusd is bullish :smiley: when i opened it, my heart went to 100000000 beats lol :smiley:

It’s just because of premarket activity. I’m feeling really bearish on the euro tonight. I wouldn’t be surprised to see the euro hit the 1.30’s’ tomorrow

As long as you keep up-to-date with the markets, and understand the typical dynamics of the markets that you are trading, then a profitable trading strat will always be profitable. Thats the simple answer. The problam with most new traders is that they build a trading strat based on very little historical data, and thus the range of data chosen is not big enough.

At present I chose to back test any new trading strats over the years of 2006, 2008 and 2010. These are very different years in terms of markets activity, and do give a nice range of results.

2006: Markets entering a boom
2008: Markets enetring a crash
2010: Markets enetering a ‘recovery’ (or so we hoped :wink: )

This is exactly why i test over 10 years, also you have to take into account the macro business/economic cycles. there are certain phases of the economic cycle that need to be trade into as these shift the cyclicals and peaks of each industry and importance of certain factors. From what it sounds like is that Leg0nd needs way more backtesing until i would even consider his idea a theory, much less a system. But As i said before my requirements are quite stringent, but they are that way for a reason.

A system survives based on[B] ADAPTATION[/B]

Update*
I developed a new system and have been testing it since it’s basic foundation yesterday. I used a few principals of the original system I briefly touched up on at the beginning of this thread. My new system is still 100% accurate thus far, and I have only used real money since the basic inception via paper trading the 17th of febuary. Even as the system was being used to make real trades, the entire time it has been in action, I searched and still continue to search for new data to confirm and improve the 100% I already have. 100% still isn’t perfect, you can still be 100% without taking maximum gain possible per trade. That’s why I search for (just found the most important peice today*) data to make a faster more precise exact entry and exact exit. So that I know that I will achieve maximum gain per trade. I have only made 6 trades thus far, and i curretly have one open. Will let you know how this trade closes afterwards… I may not have found the holy Grail, but I did find something very few people have yet to stumble upon. Probably only because all traders look at numbers all day, so It’s very easy to miss a few of the important ones unless you’re purposely looking for them. Everybody see’s them. I already know that lol. It’s just most people don’t understand the significance of them or how to use them for there advantage. I never guess. I let the data inform me so that I know ahead of time what is currently scheduled to happen.

Shoowww meee teh moneyyY! :stuck_out_tongue:

legend, Whole numbers i presume?

00-50’s?

Just taking a stab

Just to make it a little easier, pull up a euro/usd 5m chart. Let’s say you are looking for a 5 minute trade. You decide you want to enter at 8 a.m (most of the time you would want to trade for a longer timeframe, but if the fluctuation Is there, you can easily make and win a 5 min trade) in order to get the most of of a 5 min trade you are going to want to get in at the open, and exit at the close (max possible gain for a 5 minute trade).

Example Timeframe:
Check out the 7:55 a.m candle. What is the 7:55 a.m candle’s close? Take its close price and subtract the current 8:00 a.m candle’s open price. If the difference is positive, the 8:00 a.m candle will close negative; If the difference between close and open is negative, the 8:00 a.m candle will close positive. So if you where able to get in at the open in the correct direction, you could then exit at the close of the 8:00 am candle or you could wait until the 8:05 candle opens, then immediately determine 8:05 a.m candle’s direction so you know if you can hold on to the trade for another 5 mins and to make more profit, or if the 8:05 a.m candle is going to go against you so you know to fully exit. Like I said, 5 mins aren’t the best length for a trade, but I have made several 5 min trades today on my practice account and they have all been positive thus far. There’s more to what I do than just that… I’m going to continue testing it with real money, and if it remains highly profitable as a system, I will copyright it first. Then share the full system with the community. I just don’t want someone to steal it then sell it, making it illegal for me to claim it as my own.

I will check it out, for sure,

Always a good thing to have another weapon in the cashe.

Thanks for sharing, and great profits to ya