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Monday, April 23, 2012

REALITY OF A TRADING SYSTEM AND THE TRUTH FROM YOURS TRULY




This chart looks a bit funny to me but the new blogger platform is so god awful it could just be the way it is showing it to me while drafting this. You can see that the short was reversed to a long on tonight's open at 142'22. As a result the short lost 29/32's. The long could have been entered at a better price since it drifted a little lower after the opening.

So far we have one small win of 5 ticks and a loss of 29 ticks, so overall the system is down. For those of you who think you can just trade a system and just win on every trade, you really should just go do something else. There is nothing that has ever been or will be created, that will do that other than a time machine. I got an email from one of my favorite readers today and he made a remark about how large the stop was on the add on for the original trade I did was. What was lost in that was the add on was done at a price of 13 ticks better than the original. That meant the risk was considerably less than the original stop.

If you are intent on trading with systems, the one thing that has always been and always will be the case is stops need to be wide to get high accuracy. If you want to trade bonds with a $500 stop go to tick charts and scalp, or better yet just take half the money you want to risk and donate it to charity. That way you will have saved 50% of what you would wind up losing, and will have done some good in the process. I have seen so many trading systems that have failed including those concocted by yours truly. Wider stops give your ideas a chance to work, small wins condemn all ideas even good ones.

In the full disclosure department, I bailed out of the short Sunday night early when I saw that I was looking at a short in the ES. It was a judgement call, but it resulted in a small win with the add on and a small loss on the original, for a net scratch. I will probably never trade this straight up until I watch it live for a while to see how it does in live trading. I am not in this long tonight, I have decided to watch these trades for a month or so first. So I made a net 5 ticks basically screwing around with the first two trades, and basically not following my own rules on the second one. I like to think that my discretion at this point should help enhance results, but who knows if that really is the case.

It appears that my software is not predicting for the next day the correct price levels to enter these stock trades. I projected a close to the levels I posted and the software showed the trades were generated. Yet when I look at the levels in the indicators where the closes did meet the rules, the readings are not sufficient for the trades to be initiated. I have to call Genesis tomorrow to ask why this happened. I am going to have to figure out if I can correctly call these in advance or not, possibly not. The NSC parameters were correct, so that trade is filled by the rules. Also there was an annoying typo that I am fairly sure was not there when I proofed the stock trades. Did I mention how much I hate the new blogger?

The only trade I can see that excites me that is new at all is the Aussie on the long side, but it has to break out above the channel it has been in which seems unlikely tomorrow.




You just never know what is going to happen, but what I don't like about this long is how weak the POIV is, it is making new lows way ahead of the price.

Sorry there is not more, but I am not finding many trades right now. This is a very tough trading environment with a lot of sideways choppy action.

Good Trading




1 comment:

Michael Tredr said...

I kinda wished to be flat on everything after today so that I could lock in some R&R time. with Feeder moving to the downside tremendously, the only thing to keep was my SP00s short - but now, it looks like other markets are about to heat up. I say this because i agree with your assessment about the current trading environment (and also about trading the 32s). It's almost like I'm reliving last year and waiting for a late July/August catalyst. Do enjoy your break time. At least the weather is getting better - well, unless you're in western New York or Pennsylvania...