AmCan1

I often use SIUYA'S ideas myself with my trades. With a strong move, maybe a breakout or reversal, I look for a consolidation of some sort. If it retraces approximately in that area that could be considered a fib retracement, I'll begin to look for a 2nd move that has a good chance of mirroring the first move. Action, reaction, subsequent action which ofter mirrors the first action, in other words. I find it very reliable on many charts but of course, with a tradeplan; entries, targets, stops, etc. The subsequent action is very tradeable and while I do not trade fib numbers per se, I do use the idea in an abstract way. Also, I usually use tick charts set to fib numbers but that's a different subject. Call me superstitious but there's an effective fib number tick chart out there for just about every market I like to trade. Russell emini, 233 or 377, EURJPY; 144 or 233; Soybeans, 55 or 89, etc..

At first I began to read Nemisis' comments and I began to think, "oh, no.." I do not agree. But as I read further I was able to get his point and he does make some good ones. Lots of great points actually. What if we just asked does 'analysis' work, and leave out the word technical. It's all semantics really. rs1 and Siuya say it great. I would say that it only works if it does. lol.. I mean, after the analysis, you're either going to go for it or not. Then you'll find out. I'm not technical in my own opinion of myself but when I tell people what I do, for a second they're interested. They ask a question or two, and when I try to answer, usually their eyes begin to glaze over and the conversation is done. I guess it was too technical. For someone to imagine all the time I spend in front of charts.. they become very antsy, the very definition of technical, lol.. Good proper analysis, technical or not, will work, even if it shows you that what you are analyzing is a bad idea and shouldn't be traded. That qualifies as working too, no? Unless it would have worked and your analysis was bad. Bad analysis obviously won't work. Garbage in, garbage out, as they say. Sorry guys.. Just trying to add a little levity to a very important question, while hopefully making a good point that contributes a bit.

I see your point. Sometimes a something like this is the perfect excuse to decompress a bit and take some time off.

Cuttshot has hit the nail on the head. I completely agree. Manual backtesting, while tedious, and a pain in the butt, literally (hours in the chair, lol..) is FAR superior then automation, IMO. I'm sure there are many on TL who would strongly disagree and their entitled to their opinion, and quite frankly, that's what makes a market. As soon as the going gets tough, you'll be gone because you won't have the vision or confidence or even basic understanding to know that the best trades come after hard losing trades. At least with a manual backtest, you can live through that process and begin to absorb it into your psyche. Little by little you build the most important thing of all, confidence, by seeing how the system recovers after losses and how the equity grows, despite the losses. Without that, your instinct for survival will override your trade decisions and you'll be running for your life, the first time you get a 4 or 5 trade losing streak. I'm sure good one's exist, but anybody with a good automated system is NOT going to be making it available. Who would want to kill their golden egg laying goose? Makes no sense.

I might just follow your lead on that Cuttshot. When is the date of the rebalancing again?

Great advice by Cuttshot. I have the John Murphy book. I think it belongs in every trader's library. And if I can now humbly add something to Cuttshot's advice, I would also encourage you to look for a trade system that is based on price action. Indicators always lag the market. They definitely have value and the more you know about them the better as there are many different kinds. I like a system that uses price action to base its trades from but uses a very select few indicators to confirm the price action and possibly even to calculate the size of the trade; its targets and stops. Still though, unless you follow Cuttshot's advice and learn as much as you can, it's probably all going to be a foreign language.

Cuttshot makes an excellent point. Fixed targets for me, are fixed for that particular trade setup and will adjust with current market conditions. So one fixed target might be different than another, depending on the parameters of the trade itself. Trailing stops do require a competely different mindset. If you have a two position trade where position one comes off at the 'fixed target,' the odds are that the trailing stop will not do as well on most trades. But, if it catches a bigger move, every so often, that could really make a big difference to your overall performance. You have to track the results and compare over time. I have seen where a trailing stop has out produced my fixed targets, say on the Russell emini. But if you look back over the past several months, at least with my method of trading, the fixed targets have outperformed the trailers. There just hasn't been enough larger moves during my trades. So in hindsight, maybe just a 2nd larger fixed target, to exit my 2nd position might have been a better approach. The markets are always changing though and you need to be very careful not to curve fit.

