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keymoo

Hi from a new trader

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Hi there,

 

Just found your forum this week. I must say thanks for a very well-designed and polished site. Lots of hours of work gone into that, well done.

 

About me

I worked for banks in London for 10 years developing and supporting trading systems. We're talking about the big boys here. I want to learn to trade for myself now after working for those guys for so long. I've learnt a lot from this site already, thanks a lot!

 

keymoo

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Hi there,

 

Just found your forum this week. I must say thanks for a very well-designed and polished site. Lots of hours of work gone into that, well done.

 

About me

I worked for banks in London for 10 years developing and supporting trading systems. We're talking about the big boys here. I want to learn to trade for myself now after working for those guys for so long. I've learnt a lot from this site already, thanks a lot!

 

 

Welcome to the forums keymoo! :cool:

 

sry if your post reads at the bottom " Last edited by MrPaul : Today at 02:28 PM." I hit edit instead of quote...:o

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Hi keymoo,

 

Welcome aboard. Very interesting background you have with trading systems. So are you trying to learn a discretionary approach to trading? Or do you plan to trade a system?

 

Soultrader

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I know that most systems don't work, so if I use a system it will be something I have grown myself using ideas from other people blended with my own. I'd like to use a system to guide me to entries and exits but also use some discretion too. I have paper traded 3 or 4 systems and none of them have worked very well at all, on paper, so on a live account I'm sure they'd be a disaster.

 

Favourite markets for me are the ER2 and ES, also forex, but I only trade forex on news releases. Forex seems a bit dirty to me with all the bucket shop brokers and I try and keep away from it, however news trading is so much fun that I can't resist it.

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Hi keymoo and welcome aboard!

 

If you look around you'll find the right forex brokers now. Markets are changing, check out MBTrading, EFX and OANDA sites and google non-dealing desk brokers should get you started on your search for the right broker.

 

Great background and very interested in asking you the BIG question: did the systems the big boys have worked and lasted as long as they expected to? Are they are complex as us outsiders rumor them to be?

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Thanks.

 

If you saw what the big boys do you would panic. They have ARMIES of IT people, economists, strategists, analysts, etc, building systems, data modeling, etc, the works. A few systems I worked on cost the banks 10s of millions of dollars to develop.

 

That's how serious they are. You better make sure you do your research, lol!

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That's great to see all these people employed, but the final result is what? measly 10% annual return? And the rest of their income in from bank fees? I'm not saying I'm a great system developer, just a simple trader who still has mountains of things to learn, but I find it hard to believe an institution can rake in beyond 20% consistently based on systems. Bruce Kovner's hedge fund is one I know has been doing well except this and last year. Are systems as complex as these can still bring in superior return? That's the question that piques my curiosity.

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Look at Goldman Sachs profits. A lot more than 20%. All I am saying to you guys is, the professionals hire the brightest IT minds in the industry, get them to model systems you and I would never have a hope in modeling. They have the edge, and deserve respect when trading. If Goldman Sachs places a Buy order for 1000 S&P contracts, the market takes notice. What do they know that we don't know?

 

Some banks trade for their own account and some are more conservative with clients' capital, I agree. People like Goldman are much more aggressive.

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Hi keymoo,

 

Welcome on board.

 

A successful trading system after back-testing shd work in real trading. If it does not work is because the trader does not follow the rules of the system.

 

Besides, don't trade on systems developed by other people. The systems probably are not appropriate for you in terms of risking-taking, time-frame, volatility, etc.

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A successful trading system after back-testing shd work in real trading. If it does not work is because the trader does not follow the rules of the system.

 

Not sure why this thread was dug up, but since it was - your statement could not be more wrong. Just b/c something backtests well does NOT equate to a profitable system going FORWARD. Contrary to what you read in the books, backtesting may help (or could actually hurt) a possible new system but since it is based on purely historical data that means little when the future is unknown. There are plenty of possible systems out there that backtest well and perform poorly live and vice versa.

 

If it was this easy, we would all be multi-millionaires here.

 

I'm amazed at what I read sometimes...

 

:roll eyes:

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Not sure why this thread was dug up, but since it was - your statement could not be more wrong. Just b/c something backtests well does NOT equate to a profitable system going FORWARD. Contrary to what you read in the books, backtesting may help (or could actually hurt) a possible new system but since it is based on purely historical data that means little when the future is unknown. There are plenty of possible systems out there that backtest well and perform poorly live and vice versa.

 

If it was this easy, we would all be multi-millionaires here.

 

I'm amazed at what I read sometimes...

 

:roll eyes:

 

Trading is a game of probability and for sure nobody can predict the market with certainty. As you'd said future is unknown, therefore, trading with a system based on backtesting on historical data is better than trying to predict the market without any research.

 

I did not say backtesting well must equate to profitable trading going forward.

What I'd said was that if you've a good system based on backtesting and if you do not follow the rules religiously, your trading will probably not be profitable.

 

Please don't be amazed at what you'd read anytime because many traders succeeded in trading by many ways, As the saying goes, there are many ways to skin a cat.

 

Trading systems may be easy but many traders find it very difficult psychologically to follow the systems religiously. As such, not many traders will become multi-millionaires. Just like playing golf is physically easy, swing and hit but not many people can be like Tiger Woods because not many people are prepared pyschologically to train for it.

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Hi keymoo,

 

Welcome on board.

 

A successful trading system after back-testing shd work in real trading. If it does not work is because the trader does not follow the rules of the system.

 

Besides, don't trade on systems developed by other people. The systems probably are not appropriate for you in terms of risking-taking, time-frame, volatility, etc.

 

Hi late to the party Charlie. They say that the ability to take notice of detail is important in making it as a trader, especially importnant numbers and dates!

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backtesting is just one piece of the puzzle. Forward testing (forward walking) is essential. When I first started, I made this mistake of blindly traded the system I tested with nice results but failed miserably in real time, even when I followed it religiously. Nothing compares to real time testing, even then, there is always changing condition that will get kinks in the system that will. Systems will succeed at one time or another, but it fails too. How the trader deals with that period is crucial? Should he optimize it? Retest? Cut down the number of contracts? All these make a difference in making or breaking the system.

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