Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

gifropan

Does Traditional Trading Advice Work?

Recommended Posts

Certainly I will concede that there is a difference between a trend and a trend trading system. My focus is on the latter, and my statement to be more precise is that the common trend trading systems (MAX, MACD, B/out) do not yield positive returns on daily equity index data.

 

I also agree that you can with optimization find positive results- simply reversing slow and fast variables in MACD will do it, but that is hardly trend-trading..

 

I'm catching a flight now to a conference (not trading) and won't be able to respond further until Monday.

Share this post


Link to post
Share on other sites
..... my statement to be more precise is that the common trend trading systems (MAX, MACD, B/out) do not yield positive returns on daily equity index data.

 

Now that I will likely agree with, the key word being "system".

 

Beginners attracted to this thread should understand that practically any idea -- whether rocket science, not rocket science, or downright harebrained -- can be made to appear profitable, whether by accident or by design, in a backtest. A more meaningful test is a properly-conducted forward test. And the most meaningful of all is a real-time test, preferably with real money.

 

Belief or the absence thereof is not pertinent. The account balance is the final arbiter.

Share this post


Link to post
Share on other sites
Now that I will likely agree with, the key word being "system".

 

Beginners attracted to this thread should understand that practically any idea -- whether rocket science, not rocket science, or downright harebrained -- can be made to appear profitable, whether by accident or by design, in a backtest. A more meaningful test is a properly-conducted forward test. And the most meaningful of all is a real-time test, preferably with real money

 

Yes , the forward test proves the results and it is not easy to follow, but I disagree again with the notion " can be made to appear profitable". That is not what I do. I put in not only time but effort and it costs money as well. Because the data does not work on a daily timeframe doesn't mean the idea / strategy is not profitable. One has to find what is . One has to look. One does not make it profitable, one just has to test it. Otherwise how the hell would one know whether they are on the right track or not. I"ll leave you's alone now..........

good trading to you's

 

erie

Share this post


Link to post
Share on other sites

 

Remember to keep an open mind and try all timeframes and different combination of ma's.

 

erie

 

Some would argue that is curve fitting. :D All mechanical systems are prone to stop working. Some even start again. Some would also argue it requires quite a lot of skill and discretion to keep a system running well.

 

Personally if I was going to approach something like this I'd be inclined to take something that is more based on market structure as a starting point. Maybe a Donchian channel or something....hmm that sounds familiar.

Share this post


Link to post
Share on other sites

Here is one of my trades from yesterday, long SWN.

 

I put MACD on the chart. MACD would have had you in then out then in then out, rather than rising the trend until the market reversed.

 

Profitable for brokers, not so much for traders.

 

Best Wishes,

 

Thales

5aa70ee5cd2ca_6-11-2009SWN1.thumb.jpg.ade7ce2d76f3384bb4d1e371851c8862.jpg

Share this post


Link to post
Share on other sites
...

I put MACD on the chart. MACD would have had you in then out then in then out, rather than rising the trend until the market reversed.

Profitable for brokers, not so much for traders.

Best Wishes,

Thales

 

 

MACD is an Oscillator.

 

An Oscillator is never meant to be used by itself.

 

An Oscillator is always used as a complement to another indicator,

e.g. a Trend indicator.

Share this post


Link to post
Share on other sites
Some would argue that is curve fitting.

 

Which is not necessarily intentional, which is why beginners so often go astray with this sort of testing.

 

If one is testing something, he has to do more than just "look". He has to do more than just "find what is". One has to do more than "just test it". Testing requires inputting data, which requires making choices. If the results are unsatisfactory, different choices are made and the testing begins again. And again. And again. Until one either quits or finds something that appears to be profitable.

 

Which is why backtesting can do no more than provide clues for further research. The sort of backtesting results posted earlier that demonstrate profit are meaningless, much less demonstrate that a moving average crossover system "works".

Share this post


Link to post
Share on other sites
MACD is an Oscillator.

 

An Oscillator is never meant to be used by itself.

 

An Oscillator is always used as a complement to another indicator,

e.g. a Trend indicator.

 

 

I beg to differ, my Good Tams. I may not use indicators any longer but I studied and tried most of the common ones and a good number of the more obscure ones. In fact, I could fund several decent small starter accounts with the money I have spent on various software add ons etc. as I made my way through the 38 steps that DbPhoenix has posted here at TL.

