What Really Works for Technical Traders

[Flex1975 10]

Didn't Mark Twain have a real knack for hitting the nail square on the head? I believe Mr Twain also said something to the effect of "There's lies, damn lies and statistics." That's why I never had much faith in backtesting "systems." I test my research with real money, not computer simulations.

 

 

Although backtesting is just a single step and only valuable when confirmed by forward testing... it is a crucial step in the whole proces. Calling a backtest a lie confirms indeed Phantom is not a daytrader with 12 years of experience...

 

I do not apologize for my skeptical posts in this thread but based on the replies I realize the harder I try to prove Phantom is a fake the more forum members luv him...

If people choose to believe him and eventually buy his/her stuff (or worse...give him/her your trading money to do the trading for you) then I have to respect that and keep my ethical mouth shut...

 

The bait is always too attractive for people blinded by $ signs. That's how it works and always will work....

[phantom 16]

Random thoughts on testing.

 

My uncle was an engineer he taught me the scientific method when I was... I dunno about 8 years old I guess. In my view (fwiw) though pretty simple it is very useful in many aspects of life for acquiring and integrating knowledge.

 

Computerised back testing is just a tool. Nine times out of ten people draw un-reliable conclusions from it. There's a whole bunch of reasons for this that go beyond the scope of this thread. For most things I far prefer testing 'by hand/eyeball'. Performance analysis has its place too (to call that statistics is a bit grand for what is essentially keeping a tally). Market generated statistics have there place too but this thread is not one of them

 

This is one of those areas where expertise in other walks of life can be detrimental to your outcomes if you expect trading to 'work in the same way'.

 

 

My friend, its not that I never backtested anything in the past. My brother is a high level government programmer and believe me when I say that we've run backtests on an array of system ideas, but when I traded these ideas I could never get the real trades to produce like the simulated results. Maybe coding errors, maybe poor execution, maybe whatever...

 

There is a reason the CFTC proclaims "past performance is no guarantee of future results," because they know that system vendors abound with all kinds of optimized this and that, but when traded in real time with real money, these systems just don't work. My personal experience attests to that fact.

 

So I've become more like yourself; I observe market dynamics, then do visual/eyeball-type analysis, and then place bets iaw my observations.

 

Works for me.

 

 

Luv,

Phantom

[phantom 16]

Warning: this setup was not backtested on 300 years of data before I made money with it, so it may not be for you!

 

Let's consider the following chart of Friday's euro currency price action:

 

 

This is a 10 minute chart of the June Euro. Friday morning opened to a huge overnight move in the euro. This kind of overnight action is even better than the release of the employment numbers IMO because not only is there going to be a long-covering frenzy when the banks open at 8 am MDT, we don't have to guess which direction we are looking to trade this morning!

 

The 20 period moving average is my best friend in the financial world. I use it to determine the current trend on my 10-15-20 minute charts (yes, I look at all three time frames continuously during the day, because sometimes I'll see price rejection on one when the other two are not clearly showing it (one of the "subtleties" of price action).

 

The 0730 bar, indicated by the black arrow, is the first full bar underneath the 20 sma following the market's consolidation/price test of some previous price level. As we already discussed earlier, the doji bar at 07:30 is a secondary consolidation following the breakout of the primary a-b-c consolidation that occurred from just prior to 6 am until its culmination at around 07:20.

 

Price action indicates that the market broke the ascending pennant (a-b-c consolidation), consolidated again (doji), broke down below the doji low, retested some point within the doji, and then plummeted. I think this was about a 90 point move.

 

I sell one tic below the low of the doji with a protective stop one tic above the doji.

I risked 13 tics on this trade to make 80-something tics. Not a bad reward for the risk I assumed.

 

The afternoon trade is one that I did not trade (I was busy with this thread-see how easy it is to be distracted from a trading routine, especially when you've been doing it a long time; it becomes harder and harder to stay focused). The psychology behind the setup is the same. This breakout moved over 50 points.

 

Anytime a big report is released that rocks the market or a big overnight breakout of a multiday trading range occurs that skyrockets volatility, I'm on alert status for this setup.

 

Folks, I wrote this thread to help you understand price action. Once you truly understand price action, you won't have to rely on a computer simulation to tell you your trades are okay to take with real money. This advice is coming from a real trader, not some institutional bean-counter.

 

Hope this helps.

 

 

Luv,

Phantom

[JerryHatfield 10]

Sorry I screwed up the quoting.

 

Mark Twain also said: "Differences of opinion are what make horse races."

 

Differences of opinion also make markets.

[BigAl 10]

 

What I like to see on a 15 or 30 minute chart is a hammer or doji candlestick following a consolidation or range breakout.

 

What is the psychology behind the hammer? Price moved from the breakout zone to some new level. Then price then retraced towards the consolidation zone and was rejected (hammered) back into the direction of the new trend. The breakout of that hammer bar IS THE ABSOLUTE SAFEST BET YOU CAN MAKE!!! Why? Because if the market just got hammered away from a price level, what do you think the odds are that price will immediately return to that level? Not very good odds at all.