By the way, I think WorldTrader gave good advice too. You really need to find one that gives you an edge that you can prove. If you can win 2 out of 3 on average, over a lot of trades, and, if you control your risk, never risking more than 2% of your trade capital on any one trade (and maybe 1% is even better), then you could prosper with that type of 'trade system.' One thing for sure, it helps remove the human element. The system acts as your objectivity and reduces your trades down to high probability setups.. if it's a good trade system, that is. The chart posted earlier of ANN looks to me like a good swinging stock, by the way.

JLJ, a trade system is a package of indicators, sometimes custom, that help identify trade setups that have a winning edge in the market. They usually come with rules that tell you the entry, target, stop and perhaps even a trade mgt plan that has you moving your stop to reduce risk and/or lock in some profit as the trade progresses. The good ones print the actual trade setups right on the chart and are simple to learn and use. They should never be blindly trusted though. Even if they work most traders still need to do foundational work to learn the system and manually backtest it to gain confidence and see for themselves that it works (or not). There are some real good ones but its hard to find them amongst a bunch that really are not that good (being diplomatic here). There is one in particular that I personally really like for stocks and forex called the Ultimate Swing Trader. I hope that the readers on TL don't think I am spamming or promoting here .. lol.. I'm not. You asked me a question so I'm merely trying to answer you straight forward with my personal opinion. Hope it helps.

I don't like trading on the Monday after Quadruple witching so I didn't trade much. I only took 2 NQ trades. I won and lost so pretty much ended up flat on the session. In hindsight I would have been better off not trying to predict the outcome of the day. If I took the next trade according to my regular plan, I would have won and I would have ended hitting my goals. :crap: Re Russell rebalancing will be interesting and I have no clue what to expect from it. If I stay away, my system will probably do great and if I decide to trade through it, I'll probably get slaughtered. lol.. Murphy will sneak in the back door no matter what, I imagine.

Wow, I had a good day on Friday too. I wish all days could be this good. It's not always that way but I'll take it when I can get it.

I'd like to offer my 2 cents. I believe everyone has made great points. There are good things that could come out of replaying a market quickly but I think you need to be aware of the limitations as mentioned above. What I like about replaying a market quickly is that it can teach you how to be a quick thinker and to take decisive action. If we allow ourselves too much time to analyze, it is easy to become prey to over analysis, or as the cliche goes, analysis paralysis. A quick replay forces you to take fast action. I do believe though that you should already have a very tight set of rules that you are trying to master. Kind of like learning the mechanics of some sport maneuver. You should already know what you want to practice. Repetition is the thing you want to gain from this excercise imo, and you can get it in this way. I like to think of driving my car and seeing a hazard of some sort in the road. I don't have to think about it before I react. It has already become reflexive. My reflexes just react and I can depend on that reaction being a good one. If one could get their trade decisions to be like that, I think it could only help. That to me, is the most positive thing one could get out of replaying and practice trading in faster time. What do you guys think?

I'll begin by sharing some of my work over the past few days. I have been going through the YM (dow emini) with a new trade idea that I have. I spent a few hours over the past couple days backtesting my idea to see if it might hold up. Granted, I have a lot more work to do but I did manage to backtest over 100 trades, May 3rd thru May 12th. The results we quite encouraging and I think I will meticulously go through the remaining sessions up through the current date, although I might no finish for a few days. I can't sit all day and do this type of work without going stir crazy so I try to do it little by little. Anyway, as I mentioned, the results look good so far. I don't have the UTA yet but I do use my own spreadsheet that can at least give me some basic details. So far I have looked at and entered 103 trades. 65 were winners and 38 were losers which is a 63% winning perecentage. That's not too bad. I believe just by scanning the charts that this will either hold up or improve as I record more trades. My idea would have worked nicely during this brief time period which is very encouraging. The 103 trades would have made 337 points. Positive is good, right? The idea I am testing uses a 377 tick chart and relies on two types of trades. A breakout trade and a reversal trade. Sometimes I have to stop out and then reverse into the opposite direction and I am finding that when a reversal trade fails, the opposite direction trade tends to win a lot. I am hoping to track this kind of trade more thoroughly and if I understand correctly the UTA would be good for that. Is that right? Is anyone else trading the Dow emini or backtesting it? How is it going for you and what kind of results are you getting?