 

MACD is certainly presented by Gerry Appel, its developer, as a trend indicator. In fact, chapter 8 of his Technical Analysis is entitled, "Advanced Moving Average Convergence-Divergence(MACD): The Ultimate market Timing Indicator." He argues that across multiple time frames, from monthly to intraday, MACD can be applied in the analysis of market trends, "frequently capable of producing precise entry and exit signals" (Appel, p. 165).

 

He also suggests that while MACD "oscillates" above and below a zero line, that it is not best to utilize it as an overbought/oversold indicator, but that its real value is in its ability to "use divergence to recognize the most reliable signals" (Appel, p. 171). Since divergence accompanies the most reliable signals, then that in and of itself would bring into question the indicators use as an overbought/oversold indicator. Think of it this way: the signal would occur when the indicator is less, rather than more overbought/oversold, but at a price level higher/lower than the most extreme reading. In other words, using MACD as an ob/os oscillator could prove hazardous to you equity.

 

Furthermore, MACD is constructed of moving averages. Moving averages are themselves trend indicators and not indicators of overbought or oversold conditions.

 

Also, the origin of this part of the discussion in this thread was a claim that trend trading "doesn't work," i.e. it is not profitable, and the example used was a system based upon trading MACD signals.

 

So, while I have the greatest respect for you, Good Tams, I must nonetheless respectfuly disagree with your characterization of MACD as an oscilator and not a trend indicator, as well as your suggestion that MACD needs yest another iindicator to, I imagine you would say, "filter" the signals.

 

Best Wishes,

 

Thales

Edited by thalestrader
spelling

Share this post


Link to post
Share on other sites

May I address you Good Thales? ;-)>

 

 

You are correct in ALL counts.

(and thank you for the references.)

 

 

MACD does show trend.

 

I call MACD an oscillator because it varies around an equilibrium point.

Calling MACD an oscillator does not mean to say that it does not show trend, nor not trend related.

 

At the same token, not all oscillator must show OB/OS.

 

 

A bounded oscillator may deem OB/OS when it is at its boundaries, when complemented with a trend indicator.

 

I would not suggest interpreting a boundless oscillator (e.g. MACD) the same way as a bound oscillator.

Edited by Tams

Share this post


Link to post
Share on other sites

Until you are making decisions from your own experience and not trite sayings you won't be able to trade profitably. How do you get to that point? Putting in your time making real time trades and taking your lump$!!!!!!! Just view it as paying your tuition. Play small until you can start to define who you are. Your way won't be my way grasshopper! One thing I can state with certainty is that you can not win at this until you conquer your emotions and you must trade real money real time for quite a while to discover how to accomplish that. Good luck and remember always lick your wounds and summon the courage to face tomorrow

Share this post


Link to post
Share on other sites

I have a quibble with the "learn from your experience" school of trading.

 

1. Methods that work for a beginning trader in the short-term may very well not work longer term. Almost every good system has losing months. Almost every bad system has winning months. My point here is that you cannot trust short term personal experience.

 

2. There are good methods. Some have been shared. Find them. Following them may very well lead to better results than personal experience. In addition, trying to adapt them and improve them will often be a better use of time than looking at your own trades.

 

3. I favor the "scientific" school. Learn the pitfalls of testing- there are some good books and articles on this. But then test. Use multiple systems. Keep detailed records. Trade scientifically. Retire young.

Share this post


Link to post
Share on other sites

I don't disagree with anything windsurfer says. I should have qualified my remarks by saying experience comes after and during constant study and testing. There is no need to try and reinvent the wheel but we cannot underestimate the human factor in trading. I feel that our human tendencies can be our greatest impediment and until you feel and learn how to control them you will be in for a difficult time. Was it Kipling who said "if you can keep your head while all the other traders are losing theirs you will make alot of money my son.." or something like that

Share this post


Link to post
Share on other sites

In a more practical vein let me share today's rather unpleasant lessons. I have been having some success in the last several weeks by fading moves to either pivot points or the support/resistance lines that develope during the day when accompanied by a divergence in or extreme reading in the tick. Very few held and twice they broke down so quickly that the trade cost me more than I had expected. Are we entering a downtrend where this method won't be profitable for awhile, at least at support levels?Should I only take them at resistance. Just giving you a glimpse into the workings of a fledgling trader's brain? Hope it helps and if anyone has the answers to "life's most persistent questions" I'm all ears.