 

Phantom

 

In keeping with Phantom opening post.....the pictures below are the hammers and dojies from last week's (5/16 to 20) YM and ES trading. I use 512 bars for YM and 1600 for ES.

 

The green horizontal bars are Long Entries, Red - Short Entries, Magenta - 1st Target exit at 10 ticks in the YM. Pstops (protective stops) are 15 tick below or above the Entry Prices. Just look to see if the market traded back above or below the hammer or doji at the entry.

 

I've only posted the 1st Target of 10 ticks and I'm using only 1 contract per trade to keep the example simple.

 

5/16: 6 trades for 60

5/17: 4 trades for 40

5/18: 3 trades for 10 no line for entries and exits

5/19: 3 trades for 30 no line for entries and exits

5/20: 4 trades for 20 no line for entries and exits

1st target total for week: 160 ticks

[BlowFish 10]

Although backtesting is just a single step and only valuable when confirmed by forward testing... it is a crucial step in the whole proces. Calling a backtest a lie confirms indeed Phantom is not a daytrader with 12 years of experience...

 

 

Depends what you mean by 'back testing' if you mean computerised back testing I have to respectfully disagree. Anyway none of that is germane to this thread. It is up to each individual trader to thoroughly test their trading premise, without doing so it is unlikely they will have the confidence to trade it.

 

 

I do not apologize for my skeptical posts in this thread but based on the replies I realize the harder I try to prove Phantom is a fake the more forum members luv him...

If people choose to believe him and eventually buy his/her stuff (or worse...give him/her your trading money to do the trading for you) then I have to respect that and keep my ethical mouth shut...

 

The bait is always too attractive for people blinded by $ signs. That's how it works and always will work....

 

All of that says more about you than Phantom or his method. Why do you want to prove him a fake so badly, who gives a flying fig? If you think his method is no good by all means indicate why. If and when he asks for money he will be asked to be a sponsor or shut down. Simple as that. What you are doing is engaging in a witch hunt, to repeat myself it says more about you than phantom or his method. If you want to engage in that sort of activity Ellite Trader is a better venue. Incidentally your posts not only 'prove' nothing they don't make the slightest attempt to try to. Post some back test results (as you threatened to earlier) or at east post some charts indicating why this is unsound.

 

I also think it rather sad (not to mention insulting) that you have to deride people that won't join your witch hunt.

 

In short post some tangible proof or it would be best for all concerned if you "keep your ethical mouth shut". No disrespect meant to you but this seems to have got under your skin. Hell, just drop the matter and start a thread "how to back test properly". You could even use this approach as an example!

[waynick5 10]

Will your indicators work on Tradestation?

[phantom 16]

Will your indicators work on Tradestation?

 

I can only assume by indicators that you mean 20 period sma (part of the Bollinger band) and MACD?

 

Although I've never used Tradestation, I'm sure the answer is yes, because these are basic to every charting package out there.

 

 

Luv,

Phantom

[mslk 10]

hey phantom - any more updates on this thread? i've enjoyed following your thoughts on price action thus far - mslk

[phantom 16]

 

Here's a breakout in July Corn this week. The red arrow points to the test > hammer (price rejection away from the side ways channel) > breakout that led to a massive 60 cent move over the next couple of days. (That's $3,000 profit per contract traded)

 

Here's my question: Why are you still trading the e-mini sp 500???

 

Remember, most of the stuff you read on this website will take you right to the poorhouse.

 

 

Luv,

Phantom

[mmustoe 10]

Phantom,

 

Thanks for sharing... Enjoyed the thread (other than the add nothing whiners). My question is why do you not like the ES (S&P emini) ? I enjoy the liquidity and breadth, but also believe it is a heavily manipulated market..

 

Can you plz expand?

 

Cheers

[phantom 16]

Phantom,

 

Thanks for sharing... Enjoyed the thread (other than the add nothing whiners). My question is why do you not like the ES (S&P emini) ? I enjoy the liquidity and breadth, but also believe it is a heavily manipulated market..

 

Can you plz expand?

 

Cheers

 

IMHO, trading is all about reward to risk.

 

I generally risk around $150 per contract on my breakouts, and the reward varies, but it is not uncommon to achieve 6,7,8 times the $150 risked as a reward for my patience and risk taken. I found it extremely difficult to get anywhere near the RTR ratios when trading the ES and NQ contracts.

 

There is plenty of liquidity in the currency and grain contracts, and I'm not too concerned with the depth of market. Usually, when its time for the market to break out from one of my setups, the market does not linger at my entry price zone long enough for the scalpers to come hunting my stops. That was never the case in the equities markets.

 

Hope this helps.

 

 

Luv,

Phantom

[mslk 10]

Remember, most of the stuff you read on this website will take you right to the poorhouse.

