Trading Contest Discussion

[TTony 10]

Trading is a "long run" game, and even the best approach will suffer larger than normal yet not unexpected drawdowns at the hands of the approach's standard deviation. While three to five losses in a row at a 2-3% risk is never fun, it is nonetheless beatable (as you will see once Oanda updates again).

 

In real life, I often will have more than 2% at risk depending upon the situation and my confidence level.

 

I guess it takes big sample size of positive performance and a lot of experience to be able to trade with confidence and discipline after a long losing streak with 2-3% risk per trade.

You obviously have all that and it's great you're sharing your insights (I'm reading thru "Optiontimer's Project" thread). Thank you.

 

As for me I just came back to trading after a few years break and as I'm building my trading plan I stick to the rule "Don't lose money"

If I'll get positive results I'll slowly increase position size. For now any profit is good.

[optiontimer 10]

Wow optiontimer ... Do you trade real account with same risk?

 

Risk is the least understood component of this game. This has two results: First, as risk is not understood, it confounds and instills fear. People who attempt to trade have responded to this fear with all manner of "money management" schemes to "control" risk. You cannot, however, control risk. You can only control your exposure to risk.

 

Nearly all money management approaches begin and end with a fixed risk amount, expressed either as a fixed dollar amount or a fixed percentage. The problem with this is that it leads the trader to view all market opportunities as the same. This is fine when you are developing a trading plan, learning to identify your set-ups, and generally becoming experienced with seeing and identifying opportunities. In other words, such money management designs are fine for the beginner or amateur who is still grasping for an edge. But if you have an edge, you will maximize its results by varying your trade size based upon the preceived strength of your edge as it varies from opportunity to opportunity.

 

Failure to do so will lead to subpar results more often than not if one does not learn to distinguish a trade with high probability of success and a better potential payoff from one with a lower probability and a lower potential reward. You must then bet stronger on the former and less on the latter. If you bet the same both cases, then your risk is higher on those bets with a lower (yet still positive) expectation than it is on those bets with a higher expectation, but because you risked the same amount or same percentage of your account on each trade, you are fooled into thinking your risk was the same. It was not.

 

The second result is that since risk is for the most part universally misunderstood, it is almost always mispriced. Therein lies the opportunity.

[TTony 10]

Risk is the least understood component of this game.

I actually meant "risk per trade" but couldn't edit because my posts are not visible until approved by mod.

Thanks again for another great post. Good stuff.

 

 

btw. anyone knows how long this "new member" status lasts? My posts are not showing up for hours. Let's see when this one will appear

[optiontimer 10]

I actually meant "risk per trade" but couldn't edit because my posts are not visible until approved by mod.

 

I always assume that "risk per trade" is included in any discussion of or reference to risk in general.

[TTony 10]

I guess it takes big sample size of positive performance and a lot of experience to be able to trade with confidence and discipline after a long losing streak with 2-3% risk per trade.

 

Quoting myself from post #51

 

Optiontimer, how big of a sample would you say we need in order to conclude (with some degree of confidence) that our trading strategy is profitable?

I'm talking about real money trades not demo.

[onemove 10]

Optiontimer, will you share which pairs you have seen trades in please? I have been scrolling through the pairs down the list and have not seen any yet that meet criteria for entry, obviously I must be missing something. Thank you!

[onemove 10]

Optiontimer, will you share which pairs you have seen trades in please? I have been scrolling through the pairs down the list and have not seen any yet that meet criteria for entry, obviously I must be missing something. Thank you!

 

Ah, I see that Oanda has a lot more pairs than the mt4 I was using for charting. Slight differences also in price bar and indicator configuration. I found these that I missed last week GBPNZD, NZDCAD, NZDUSD, USDNOK, USDTRY.

[onemove 10]

Comparison mt4 and oanda

[TTony 10]

Anything I do ends up with a loss. :crap:

Out of 12 last trades 10 were losers.

Very frustrating

[onemove 10]

Anything I do ends up with a loss. :crap:

Out of 12 last trades 10 were losers.

Very frustrating

 

Hello TTony, I was going to asked whether you had reviewed the trades and identified the issues, when I saw that the trades you do have are working really well! Well done!

[TTony 10]

I think half of those losing trades were my fault. really must work on my discipline

Often I jump in too soon/late because my lack of patience.

 

After that post I caught nice moves in e/j, e/u and g/j so at the moment all is well

[kuokam 10]

You have 4 types of trades: good, bad, profitable and losers.

You should always try to take but the good trades, as qualified by your system.

But as always theory is so easily stated. I recently missed 2 great trades that were signaled, as I lacked confidence

 

 

 

I think half of those losing trades were my fault. really must work on my discipline

Often I jump in too soon/late because my lack of patience.