This seemed like an appropriate place to begin a thread for traders to share their backtest results. I've been reading up and learning some about this program, UTA. Obviously this is a piece of software that requires some dedication to use. Since I am a believer in going through past history and backtesting by hand, I think I would like to give the UTA a try. As soon as I get a copy I'd be very happy to share my results. I see that tjnoon has been showing his currency futures results which is great. I think it would be very productive and positive to see results from other markets too. Hopefully other UTA users will find this thread and share what they are getting.

I agree with MadMarketScientist about the 65% win rate, give or take. That seems to be the sweetspot and a realistic expectation. One of my biggest hurdles is wanting to trade too many opportunities. It has taken some time to learn this but it is better to trade one or two markets perfectly (or well, since perfect is pretty intangible) than it is to trade 3, 4 or 5 markets with mistakes. Finding the balance of markets and timeframes to trade, where you can trade your method accurately with consistency, and gain a level of diversification can be tricky. I find that a faster moving market (I too grow impatient) combined with a slower market and timeframe for daytrading, and then combined with some swing trading, is a good combination. But I still have a hard time when I see the opportunities on other markets and timeframes. I just want to trade them all. So then, staying disciplined becomes an issue that must be controlled too. lol..

Interesting thread. I agree that exiting a trade is the hardest part to trading. It is the artsiest part to trading. Lots of great advice so far. Here is what I do that seems quite effective. I like to get out at a dynamic fixed target with part of my position, and trail a stop on the rest. I typically use a 3 bar stop. My fixed target is calculated by the trade setup itself, and is therefore going to adjust to current market conditions. I use price action for my trade decisions but indicators to calculate my targets and stops, so they adust, trade after trade. So a 35 pip fixed target in the cable on one trade could end up being just an 18 pip target on another, for example. It will tune itself to the current market conditions, in other words. If the trade doesn't make it all the way, I have a level where I adjust my risk or lock in a little bit of profit. I will exit both positions at that level. I like this better than some sort of artificially imposed goal of say, 20 pips on every trade. As expressed in earlier posts on this thread, the market might not have enough juice to get 20 pips, or it might have too much juice and greater potential then would be missed. A dynamically tuned fixed target works to solve this problem on a trade to trade basis. Then, if I do get my full fixed dynamic target, I will then employ a 3 bar stop to my trailing position. A three bar stop is a simple concept and easy to trade. It takes the guess work out of the decision and turns an artsie part to trading into an objective rule set. Simply put, using a long trade as an example: If a bar closes with a higher low, I count that as bar 1. The very bar to its left is bar 2. The next one over to the left is bar 3. I put my stop 1 tick below the lowest bar, 2 or 3. I make a minor adjustment around key levels if those levels are where the stop would be (0's and 5's). I don't move the stop until a new bar closes with a higher low than its neighboring bar to the left. Then that bar becomes #1 and I count back again. I keep going with that process, moving my stop up to a tick below the lowest point of bars #2 or 3, resetting my count with every bar that closes with a higher low than it's immediate bar to the left. That's the basic idea. I find it gets me out of the trade most of the time (nothing is perfect as we all know) right where I want to be out of the trade. You can visually see this working on any chart or timeframe. I'm not saying it's the best way to go on all charts and timeframes. But it is worth exploring. You will learn much from the idea. I can miss bigger moves sometimes, but that's the way it goes. I use a reentry strategy to get back in if need be. I also have certain setups where I could scale in more as the trade progresses but I would treat them as separate trades in that I still will go to my dynamically established fixed target, and trail the rest with the 3bar technique, tuned from the scale-in setup itself, and not the primary trade. Hope that helps. Let me know if you have any questions about the 3bar and I'll try to explain it with a chart posting.