Share this post


Link to post
Share on other sites
Was it Kipling who said "if you can keep your head while all the other traders are losing theirs you will make alot of money my son.." or something like that

 

Or, as some have suggested, "if you can keep your head whilst all the other traders are losing theirs, you have no idea what's going on." :)

Share this post


Link to post
Share on other sites
In a more practical vein let me share today's rather unpleasant lessons. I have been having some success in the last several weeks by fading moves to either pivot points or the support/resistance lines that develope during the day when accompanied by a divergence in or extreme reading in the tick. Very few held and twice they broke down so quickly that the trade cost me more than I had expected. Are we entering a downtrend where this method won't be profitable for awhile, at least at support levels?Should I only take them at resistance. Just giving you a glimpse into the workings of a fledgling trader's brain? Hope it helps and if anyone has the answers to "life's most persistent questions" I'm all ears.

 

It sounds like a good system. I wouldn't try to guess long or short as long as you're not fighting the trend of the day. Good luck.

Share this post


Link to post
Share on other sites

Hi guys i feel these tradional things dont work.coz they tell contradictorythings for eg:

1)let your porfits run.

2)you dont lose ur shirt booking profits.:doh:

how can be both true.

if these things worked then 95% traders wont be losers.

the only way is to develop a mechanical system and follow it strictly.

i dont think u can make money provided u are required to take decisions during trading hours.

Share this post


Link to post
Share on other sites

rajatheroyal

 

I don't understand your statement; both can't work because i don't understand the u shirt statement.

 

but 95% of traders fail because the don't have the discipline to follow their plans or they don't have the skill to put together a good plan.

Share this post


Link to post
Share on other sites
Hi guys i feel these tradional things dont work.coz they tell contradictorythings for eg:

1)let your porfits run.

2)you dont lose ur shirt booking profits.:doh:

how can be both true.

if these things worked then 95% traders wont be losers.

the only way is to develop a mechanical system and follow it strictly.

i dont think u can make money provided u are required to take decisions during trading hours.

 

raja,

 

They can both be true - because market truisms are system specific (and this applies across 'discretionary', 'mechanical', and 'automated' systems btw)

 

Some systems you got to stay in or be ultimately doomed

Some systems you got to get out quickly or be ultimately doomed.

Some systems you got to do both - making each of the opposing truisms true to its proportionate degree for the particular system.

 

The spouters of truisms usually just spew them out without qualifying the type of system it applies to - omitting or not realizing that their truism is not general but instead is very system specific.

 

Most traders who never followed automation to near its limits never realize how far their exit strategies are off from optimal... ie how they are based on truisms and / or on neurological comfort zones, etc...

 

zdo

Share this post


Link to post
Share on other sites

zdo

 

I think you get it. I said it like this at my website; trading-seminar.com

 

Why No Specific Plans Here?

 

Plans are all personalized. What works for me would not fit your personality. Example; I'm don't have patience, so I day trade, waiting for grass to grow and watching trades go negative for a day or two just does not work for me.

You have to understand the plan too well. You can only get that from doing it yourself.

Share this post


Link to post
Share on other sites
raja,

 

They can both be true - because market truisms are system specific (and this applies across 'discretionary', 'mechanical', and 'automated' systems btw)

 

Some systems you got to stay in or be ultimately doomed

Some systems you got to get out quickly or be ultimately doomed.

Some systems you got to do both - making each of the opposing truisms true to its proportionate degree for the particular system.

 

The spouters of truisms usually just spew them out without qualifying the type of system it applies to - omitting or not realizing that their truism is not general but instead is very system specific.

 

Most traders who never followed automation to near its limits never realize how far their exit strategies are off from optimal... ie how they are based on truisms and / or on neurological comfort zones, etc...

 

zdo

 

Yes sir what u said is absolutely correct when u say about systems coz anybody who has a good system will survive but many many discretionary traders dont even have a system.

They completely trade on discretion some time they book profit taking in mind " you dont lose ur shirt rule"(when time is to stick with ur positions) some times they " let their profits run(when its actually time to book the profits) so i told that it wont work for them.

For those who follow systems,they dont even have to care about these these traditonal trading advices.

for example they say never trade against the trend

then what are mean reversion systems for ?

Edited by rajatheroyal

Share this post


Link to post
Share on other sites

You need to build your rules ONE AT A TIME, and then stick to them.

