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I have 3 systems that I trade, two of which are almost purely
mechanical. I didn't have the confidence to start trading them
together until February of this year. Together, I'm up 70% for the
year. Before that, I used pure discretion , but I also made it
mechanical. One of my systems is discretionary, but I've made it
somewhat mechanical. The other two trade different time lengths,
instruments and have different philosophies. I'm always working on
others to replace the systems which the market digests and to smooth
out my equity curve.
Before I developed these systems, I was a losing discretionary day
trader/swing trader-- I did this for 2 years. I made the mistake of
deciding my methodology of making money before I knew how to make
money. I was trading at a prop. firm during this time and I
stubbornly decided that I didn't want to scalp and that my way was
better. I was going to impose my will and unproven methodology on
the market. I would scrutinize trendline breaks for classical
patterns and compulsively search for the best parameters to use. I
would only use IBD stocks and I read so many technical analysis books
that any out-of-the-box realizations were smothered by text book
technical analysis doctrine. If my said goal was to make money I
would have scalped and learned to read the tape like rest of the
guys. To make a long story short, I've been around long enough to
know what definelty doesn't work, what roads not to go down, who is
full of it and . It wasn't until a short time ago that I also
realized the right questions to ask, how to compete, how to do
research and that I have a trading system that works.
My first system that I "developed" is based on quantitative measures
on how I feel about a chart. The reason this method works is because
I have an intuitive feel for recognizing certain patterns-- which
obviously comes from time in the market. The majority of the time,
my feeling on a chart are neutral. I don't care what the technicals
tell me.
The quantitative part of this system is that I set a stopwatch on a
chart that I like and I rate my feeling of the trade. I only take
trades that rate as a 10. I also found a positive correlation
between profit and how much I like the chart, but the trades where I
would make the most money were the ones that I was uncertain because
of fear or because I was looking for more confirmation. So, I also
parameterize this. I also used my overall confidence level with my
trading and profitability as a contrarian indicator for the market.
I also make myself answer, "what is the market rewarding?".
Sometimes it's related price patterns, sometimes valuation methods,
sectors, mean reversion etc. I noticed that the market will continue
to reward these patterns from the point of time that I feel like it's
too early to trade them to the point that I feel like hot shot.
The best thing you can do right now is come up with a list of
questions that you continuously add to and look for those answers.
You will find that as you progress, your questions will become more
relevant. Don't worry so much about system development as much as
understanding the markets and modeling the system devoloment skills
of proven traders.
Realize that anything that is easy to implement and common has most
likely been priced into the market.
Understand the barriers of entry into this game:relevant information,
information processing, information translation, technology, etc.
Also, think about overall strategy of any game. Who are the
players? What is the setting? What is their agenda? What are the
implications of these answers? Realize that most traders don't work
on strategy and instead focus too much time on tactics. Educate
yourself on quality of research. example: Lo vs. bulkowski
Instead of thinking as trading as a business, think of making money
in the markets as your ultimate business (tactics vs. strategy) and
think of coming up with an "edge" as your first business objective.
Learn how to identify an edge vs. identifying the best parameters of
a market. Think about when technical analysis is relevant.
Sorry for being not being more organized with this post. I could
keep going, but that should suffice for now. Good luck!
--- In amibroker@xxxxxxxxxxxxxxx, "Louis P." <rockprog80@xxx> wrote:
>
> Hi,
>
> I was only wondering... Anyone actually making money or making a
living
> with AB and trading?
>
> I've been working on ideas and plans for over 7 months now and
didn't find
> anything convincing yet. I've been searching daily data, then
hourly,
> 15-minute and now I am into 1-minute data and nothing seems
satisfying.
> Been searching RSI, MFI, ADX, MA, HHV, LLV... nothing seems to work.
>
> So... Anyone is making consistent money with this, and if so, at
which
> timeframe and how do you do it?
>
> I'm beginning to think about switching to tick database; it seems
even
> 1-minute is too slow for intraday trading. Anyone making money with
> 1-minute?
>
> Thanks,
>
> Louis
>
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