I hope that this isn't too far off base as far as the direction this thread is heading. I see there are some programmer math guys chiming in. I'm in the camp that pretty much agrees with WorldTrader. Here's why. Let's say you get a very accurate, automated backtest with a bunch of reliable results. I believe it is a rare bird indeed, that would be able to trade the rules based on those results because the reality will be that the market will throw winning trades and losing trades at you in a random way and the losing trades are sure to cluster up and affect most traders confidence at some point. In other words, I don't think you can 'take ownership' of a trade system, merely by logically talking yourself into it. Automated backtest results give you a good logical reason to trade a system, but pschologically, there is no internal ownership. Most people will fall prey to just being human and will lose their objectivity that was supposed to have been provided by the automated backtest results. So I have to agree with WorldTrader that the tedious, boring, hard work of manually backtesting a system you hope to trade, coupled with some forward testing and practice in real time conditions, is the only way to finally take internal ownership of a system that you can see logically works, but also can trade with confidence, trade after trade, according to the plan. That's been my real life experience too, having spent a lot of time manually backtesting, gathering useful and accurate trade data, analyzing it properly, and then being able to trade the plan without worrying about the random distribution of wins and losses. The edge that I had been able to establish with my manual backtest continues to manifest and the equity curve keeps growing over time as a result. It was worth the effort. A real, hard ass pro could possibly achieve this with automated backtest results only, but, that's a rare bird. Most retail traders could not, imo.

SIUYA makes a good point. I personally don't believe that automated backtesting is terribly useful in the context of what we are discussing though. You can not get a feel for your market and the dynamic relationship between the wins and losses and the equity curve, trade after trade unless you can live through those trades, one by one. To me, that is essential. I believe you have to set your charts up at some random date in the past, and begin clicking forward, looking for your trade setups at the right edge of the chart. As they setup and trigger in, record it in your spread sheet and manually build up a record of trades. To me, you gain SO MUCH from this excercise that there is just no way to duplicate the benefits in any other way. It's exactly how I turned my trading around. Is it a lot of work? Ahhh... Yeah! Harder to recoup lost trade capital though. And what you learn is priceless information.

I like the squeeze indicator you speak of on the Tradestation forums. That is an excellent suggestion.

One thing to be careful of is to not fall prey to the promise of easy profits in the markets. There are many seductive adds out there and many seek to alleviate the responsibility that one really must take for their own success. They promise everything, short of the holy grail itself, and if a beginning trader throws their money at such dreams, then many will make the next big mistake, which is to blame their failure on the magic system that they just invested in. A very beginning tip to succeeding as a trader is to be committed to taking responsibility for ALL your trade decisions. Decide to learn how to trade vs. to be told what to trade, for example. Every trade decision (or lack there of) comes with a consequence. You should know what that consequence could be, worse case, before making any decisions.

