what that means exactly? Someone told you that this strategy doesn’t work?
Backtesting helps to refine your strategy especially if you are using indicators.
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Nono sorry for not explaining more clearly. What I mean is that I have back tested several strategies and they seem very profitable. But when I start to trade them in the live market they quickly run my account to zero.
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The MACD can help with entries i.e. the zero line cross or a cross above or below the signal line. Try experimenting with a 12,26,2 or 12,26,3 MACD.
I think that these strategies are overfitted, that is why it is not profitable in live trading or you have bad quality data which shows you random results
I struggle to find any strategy using indicators that works consistently. I mostly put a few EMAs on a chart and look at what price is doing. Wait for a pullback and enter in the trend direction. Use candlesticks or price action to determine when the trend will continue. HA candlesticks help this.
You can do this on any chart
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Is that a problem with you or with the strategy? The only difference between backtesting and forward testing is YOU!
Maybe you need to be more patient, maybe you’re taking the wrong signals.
It could be a few things. But if it backtested well, then problem is something you’re doing. But that’s a good thing. That means you have a good strategy, but now you have to correct your actions.
You can do it!!
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Maybe one thing might be worth investigating.
From your description it sounds like you are trading trends. If so, then your overall “profit-to-loss” cycles appear to reflect the claim that markets only trend about 20-30% of the time, and the rest of the time in between is spent ranging.
Bearing in mind that indicators are based on fixed mathematical equations, they can only function well while the market movement is in tune with the formula. I.e. if the indicator is designed for trend trading then it will do well in trends and poor in ranges.
Personally, I do not like trailing SLs because they tend to give up a large portion of gain before being triggered if they lag too far - or are accidentally hit from a price spike if they are too close. In addition, the end of a trend often happens far faster than the rate at which it built up and most indicators do not reflect that (e.g. MA’s) and they react too slowly.
This is perhaps one reason why a lot of people have migrated from indicators to PA. But, interestingly, this migration has not reduced the high overall failure rate amongst retail traders at all - at least, according to the percentages reported by regulated brokers (roughly 70-80% of retail clients).
Another issue is raised by Mark Douglas in his book “Trading in the zone”:
“If your goal is to trade like a professional and be a consistent winner, then you must start from the premise that the solutions are in your mind and not in the market. Consistency is a state of mind that has at its core certain fundamental thinking stategies that are unique to trading.”
I think the “take-away” from this quote is that you are unlikely to simply find a mechanical indicator setup that one just has to apply and sit back and watch the money roll in.
In trading, the markets are the raw clay and the indicators/PA are the tools with which the sculptor turns that clay into a sculpture with personal value and meaning. But it is not the tools that do the work, it is the scuptors mind and hands that manipulate and control those tools. It is these skills and vision that a consistent trader possesses.
Trading is “simple” in theory: buy when price is rising, sell when price is falling. Driving a car is also “simple” in theory: it has an accelerator and a brake pedal…but it also has steering wheel without which it is going nowhere other than eventually into the next ditch.
(Discretionary) trading also needs a steering wheel to stay on track regardless of the proficiency of the actual vehicle itself (the strategy).
Just some thoughts…
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I use MACD 3-10-16, which was provided by No nonsense forex who stated after 100 tests that it was excellent for entry and exit strategies. Link it with a RSI 10 with a 50 line - above is buying and below is selling, which is confirmation of which direction the candles are heading.
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I understand your frustration, and we all go through this. What helped me the most was to stop focusing on the strategy as the cure and put focus on myself. Don’t take any of this the wrong way, I just want to help you shift your perspective a little.
As the saying goes “A good craftsman doesn’t blame his tools”. In trading we are the craftsman and our strategy is the tool for performing our work. A good craftsman will produce quality work with a $500 tool or a $5 tool because of their skill level. An unskilled craftsman will produce shoddy work no matter how expensive their tools are. I’m decent at MIG welding, but I’m not skilled at TIG welding and if I were given the most expensive top of the line TIG welding machine, my welds would be shoddy because I don’t have the skill to make use of that tool.
Consider that every strategy that you have tried without success is working for someone else. Same strategy different results. The variable factor is the trader. So strategy hopping isn’t the answer, especially since doing this doesn’t give the trader enough time to develop mastery and refinement of the strategy under a variety of market conditions.
At some point we all have to take ownership for both our successes and failures and focus on improving the variable in the equation that really matters…ourselves as the trader.
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Brent Donnelly in his book The Art of Currency Trading claims that pure technical analysis is a valuable tool but does not work well as a standalone trade selection methodology. He also states that in his 20+ years of experience he has never seen a purely technical trader to make meaningful profit. In his opinion, a combination of technical and fundamental analysis is necessary.
Yes, that is quite right. I was addressing another poster who includes MACD in his process selection, same as what I do. By no means is just the MACD and RSI part of my selection process as a trend trader, which is mainly watching price action movement following market sentiment.
Stop wasting time trying to combine a certain set of indicators and try to back test it because the market is moving in its cycles. Instead, try to focus more on money management. Entry does help to get an extra edge indeed, but without a good exit, you still won’t making any money. Also, try to understand the fundamental core of:
- Why does price moves?
- When does it move the most?
- How does it moves?
- Why there is buying and selling happening in the market? Who are they?
- What are their roles in the market? What is my role in the market?
Answer these and you will find you trading strategy.
As for the technical side, study 3 market states as a start. You should know and able to identify these states on the chart because you will only able to make money in 1 of the 3 market states, if you try to chase the other 2, you are gambling and most likely you will get stopped out even you’re not. Identify these states, master it until you able to identify on the chart by just glance it for a few seconds.
I like the emphasis on exits: the entry makes the trade, but the exit makes the money.
Too many traders believe their job is to use TA to predict what the market will do next. A dangerous pre-conceived attitude which leads naturally to the following mistaken conclusions -
- if the market does what they predicted and they make money, they are right
- if it doesn’t do this and they lose money either they made a mistake in their TA or the market was manipulated against them.
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Brilliant! 
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It is possible but you have to find your own way to trade profitably. Not just blindly copy other’s trading strategies.
I suppose it is possible to trade even without indicators, simply on the pure candle chart. Although I still find it difficult to do so.
You need to focus on yourself and notice what you are good at. Whether it’s a particular timeframe, asset or asset class and so on.
You can do it brother!
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couple of years？ it took me 14 years to found one . you want tips? its not lying in everything you had learned so far .
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strategies and TA are necessary but not enough to be successful.
for me TA is based on Market Reading and everything else comes after it.read market correctly and then even simple strategies could be profitable.
and last but not least. no one could be correct every time so if you found yourself in the wrong side of the market, try to cut losses as small as possible.
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Start trading supply and demand. Also read the Candle Stick Bible
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Have you tried re-analysing your losers? I find that I got better by analyzing my past analysis if you will. Sometimes I find my mistakes and realised it was my emotions that got me on the wrong side of the trade and sometimes, well it’s just plain simple: market does what market wants and even the best analyst can’t have them all right.
Also occasional greed in position size will keep you from being profitable 