 

After that post I caught nice moves in e/j, e/u and g/j so at the moment all is well

[TTony 10]

My "End of the world" campaign didn't finish as planed.

I accumulated huge position which showed big unrealized profit (forgot to take at least some of it :crap:) but overnight it collapsed to zero.

Still managed to get at least something out of it but, meh, this one had the potential to catapult me to 2nd place behind optiontimer.

Maybe next time .....

 

I'm probably done for the year and would like to wish everyone here a merry Christmas and tons of pips in 2013

 

 

[onemove 10]

Wishing Everyone a Very Happy and Prosperous New Year!

[kuokam 10]

May we get all those pips in the new year 2013 !

 

Wishing Everyone a Very Happy and Prosperous New Year!

[Ingot54 13]

May we get all those pips in the new year 2013 !

OK folks - celebrations of the holiday season are largely behind us now.

Here's some local Aussie trivia for you:

 

On 26th January each year, Australians celebrate Australia Day.

This holiday commemorates the beginning of European settlement in

Australia, when Captain Arthur Phillip arrived with the First Fleet.

 

Australia Day Holiday

 

Also known to our indigenous brothers and sisters as Sovereignty Day,

Invasion Day and Survival Day, and as a Day of Mourning.

 

WGAR News: Aboriginal Sovereignty Day, Invasion Day and Survival Day Events: Sat 26 January 2013 | Indymedia Australia

 

What has this got to do with the discussion about the Trading Contest :confused:

 

Nothing.

 

Only I could add that for me, it signals the end of the holiday season, when

the local tourists from the south of the country leave our great beaches in

Queensland, and return home.

 

And that means that reality bites - 2013 has consolidated its arrival, and it's

really time to knuckle down and start trading in earnest. All over the word

economies are experiencing a return to "normal" conditions after the holidays

too, so the markets should be a little less volatile, as normal volume returns,

and the Institutional traders and Banks are back at their desks.

 

This post then, is a "call-to-arms" for all traders to register for the next 2-month

trading contest, here:

 

https://fx2.oanda.com/mod_perl/fxcontest/fxcontest.pl?rm=listContests

 

The Traders Laboratory Contest is on page 2 at that link.

 

I am looking forward to getting through the period without blowing up this time :rofl:

 

And it looks like we are getting some serious traders contending for the bragging rights.

[fxYogi 10]

This is my first post on TL, and would like to thank you all for starting and keeping the contest threads alive. This is specially valuable for me right now, while trying to figure out where to look for a genuinely proven profitable trading method.

 

I am not exactly new in the FX trading (I have already lost an account about 5 years ago), but I am back to the drawing board again like a beginner, since my previous run didn't succeed. The first time I have been sucked in by the widespread loser methods based on moving averages, and by the time I have realized it doesn't work, it was too late. :doh: Anyway, it was only a relatively small account of 1000 GBP.

 

Now after few years of "break" I am back to give it another chance with a bit more research. There are many trading forums with countless systems and methods, which makes it extremely confusing and difficult to find the golden needle in the haystack. So I thought, the fastest way to find what really works in the long run is to measure the performance of traders and their methods which is done in contests. Those gurus who teach a method but unwilling to prove their performance in contests (or posting live trading results) are most probably not worth the time and effort to investigate.

 

I was very excited to find here Optiontimer's excellent repeated performance in some of the past TL contests. But what was even more encouraging is to find one of his students (if I may use this term) Onemove winning the Nov - Dec Contest with an excellent result of 89% return vs. -6.87% max drawdown. The expertise of a guru and value of his method for a student is best measured by the performance of his students.

 

So this is IT! :beer: - I thought, but then how is it possible then that in the last results of the latest contest Onemove is back in the red area with -31.44% loss and -15.61% max. draw down? What went wrong? Would Optiontimer have also have a losing run (meaning that the method is in a monthly drawdown period), or is it only failure of proper strategy execution? I am not criticizing anyone, my intent is constructive, trying to figure out what is happening.

 

I would very much appreciate some relevant comments from all, but especially from Onemove and Optiontimer. Whatever the case, I will read Optiontimer's thread. Thanks again for sharing your wisdom people!

[Mr_black 10]

Trading contests are good for testing new strategy and test yourself against other traders..

[Mr_black 10]

There is a contest on Myfxbook starting on march 17th and it is for real cash awards...:helloooo:

[fxYogi 10]

There is a contest on Myfxbook starting on march 17th and it is for real cash awards...:helloooo:

 

Thanks Mr_black, I will check it out. :thumbs up:

 

A contest for real cash is even more likely to draw in more participants. Hope that cheating and gambling type tricks to win the competition can be effectively eliminated though, otherwise it will not reveal the information I am looking for...

