gianno

...or bigger drawdown. Trend in stock indices has been good but CTAs are having a problem after 2008. The biggest problem is not how to follow a trend but where to look for one. If you are in the wrong market the price paid is high.

Would appreciate some sort of a summary what it is all about because to me scalping forex is the impossible task.

Gold trend is down and fighting it is not a good idea imo.

I agree more or less with your points.

I sense that you use the term "price patterns" to mean chart patterns, things like triangles, double bottoms, etc. which are indeed subjective to some extend. But when people talk about price patterns they usually mean things like inside days, island reversals, closing winning streaks, etc. which are more or less objective. See how this guy has made objective the search for price patterns and the methods he uses for their validation that include portfolio backtests, cross-validation and sensitivity analysis.

What some see as random is pretty much business as usual to an experienced gambler.

Backtesting is one of the most dangerous practices known to man.

Another post in the blog @equtrader mentioned where it is explained how TA and backtesting lead to randomness but it falls short of any suggestions for solution.

It's not the same if you are profitable with 1% gain and 200% gain. Profitable must be measured against some normalized index. If you make $1 at the end of the year you have lost a lot of money actually.

Very good thread and your thinking about swing trading and adequate capitalization is correct but still your stops are too tight in my opinion. Have you back-tested your method? I think you should do that. I am not sure but it may or may not be a profitable method. I tried swing trading GBPUSD before with 40 pips stops max and I lost 40% of account no matter how hard I tried. Then I saw the system they have in the price action lab blog (here, click on GBPUSD patterns) and I got suspicious that my stops were too tight. I now use 120 pip stops and I have doubled my account in 5 months.

Thanks for a good, honest and informative post.

Read this fresh blog and you see that 90% is a candidate for a reversed system: Developing Mean Reverting Systems with Price Action Lab | Price Action Lab Blog In other words, if you can find one with 90% up to time t, then that is possibly unsustainable in the near future and you can reverse the system and profit.

PAL posted another article yesterday on their blog about curve-fitting. I think it points to programs that offer a lot of different stop options to nicely curve-fit results Article link here

Thanks but how many traders know to code in C#?

Very few trades in the testing period. Performance can be random and a statistical fluke. IMO nobody with minimum experience in trading system development relies on 60 or 70 trades in more than 15 years of data.