 

For instance for my long trades, I use rules like these:

 

Average Daily Trade Range % (14) > 5 [means the stock moves at least 5% a day]

Current Price is at least 5% < yesterday's close price [means only buy after a 5% drop]

Current Price > 20 Day Simple Moving Averge [means it is still in a long-term uptrend.

 

I simply get more winners than losers and make at least 5% on every trade.

Keep it simple and ALWAYS stick to your rules!

 

On another note, Beware of fund managers doing window dressing for the next few days as we approach the end of the month!

 

Don't get caught too Long when the market tumbles!

 

I don't believe this run-up is real for a second.

 

I've changed my automated traders to not be in more than 5 long and 5 short positions at any time.

 

Keith

 

------------------------------------------------------------------------------

Goodbye mutual funds Hello CoolTrade Robotic Traders

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • NFLX Netflix stock watch, local support and resistance areas at 838.12 and 880.5 at https://stockconsultant.com/?NFLX
    • Hello citizens of the U.S. The hundred year trade war has leaked over into a trading war. Your equity holdings are under attack by huge sovereign funds shorting relentlessly... running basically the opposite of  PPT operations.  As an American you are blessed to be totally responsible for your own assets - the govt won’t and can’t take care of you, your lame ass whuss ‘retail’ fund managers go catatonic  and can't / won’t help you, etc etc.... If you’re going to hold your positions, it’s on you to hedge your holdings.   Don’t blame Trump, don’t blame the system, don’t even blame the ‘enemies’ - ie don’t blame period.  Just occupy the freedom and responsibility you have and act.  The only mistake ‘Trump’ made so far was not to warn you more explicitly and remind you of your options to hedge weeks ago.   FWIW when Trump got elected... I also failed to explicitly remind you... just sayin’
    • Date: 7th April 2025.   Asian Markets Plunge as US-China Trade War Escalates; Wall Street Futures Signal Further Turmoil.   Global financial markets extended last week’s massive sell-off as tensions between the US and its major trading partners deepened, rattling investors and prompting sharp declines across equities, commodities, and currencies. The fallout from President Trump’s sweeping new tariff measures continued to spread, raising fears of a full-blown trade war and economic recession.   Asian stock markets plunged on Monday, extending a global market rout fueled by rising tensions between the US and China. The latest wave of aggressive tariffs and retaliatory measures has unnerved investors worldwide, triggering sharp sell-offs across the Asia-Pacific region.   Asian equities led the global rout on Monday, with dramatic losses seen across the region. Japan’s Nikkei 225 index tumbled more than 8% shortly after the open, while the broader Topix fell over 6.5%, recovering only slightly from steeper losses. In mainland China, the Shanghai Composite sank 6.7%, and the blue-chip CSI300 dropped 7.5% as markets reopened following a public holiday. Hong Kong’s Hang Seng Index opened more than 9% lower, reflecting deep concerns about escalating trade tensions.           South Korea’s Kospi dropped 4.8%, triggering a circuit breaker designed to curb panic selling. Taiwan’s Taiex index collapsed by nearly 10%, with major tech exporters like TSMC and Foxconn hitting circuit breaker limits after each fell close to 10%. Meanwhile, Australia’s ASX 200 shed as much as 6.3%, and New Zealand’s NZX 50 lost over 3.5%.   Despite the escalation, Beijing has adopted a measured tone. Chinese officials urged investors not to panic and assured markets that the country has the tools to mitigate economic shocks. At the same time, they left the door open for renewed trade talks, though no specific timeline has been set.   US Stock Futures Plunge Ahead of Monday Open   US stock futures pointed to another brutal day on Wall Street. Futures tied to the S&P 500 dropped over 3%, Nasdaq futures sank 4%, and Dow Jones futures lost 2.5%—equivalent to nearly 1,000 points. The Nasdaq Composite officially entered a bear market on Friday, down more than 20% from its recent highs, while the S&P 500 is nearing bear territory. The Dow closed last week in correction. Oil prices followed suit, with WTI crude dropping over 4% to $59.49 per barrel—its lowest since April 2021.   Wall Street closed last week in disarray, erasing more than $5 trillion in value amid fears of an all-out trade war. The Nasdaq Composite officially entered a bear market on Friday, sinking more than 20% from its recent peak. The S&P 500 is approaching bear territory, and the Dow Jones Industrial Average has slipped firmly into correction territory.   German Banks Hit Hard Amid Escalating Trade Tensions   German banking stocks were among the worst hit in Europe. Shares of Commerzbank and Deutsche Bank plunged between 9.5% and 10.3% during early Frankfurt trading, compounding Friday’s steep losses. Fears over a global trade war and looming recession are severely impacting the financial sector, particularly export-driven economies like Germany.   