continued ...

Peter said...

Thanks for your reply, you have given me plenty of information to digest.

No worries :)

An issue I'm struggling with at the moment is finding a viable way of determining if my system does actually put the odds in my favour. My strategy is nothing flash, 34,55&200 MA for trend, S&R and reading candlesticks on 30min and 1hour. I either trade the breakout or trade the bounce. I use metatrader and have an account with IG index (who i hate but have yet to find better - recommendations of brokers would be greatly appreciated).

Ok, first of all IG is not a broker - it's a bookmaker - just to make sure you understand that. Although it's virtually the same as trading on a broker they do have different motives.

Because my system is largely based on identifying S&R and candlestick reversals etc it is hard to back test the data due to not having a clue how to actually transfer all this info into excel. As you say how can i repeat a gut feeling of where i deem a Support or Resistance line is identically correctly placed in a future scenario?

However you have presented me with an interesting theory, 1 that could definitely make my life easier and completely remove the discretion from my decision making process....

Theoretically, i should just scrap everything I've learnt this past year with S&R and candles etc, find a dumbass MA crossover strategy (which i always hated the thought of because of the sheer no brains simplicity of it), play with the MA's, stops and profit limits and backtest until i find the best probability and just trade away blindly to probability success.

Is it really that simple? Is that the holy grail? Am I talking gold dust or just crap?

Your time and thoughts into this are greatly appreciated.

Peter

thanks again

Ok, the last bit then.

Firstly let me say that some people (albeit a small number) can trade like that with s&r pivots etc and consistently make money, lots of it in fact.

But as it is gut feeling based and given that you can only develop gut feelings with experience - this method takes years and years to be good at. I can do it and it took me about 2 solid years of 12 hour days watching charts to get good enough. even when you are good enough your results are affected by outside influences like your health, mood, women etc.

There aren't many people who can do that and that's why they make the big bucks.

It's not how I personally choose to secure my future earnings. You have to understand something fundamental about me personally.

The way that i discovered trading in the first place was by asking myself a single question. and I still ask the same question every day.

"How can I make the most amount of money ... with the least effort"

To me trading s&r, Pivots, MA's etc etc is hard work and draining. what's more it's very hit and miss. This is why I do not choose to trade in this manner.

As for your question - is it really as simple as just testing ma's and money management - is that the holy grail?

My answer is yes it is. finding one that works is the hard bit, and believe me there is no moving average cross that works on any pair in any combination - how do i know that? - because i've tested them ...all.

But that does not mean you shouldn't test them - trading methods are like the notes in a song - despite the fact that every note has been used billions of times - every day someone comes up with a new song from the same seven notes. The same is true with methods of trading and you may just have the next winning system. But unless you have a way of measuring it then you won't know if you have a winning system or a bag of crap.

What I can tell you though is that systems that make little money are not super rare - there are many ways of making a little money in this game - however I can tell you that winning systems that consistently make money time after time after time with enough profit and consistency on which to place some serious money - are as rare as hens teeth.

My trading at the moment takes roughly 30 minutes a day - but i spend the other 10 hours doing nothing but research and testing. Testing a single system properly takes about 2 man months

Ive worked that way now day in day out for around 2 years , and it's not just me, there are several others in my team- 10 hours a day research and development for 2 years - lot of hours i think you will agree. How many systems do you think I've developed in that time that deserve real money placing on them - and I'm not talking a few thousand here ....

Well I'll tell you - two systems, that's all. and just one of them is plenty enough to make me millions and millions. see, - rare as hens teeth.

My team have tested hundreds of systems - but there are hundreds more that we have not even heard of yet. that's why we keep on testing and testing, day after day. When the systems we have have made us the money we want then we will probably stop but for now ... back to the grindstone I'm afraid :)

My advice to you for your next step? - learn to use Excel :)