 

what are you talking about? are you being facetious or are you serious? does that include stuff you post? :rofl:

 

-mslk

[mslk 10]

IMHO, trading is all about reward to risk.

 

I generally risk around $150 per contract on my breakouts, and the reward varies, but it is not uncommon to achieve 6,7,8 times the $150 risked as a reward for my patience and risk taken. I found it extremely difficult to get anywhere near the RTR ratios when trading the ES and NQ contracts.

 

There is plenty of liquidity in the currency and grain contracts, and I'm not too concerned with the depth of market.

 

hey phantom, out of curiosity what platform are you using to trade currencies and commodities? i would like to start trading in the methods you are describing but the first major hurdle is always picking the right place to deposit my money. i only want to do it one time as it is such a pain-in-the-ass to change later.

 

thanks - mslk

[phantom 16]

hey phantom, out of curiosity what platform are you using to trade currencies and commodities? i would like to start trading in the methods you are describing but the first major hurdle is always picking the right place to deposit my money. i only want to do it one time as it is such a pain-in-the-ass to change later.

 

thanks - mslk

 

I use the ninja trader platform with a Chicago-based brokerage.

 

 

Luv,

Phantom

[mslk 10]

Although backtesting is just a single step and only valuable when confirmed by forward testing... it is a crucial step in the whole proces. Calling a backtest a lie confirms indeed Phantom is not a daytrader with 12 years of experience...

 

no it doesn't - everyone has their own approach - you cannot automatically assume he isn't a daytrader with 12 years experience simple because he doesn't agree with you on backtesting! anyhow - continue on phantom we are all enjoying your thread so far and want more

-mslk

[ChartAdvisor 10]

Here's a breakout in July Corn this week. The red arrow points to the test > hammer (price rejection away from the side ways channel) > breakout that led to a massive 60 cent move over the next couple of days. (That's $3,000 profit per contract traded)

Luv,

Phantom

 

The Phantom is back!

 

Was it the real phantom or an imposter.?

Would the real phantom give up so easily?

 

phantom, Have you considered approaching this as if you have an audience of only one trader (not 100k)? ... and s/he hasn't posted/said a peep yet?

 

Agree with zdo - forget the negative comments and keep posting your work. Moderators - can you keep an eye on this thread and let Phantom post in peace?

[ChartAdvisor 10]

Au contraire you are not welcome here if you want to scam.

 

Let's not jump to negative conclusions so quickly. Let the man educate in peace, he is doing a great job so far. We are all adults and we can decide for ourselves if he is a scam. Please go and start your own thread if you don't like what Phantom is teaching.

[ChartAdvisor 10]

I was going to comment on your first post. It seems that your approach is pretty radically different from phantoms. (of course I may be wrong) It would certainly seem to merit it's own thread if that is the case? I wonder if any 'criticism' is not really criticism, it's just you do stuff differently?

 

I agree with Blowfish, Flex you should start your own thread and post your methods. It would be easier for everyone to follow different threads vs. trying to pick out your methods from Phantoms.

[ChartAdvisor 10]

Hi Blowfish,

If the trade rules are clear I can code a "Phantom strategy" and provide some test results for those who are interested...

 

Well let him finish the lessons and then please do that - I'm sure everyone reading this thread will appreciate it.

[BlowFish 10]

Phantom,

 

Thanks for sharing... Enjoyed the thread (other than the add nothing whiners). My question is why do you not like the ES (S&P emini) ? I enjoy the liquidity and breadth, but also believe it is a heavily manipulated market..

 

Can you plz expand?

 

Cheers

 

There is a thread somewhere titled something like "why trade the emini ES" or something similar. Several opinions including Phantoms are expressed there. Liquidity is about the only thing it has got going for it but I can't see that will be a big factor except for the largest traders? It lacks volatility, granularity and a whole bunch of other minuses (mentioned in the aforementioned thread). You can almost certainly get more bang for your buck elsewhere.

[phantom 16]

There is a thread somewhere titled something like "why trade the emini ES" or something similar. You can almost certainly get more bang for your buck elsewhere.

 

 

So true...

 

Why risk $150 to make $150 when you can risk $150 to make $600? $800? $3000???

 

Reward to risk, baby!

 

 

Luv,

Phantom

[pat15 10]

Phantom ...

 

i have read your posts and chart examples with interest. I agree that one must try other mkts than ES NQ etc. How do you pick other futures such as grains etc a) Do you regularly check all grains to see which one is setting up? same with the currency b) Do you have some grains/currency that you find better than others in the category?

 

Thank you ..great thread and hope you will keep posting your setups ..

[mslk 10]

Phantom ... Thank you ..great thread and hope you will keep posting your setups ..

 

i second that

 

blowfish, are you referring to this thread? Why the S&P E-Mini Stinks

 

thanks - mslk

[BlowFish 10]

i second that

 

blowfish, are you referring to this thread? Why the S&P E-Mini Stinks

 

thanks - mslk

 

That's the one

 

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