Eurozone Growth at Risk   Eurozone officials are bracing for economic fallout, with Greek central bank governor Yannis Stournaras warning that Trump’s tariff policy could reduce eurozone GDP by up to 1%. The EU is preparing retaliatory tariffs on $28 billion worth of American goods—ranging from steel and aluminium to consumer products like dental floss and luxury jewellery.   Starting Wednesday, the US is expected to impose 25% tariffs on key EU exports, with Brussels ready to respond with its own 20% levies on nearly all remaining American imports.   UK Faces £22 Billion Economic Blow   In the UK, fresh research from KPMG revealed that the British economy could shrink by £21.6 billion by 2027 due to US-imposed tariffs. The analysis points to a 0.8% dip in economic output over the next two years, undermining Chancellor Rachel Reeves’ growth agenda. The report also warned of additional fiscal pressure that may lead to future tax increases and public spending cuts.   Wall Street Braces for Recession   Goldman Sachs revised its US recession probability to 45% within the next year, citing tighter financial conditions and rising policy uncertainty. This marks a sharp jump from the 35% risk estimated just last month—and more than double January’s 20% projection. J.P. Morgan issued a bleaker outlook, now forecasting a 60% chance of recession both in the US and globally.   Global Leaders Respond as Trade Tensions Deepen   The dramatic market sell-off was triggered by China’s sweeping retaliation to a new round of US tariffs, which included a 34% levy on all American imports. Beijing’s state-run People’s Daily released a defiant statement, asserting that China has the tools and resilience to withstand economic pressure from Washington. ‘We’ve built up experience after years of trade conflict and are prepared with a full arsenal of countermeasures,’ it stated.   Around the world, policymakers are responding to the growing threat of a trade-led economic slowdown. Japanese Prime Minister Shigeru Ishiba announced plans to appeal directly to Washington and push for tariff relief, following the US administration’s decision to impose a blanket 24% tariff on Japanese imports. He aims to visit the US soon to present Japan’s case as a fair trade partner.   In Taiwan, President Lai Ching-te said his administration would work closely with Washington to remove trade barriers and increase purchases of American goods in an effort to reduce the bilateral trade deficit. The island's defence ministry has also submitted a new list of US military procurements to highlight its strategic partnership.   Economists and strategists are warning of deeper economic consequences. Ronald Temple, chief market strategist at Lazard, said the scale and speed of these tariffs could result in far more severe damage than previously anticipated. ‘This isn’t just a bilateral conflict anymore — more countries are likely to respond in the coming weeks,’ he noted.   Analysts at Barclays cautioned that smaller Asian economies, such as Singapore and South Korea, may face challenges in negotiating with Washington and are already adjusting their economic growth forecasts downward in response to the unfolding trade crisis.           Oil Prices Sink on Demand Concerns   Crude oil continued its sharp slide on Monday, driven by recession fears and weakened global demand. Brent fell 3.9% to $63.04 a barrel, while WTI plunged over 4% to $59.49—both benchmarks marking weekly losses exceeding 10%. Analysts say inflationary pressures and slowing economic activity may drag demand down, even though energy imports were excluded from the latest round of tariffs.   Vandana Hari of Vanda Insights noted, ‘The market is struggling to find a bottom. Until there’s a clear signal from Trump that calms recession fears, crude prices will remain under pressure.’   OPEC+ Adds Further Pressure with Output Hike   Bearish sentiment intensified after OPEC+ announced it would boost production by 411,000 barrels per day in May, far surpassing the expected 135,000 bpd. The alliance called on overproducing nations to submit compensation plans by April 15. Analysts fear this surprise move could undo years of supply discipline and weigh further on already fragile oil markets.   Global political risks also flared over the weekend. Iran rejected US proposals for direct nuclear negotiations and warned of potential military action. Meanwhile, Russia claimed fresh territorial gains in Ukraine’s Sumy region and ramped up attacks on surrounding areas—further darkening the outlook for markets.   Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news.   Andria Pichidi HFMarkets   Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • AMZN Amazon stock watch, good buying (+313%) toi hold onto the 173.32 support area at https://stockconsultant.com/?AMZN
    • META stock watch, local support and resistance areas at 507.48, 557.84 at https://stockconsultant.com/?META
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.