[kuokam 10]

As already suggested, can you open another thread for that contest?

 

There is a contest on Myfxbook starting on march 17th and it is for real cash awards...:helloooo:

[Mr_black 10]

As already suggested, can you open another thread for that contest?

I will..whatever....:rofl:

[Ingot54 13]

One of the problems I see with the current format for trading competitions/contests, is that "success" is based on opening and closing balances

 

This situation is hollow ... false ... wrong ... and a perfect example of how NOT to try to trade.

 

Yet - here we are encouraging each other to "excel" at trading by earning bragging rights.

 

I stated earlier that I had discovered my personal Holy Grail (see post #546 here):

 

http://www.traderslaboratory.com/forums/forex-trading-laboratory/9303-traders-laboratory-forex-trading-contest-18.html

 

This is Traders Laboratory but it might well be called "Trader's Smorgasbord" unless we truly get down and dirty, and look at how we are approaching trading.

 

Look, can I just say right here and now that most of have had the fabled chalice (Holy Grail) in our grasp at some point in our journeys. That has to be a fact, because we continue to believe in something that we have seen that urges us onwards and upwards. Otherwise, without some hint of what is possible at the personal level, we would have (should have) abandoned trading long ago.

 

Is anyone so foolish as to continue losing money without any hope of one day surviving and prospering in this?

 

No.

 

And that "no" is qualified only by the inclusion of the word "hope" in that sentence.

 

So what is my point here?

[Ingot54 13]

One of the problems I see with the current format for trading competitions/contests, is that "success" is based on opening and closing balances

 

This situation is hollow ... false ... wrong ... and a perfect example of how NOT to try to trade.

 

.......

 

So what is my point here?

The point is that a handful of us contest the right to brag every month or two, as being "the best" trader for that time.

 

I mentioned account balance as being the measure of success, and this is totally wrong.

 

This is what causes traders to fail - stretching their resources, both mentally and financially to breaking point ... failure. How many traders were close to leading at some point, but bombed out dismally at the end?

 

Their failure has N-O-T-H-I-N-G to do with "damaged psychology" in any way - it is simply that traders are not encouraged to trade the way their strategy was designed to trade. The contest on its own is attempting to force traders to win the chocolates with big trades, instead of smart trades.

 

What I am getting at is the contest is not good for trading as it stands.

 

What I propose is a contest where traders have to win pips ... not dollars ... as a measure of prowess ... and yes - bragging rights.

 

If you look at my 166% gain to win last month's contest, some might say "welldone" for the effort. The truth is the opposite - it was nothing more than a calculated gamble to earn me the right to make this post. (See posts #578 and 581):

 

http://www.traderslaboratory.com/forums/forex-trading-laboratory/9303-traders-laboratory-forex-trading-contest-19.html

[Ingot54 13]

I mentioned a link in one of those posts to "How to Trade the Foreign Exchange Market (Forex)" but to be honest, I no longer trade that way - this was an evolutionary step along the way.

 

While those principles remain sound and useful, they are no longer how I trade, and thus the reason I have had difficulty in completing that thread. I still intend to complete it btw, in good faith of my promise to do so.

 

Here is how I won the contest:

 

1) Look for great setup

2) Put it all on red

3) Take profit at end of trend

 

Such tactics can bring traders unstuck fast. But this is the reason I had only 17 trades ... and made 166% with a Sharpe Ratio of 0.22.

 

It demonstrates 2 things:

 

1) Care and attention to selection, timing and probability CAN bring some rewards

2) Backing your judgement with big plunges CAN bring some rewards

 

What it will never demonstrate openly is that this is the way to trading oblivion. You can win lots of times, but putting it all on red requires you lose just ONCE and you are out!

 

I think Traders Laboratory owes its members more than that.

 

I think we should be encouraging members to participate in contests where the rewards come for sound trading practices:

 

1) Choice of trading vehicle/instrument

2) Position sizing and money management

3) Trade management skills

4) Demonstration of:

a) Trading Plan

b) Business Plan

c) Discipline to remain within stated guidelines, however broad or narrow

5) Wisdom to know when NOT to trade

 

Throughout the forum we do see threads where all of these things are addressed, but we have no contest that encourages traders to follow their own guidelines.

 

Instead, we trade like there is no tomorrow, in an attempt to win "bragging rights."

 

I give back my award, because I disqualify myself as ... for THAT contest ... a very poor gambler ... not a trader.

 

Instead, I would like to award the trophy to ... TradeRunner.

 

Look at the numbers:

 

12 trades (6 in/6 out)

1,691,354 trading volume

-4.45% DD

0.02 Sharpe Ratio

+0.68% portfolio return

 

I might be wrong, but did any trader do better than TradeRunner in that contest?