I think Wrbtrader makes an excellent point. Backtesting plays an essential role to success but you also have to understand its limitations. It is great for learning your method, going through the internal changes you inevitably go through as you assimilate experiencing the wins, losses, and how the two relate to the overall growth of the equity curve. It reinforces discipline, helps refine your trade rules, and gives you a broader vision of your market, etc. You also should have some way to read all the backtested trade data and that can be real tricky. There's great stuff in there so getting proficient at excel is important too, I think. There's some good tools out there that are worth the investment many times over. But how do you know you can execute accurately what you are backtesting? It's one thing to post trades in the comfort of a static, non-moving chart. It's quite another thing to do it in real life. This is where I believe, the value of sim trading comes in. Prove you can execute your plan and do it a whole bunch of times until you can do it on 'auto-pilot.' It won't be perfect and should not be confused with real trading. But it will help you practice the physical moves you need to make to execute your trades and it will also sharpen your fast decision making skills. Prove you can be profitable in a sim account and continue to track your trades, adding them to your backtest results. If you can maintain the same winning edge, and execute your plan without making mistakes, you have gone a long way in laying the foundation for your trade business. You're probably going to be in the best position to succeed if you have learned your lessons well from the above excercise. Through all this, you might just discover that you're better off in a different market than your initial thought. That's what has worked for me anyway and going through the above steps turned my trading around in a big way.

Excellent post Cuttshot. I couldn't agree with you more. There are many styles and what works for one won't necessarily work for someone else. In fact, for sure it won't unless the trader takes the time to learn it and understand it, fully. You can see someone else succeeding with a method of trading, and you can say to yourself, all I have to do is follow the rules that that guy is using and winning with, and I'll achieve the level of success that he is. I believe this sort of idea will not work for most people, unless that person really works hard in learning that system and, the type of trade results it will get over time. That includes the string of losses that will pop up randomly. Most people who try to copy someone else's method without laying the foundation for themselves, will lose confidence quickly and end up quitting, sadly, right at the wrong time. They'll quit with their losses in hand and then watch from the sidelines as the winners start pouring in again. I've been there. I've done that. I've learned my lesson the hard way as I am sure so many others have, as well.

Good question Pa18. For higher time frames to look at the big picture, I'm perfectly comfortable with looking at time charts, lol.. I'll watch a 15 minute chart, which is pretty high for me as it relates to a 233 tick chart with the eurjpy as an example. But you can triple the 233 and watch a 699 to see a time frame 3x higher also. I'm not married to the 233 by the way. It just so happens to be a fib number and I guess I'm superstitious. More importantly, when I scan through my charts, I see the right amount of trade setups as per my system, within the given timeframe that I want to trade; just about 2 hours or so during the US morning session. I also get the size of trade that I'm comfortable with. If you look at the chart I posted earlier, you can see that the trades don't take very long and I can get my trading done early so I can go about the rest of my day. That's what works for me. I am not one of those that needs or wants to sit there and trade all day long. I think most people end up giving back a lot of their gains and pay much more in trade costs than necessary. For me, I will just leverage up my position size as I grow my account and keep taking a minimalist approach, steady and sure. I think range bars are great too, don't get me wrong. I use a 2 point range with the NQ emini. It gives me the perfect size trade I like with the NQ, 7 points. This week, as been stellar. Nearly perfect in fact. What I like about tick charts though, that you can't get with range bars, is the useful tick counter tool which will count down the ticks on the current bar that's forming. So you always know when the bar will close and the next bar will begin. Not so with range. Make sense? I hope that helps.

Thanks boomeranga for your insights. I appreciate it. Your style of trading is a lot different than mine but it makes a lot of sense and I find your approach very interesting. Can you please explain what martingaling is? I believe I know and I guess it's just a google click away but if you have the time for a brief explanation that would be great. I'm feeling the urge to revisit the Wyckoff materials too.

Yeah, I think the Russell is much easier to trade. Especially due to the 1/10th of a point ticks vs the 1/4 point ticks. Bathrobe has a good idea and I'm sure that helps elliminate some slippage. My bigger problem is exiting a trade, though, not entering. I hit my target, I want to get out at that target. I worked hard for it, right? If I get a 1/4 point of slippage due to the way the ES normally trades, that represents too large of a bite out of my total profit objective. Over time, it really adds up. Especially when a 1 tick slip turns into a 2, 3 or 4 ticks of slip. My thoughts are, "I don't need to put up with that." Let the big boys battle it out. On paper, my system works great on ES charts. In real life, the issues we've been discussing, dramatically impact the results. For me, it's just not worth it.