What is the real truth about trading?


Nah. The back testing done back then by others was of your garden variety MetaTrader EA type back testing.

Matter of fact and true story:

A forum friend of mine back then actually gave me the book containing the very trading system that I’ve been trading for the past few years. But thanks to him actually writing an EA and back testing the thing (on the basis noted above) we decided to give it a miss. Can you believe that. I would have been a very wealthy man right now (out of this business) had I just gone with my gut feel at the time and traded the darn thing. It was only when nothing was working that I took another look at the thing, gave it a slightly more than cursory look, looked at a few trades, decided it made sense to me, and decided to stop questioning the developer’s published results (Larry Connors no less) and just went for it. The rest is history as they say. But in my case (this case): back testing (although I’ll never be sure just how accurate it was) actually had the total opposite and undesired effect on my well being.

Nothing to do with the said system though: we did try others. What we found was interesting though. A particular trading system at one broker for the same period may have resulted in an overall profit whereas the same particular trading system at another broker may have resulted in an overall loss. From what I gathered at the time (and assuming reputable brokers i.e. so no broker antics involved) it had a lot to do with different closing times of daily bars (1 hour or less mostly always concurred between brokers). Now if you know that RSI, for example, is based only on the closing price: well that would explain a lot. I have indeed sat and compared the same indicators and instruments at various brokers at the same time. On one you may have a signal to enter a trade (or whatever) and on another there is no signal to be found. That type of thing. Found the same thing with those chart formations and candlesticks back in the day (yeh: tried those too) i.e. on one broker’s chart you’d have a Doji (or whatever) but on another you’d have no Doji or worse still a totally different candle formation. So I gave up on that needless to say. Oddly enough: the only “indicator” (I use that word loosely in this sentence) that doesn’t suffer the consequences of different time zones and bars etc. is pivots (some reading this and know what I’m talking about will argue with me and disagree but I can prove you wrong I assure you).

So yeh. Always wondered about this. Stopped losing sleep over it a long time ago though.



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The above being said and in just pondering upon all of this the following does come to mind:

As you’ll probably know I’ve been trading part time for the past five years or so (as opposed to full time now due to a situation). Why this could play a part (not saying it does but it’s a possibility): over the past five years or so I’ve not traded 24/7/365. Mostly I’ve made some money and stopped trading (while spending the money). And then would sort of ease back into it and wait for the next signals or whatever. Where this could make a difference: there have been two occasions in the past five years that had a material impact on performance and one that, because I wasn’t trading 24/7/365, I luckily (no other word for it) managed to dodge (only found out about it this year way after the fact as a matter of fact). One time China devalued the Yuan overnight and I went from a nice profit before bed to a huge (almost margin called) loss the next morning (I seem to remember recovering but still took a loss at the time). Then the initial Brexit referendum i.e. I just happened to be on the right side of that trade and it more than doubled an already substantial account at the time. It was a parabolic move and when I saw the amount I just closed out at market. Had I waited for the system to signal my exit I would have cleared out with a mere fraction of that amount. Last one is the correction in December last year i.e. I wasn’t trading nor even looking at charts at the time so I managed to sidestep that. But I have looked at what would have happened in December last year and I can tell you that it could have been pretty ugly. Not a wipe out. But would for sure have negated many months of profit made during the same year. I guess the point is that I suppose I DO apply some discretion which no back testing could mimic but could it account for the difference between some back test showing dismal results and live results being something totally different??? Don’t really know.




Then again and in just looking back at the charts: I seem to recall having broken my own rules and should not have even been in that trade when China devalued the Juan (matter of fact I by all rights should have been short at the time). I seem to recall having egg on my face big time and kicking myself for trying to be too clever!!! And it happens. Still. Last year I did indeed wipe out a fair amount of profit by second guessing things and holding onto a long Gold trade (adding to it on the way down I might add) that I had absolutely no business being in long (system said short). Only saving grace: these things (my getting clever) seem to happen with less frequency as the years go by!!! LOL!!!

Actually, quite a lot methinks!! :sweat_smile: and very wisely it seems!!! :sunglasses:

That “interfering” with one’s trades is actually one of my journal entries. I have the standard columns for /hit target/ hit stop/reverse signal/ end of week/ but i also have a column for “manual close” and with that a sub-column for “right” or “wrong”. showing whether it would have subsequently hit target or stoploss.

When I started that addition I surprised myself to find that I would generally have been better off always letting a trade run to one end or the other. Since then I have interfered with my trades far less and the percentage of “rights” is now much higher!

Interesting what one can learn from one’s own trading without any backtesting of the method itself!

But I don’t think we have helped @TonyFender much with his original question! :smiley: :

Funny thing is: it’s not something that I do consciously I don’t think. Not that I’m aware of at the time anyway. BAD trades FOR SURE (those are conscious decisions made to second guess the system and undermine myself!!! LOL!!!). But if anybody asked me I’d tell them that I trade the thing MOSTLY blind (truly believing that to be the case when answering them).

I do believe there’s a fine balance when it comes to taking profits and losses on a discretionary basis. I mean to say you could have a very high probability trading system but taking profits too early could still end up in an overall loss for any given period. At least one thing I can say is that I always take profit at, or better, than the trading system’s bare minimum would have me do (which is easy to gauge in my case as it just depends on an indicator’s closing value). Even on my windfall of a Brexit trade: I’d still have made a profit had I not banked my windfall if that makes sense. And who knows: maybe those years of agony actually taught me something that I don’t know that I’ve learned!!! LOL!!! Guess I’m gonna find out in the next few months.

Oh well. As you say: not helping @TonyFender at all I guess. Then again: maybe it is helping i.e. forget back testing and find a system developed by somebody that has at least some proven track record and street cred. and trade it (which unfortunately excludes 99% of the newly developed wonder systems posted here every other day and certainly those +500% per hour gain systems!!! LOL!!!). Suppose fact of the matter and in contrast with my experience: back testing is also no guarantee of future results (the usual blah, blah, blah) (and certainly not back testing demo data on any time frame shorter than the daily time frame).

I suppose, really, the only insight I could offer that I’m at least sure of is to not get bogged down with anything (including back testing). I suppose (dodgy as it may sound and not backed by any scientific or mathematical principal): something (half decent) will work until it doesn’t anymore!!! LOL!!!



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How are you able to say you have never been so motivated for anything in your life and then say you’re worried you’re wasting time researching something that might not work?

There’s a lot of drudgery involved in research and many things don’t work, but you often have to do a lot of the wrong things before you can start doing a lot of the right things.

Everyone says what works according to their own experience. Everything works, it only works some of the time. Some things work sometimes and other times they don’t work.
This is an uncertain environment, there are very few to no absolutes.

Do the work.