My Journey In Technical Analysis

VJAY

Well-Known Member
I AM A CONSISTENT WINNER BECAUSE:

1. I objectively identify my edges.
2. I predefine the risk of every trade.
3. I completely accept risk or I am willing to let go of the trade.
4. I act on my edges without reservation or hesitation.
5. I pay myself as the market makes money available to me.
6. I continually monitor my susceptibility for making errors.
7. I understand the absolute necessity of these principles of consistent success and, therefore, I
never violate them.

These beliefs are the seven principles of consistency. To integrate these principles into your mental
system at a functional level requires that you purposely create a series of experiences that are consistent
with them.

_Mark Douglas ..(Trading in the Zone)


Failure story starts when we dream quick recovery of previous blown out losses and want to become super rich ...as usual failure traders are unclear in defining edge...or they think ... secretive method is there and only elite got hold of it ...
Imo every trader shud read this book not once but when ever time get..though I hear audio book whenever I get time....

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XRAY27

Well-Known Member
System testing : Mechanical system needs testing for reasonable long period..to get DD in Absolute terms and prepare for capital calculation..system should get a positive expectancy..last test it with stress test ,to assess fat finger errors, missing of trades due to personal reasons,health etc..

Paper trading .. People often think that doing paper trading ,before real trading will help to get rid of emotions..but it won't help much.. its only factor is to study the signal and time which we need to trade that signal...so have to start with with least quantity to test the system rather then paper ..just from my experience

Emotions and there balancing :Next comes our emotions which leads to motions thinking our past failure :mad::DD...so psy drill is must,it is nothing but changing our routine to follow time...punctuality is the first step which leads to discipline ,second is living in present movement..that is just follow the act which you are doing with least thought on results..

Social media/ forums : They help in knowing various schools of trading ,we need to select our self which school we are going to follow, once learning is completed and a system is building is over ,staying is social media/ forum for a restricted time will test your emotions level... (arguments or praising ) effecting you to get into ego bracket or making you to dance in cloud nine ,thinking your self as invisible and which is leading you to violating your own method... then its impossible to scale quantity you trade, many think that we need to stay out, once we see success,it won't help because family ,friends and society you cannot escape , don't except anything from any body,its YOU which needs to be supported by YOU, in all difficult situations ,develop a will of steel to follow your system ,do an honest assessment and work within skills and psychology. Stretch yourself, but don’t try to be someone you’re not. And that goes for life as well.:)
 
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XRAY27

Well-Known Member
Stress test: it measures how robust a trading strategy is, which is an indication of whether or not the strategy is over-fit. While any variable that affects a trading strategy's results can potentially be the subject of a stress test

The basic idea is to see what happens when small changes are made to the strategy inputs, price data, or other elements of the strategy or the trading environment. A robust strategy exhibits a proportional and relatively muted reaction to such changes, whereas a strategy that is not robust will react disproportionally and sometimes fail outright when small changes are made to its inputs or environment.

It helps to settle our mind for issue like internet failure, terminal issuesor health issues ,etc..where we miss trades.Since trending trading strike rate will not exceed 40%,never think that after performing this we get a weekly,daily,or hourly earning machine.:DD
 
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XRAY27

Well-Known Member
There is a subjective marking with both TA and FA.. statistics will help a lot to remove this which are also called as quant models I studied below book, which helped me a lot



Quantitative Trading Strategies ...By Lars Kestner




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XRAY27

Well-Known Member
I have quoted 3 books,in this thread which helped me to build and horn my mechanical system,FRMM,played its part...significant study of luck factor and stress test..will make you strong..when quantitative figures are at your hand it will prevent you from FOMO,why mechanical system fail?.Generally testing is stopped at Expectancy Ratio,..so test your system with luck factor and stress test,

I think it’s better stop my Gyan with this post..nothing new to contribute..
 

XRAY27

Well-Known Member
How bias affects our trading-

A typical battle in a budding trader’s mind : Scenario 1 - My last 2 trades whipsawed, I'll not take the 3rd trade now - the mkt is out there to get me (and the 3rd trade will be a huge winner - we end up cursing someone or mkts) (1/7)

Scenario 2 - I dont have a good feeling about this trade- as soon as the trade triggered,mkts have stopped or gone slightly against me. Let me close this trade before it hits SL (and the mkts actually reverses & trade goes in deep profit) - we end up cursing someone or mkts (2/7)

Scenario 3 - Holy moly, my trade is finally in profit but it seems momentum is ending now. Let me book whatever profits is on the table and wait for the next trade (same as 2 above,we end up booking small profit and miss on the BIG trade) - we end up cursing someone or mkts (3/7)

Scenario 4 - Mkts always hit my SL and reverses..so, I will hold the position (remove SL

and exit at breakeven (voila... the mkts keep going against our position and instead of taking small loss, we take a BIG loss) - we end up cursing someone or mkts (4/7)

Scenario 5 - Last 3 trades were winners - easy peasy

Lemme increase my leverage and trade larger qty (crap.. the 4th trade whipsaws. We end up losing more money in this 1 trade than the entire profit made in last 3 trades) - we end up cursing someone or mkts (5/7)

Scenario 6 - I havent been making any money (cos of one or few of the scenarios) whereas some random guy online is making huge money in every trade. Am sure my strategy is not good. So, lemme find some new strategy/new online guru or the best selling trading book in Amazon (6/7)

or new hot system/holy grail and trade my way to financial freedom. Rinse and repeat 1 to 6. This is a vicious cycle and guess what, finally we become the biggest mouthpiece for why trading does not work !!:DD It is a 'revolving door' maze and work on it to get out.

From Madan Kumar Twitter
 
Hi Xray Sir
I have read the whole thread once again.Though I have read your thread regularly as soon as you posted.But this time I have read it again post by post & took notes.Its really a great stuff on MM,System making & risk management.Thanks a lot for this wonderful thread & a great stuff on trading aspects which we generally ignore.Its helpful to give me so many ideas on make my system rule based.
I have some query.I am doing backtesting.I have some query.
a) How many years data/ period is sufficient for intraday trading system? I.e. how much sample do we need to check that our system will work on every market condition?
b) How will I check effect of slippage on my system.I can check all parameters which you mentioned..i.e luck factor etc .But how to count slipage?
c) Shall I check all ratios & parameters on total result of each month or For total period of data.Lets us say, I am checking 5 year of data..so should I check luck factor for whole 5 years or shall I check it for every month?
I will put some more question as more testing will go on.Please bear with me :)
Thanks
P.S. I tried to Pm you But couldnt get through, even I am not able to see your profile.
 

XRAY27

Well-Known Member
NT sir,

I’m bit busy for 3 days..will answer after that..hope you don’t mind


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