My Journey In Technical Analysis

XRAY27

Well-Known Member
Yes as I think he is reducing the trade size... statistically if he continues with the same trade size he will recover faster..as system recovery factor would come into play.. however the risk is that the strategy DD time is unpredictable and is dependent on the stability or robustness of the system. A conservative option would have been to linearly scale up/down with the changes in account size but the drawdown is lower returns...a very complex game indeed..:)
Yes !! complications will be there!!!.when you highlight complications we can learn. posting rosy picture 24 /7 only helps in ego satisfaction. :)
 
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Sumo bhai !!!

Classically not,but reduced qty will have it's own time..

why I should reduce qty..when recovery factor is in place ??

when accounts start decreasing..fear of punching trades creeps in...I tested more on troughs ..

Other then reduction of trade size I could not find better solution, please suggest your way to handle this.
Absolutely stumped for an answer bro.
It all depends on the analysis of the streaks that you face on a regular basis. If for example, 3 losses in a row is frequent, then maybe reducing quantity after that threshold would be a good idea.
No doubt, only paper traders can trade themselves out of a steep drawdown succesfully, and real traders like you and me get shaken up mentally, with our accounts waiting to see new highs.
I face issues after my 3rd loss in a row, and sometimes end up finding ways to avoid the next trade, right from reasons like today is weekly expiry to the markets are in a range to the reason that volatility is too high or volatility is too low, and end up messing up my system efficiency.
Its tough out there for sure, and mental toughness is very important, and takes years and years of handling drawdowns to condition. Still working on it.
I can see no other way to suggest, other than one small point, that after 3 losses, maybe wait for the trade to trigger, wait for it to go against you by half your stop loss, and then enter the trade, for a much better risk reward ratio. The issue with this is that if the trade just zooms in favour, you are left looking at the screen with zero position.
 

TracerBullet

Well-Known Member
For a mech system, only thing to do is to take all trades. Any change should go through testing phase first.
If risk is moderate and max dd is comfortable, then maybe one solution is to do full automation so that you wont have to face day to day pnl.
If you are trading with aggressive size in order to scale up, then probably no option but to follow MM plan and scale down just as you scaled up earlier. This is the trade off.

For my current system in stocks where i take a lot of trades and have some discretion in trade selection, my plan is to reduce activity (number of trades) in extended dd phases when market is trading adversely. I do this by becoming more selective in my entry criteria. This is not a binary on off thing though as within DD period we could have days with very good context and movement and i might relax conditions a bit.

I am now testing a plan in Nifty which works best with smaller stops and large RR. So win rate is very low and streaks of small losses are the norm. For this, I will have to take all trades, there is no option as any single trade can easily cover full/most of the DD.

The best edges for the mind probably have say 50-60+% win rate with say 1:1R - without too much clustering of wins and dependence on large wins, but i have yet to find such an edge in my testing so far in my market-tf, maybe due to high taxes. 1:1 is never optimal for my systems ..

I can see no other way to suggest, other than one small point, that after 3 losses, maybe wait for the trade to trigger, wait for it to go against you by half your stop loss, and then enter the trade, for a much better risk reward ratio. The issue with this is that if the trade just zooms in favour, you are left looking at the screen with zero position.
Have you measured this ? Risk reward ratio will obviously change win rate, so this may just be a psych thing if the effect is not real. Otherwise why not take all trades in this way ?
A short term drawdown is likely to be random and so any action by us is in response to randomness and will yield random outcome. A more sustained DD env may benefit from change in tactics perhaps, not sure. There is an 'equity curve' trader who says this can work but i have not tested mechanically.
 
For a mech system, only thing to do is to take all trades. Any change should go through testing phase first.
If risk is moderate and max dd is comfortable, then maybe one solution is to do full automation so that you wont have to face day to day pnl.
If you are trading with aggressive size in order to scale up, then probably no option but to follow MM plan and scale down just as you scaled up earlier. This is the trade off.

For my current system in stocks where i take a lot of trades and have some discretion in trade selection, my plan is to reduce activity (number of trades) in extended dd phases when market is trading adversely. I do this by becoming more selective in my entry criteria. This is not a binary on off thing though as within DD period we could have days with very good context and movement and i might relax conditions a bit.

I am now testing a plan in Nifty which works best with smaller stops and large RR. So win rate is very low and streaks of small losses are the norm. For this, I will have to take all trades, there is no option as any single trade can easily cover full/most of the DD.

The best edges for the mind probably have say 50-60+% win rate with say 1:1R - without too much clustering of wins and dependence on large wins, but i have yet to find such an edge in my testing so far in my market-tf, maybe due to high taxes. 1:1 is never optimal for my systems ..



Have you measured this ? Risk reward ratio will obviously change win rate, so this may just be a psych thing if the effect is not real. Otherwise why not take all trades in this way ?
A short term drawdown is likely to be random and so any action by us is in response to randomness and will yield random outcome. A more sustained DD env may benefit from change in tactics perhaps, not sure. There is an 'equity curve' trader who says this can work but i have not tested mechanically.
Taking all such trades in this way is an option too.
 

XRAY27

Well-Known Member
Absolutely stumped for an answer bro.
It all depends on the analysis of the streaks that you face on a regular basis. If for example, 3 losses in a row is frequent, then maybe reducing quantity after that threshold would be a good idea.
No doubt, only paper traders can trade themselves out of a steep drawdown succesfully, and real traders like you and me get shaken up mentally, with our accounts waiting to see new highs.
I face issues after my 3rd loss in a row, and sometimes end up finding ways to avoid the next trade, right from reasons like today is weekly expiry to the markets are in a range to the reason that volatility is too high or volatility is too low, and end up messing up my system efficiency.
Its tough out there for sure, and mental toughness is very important, and takes years and years of handling drawdowns to condition. Still working on it.
I can see no other way to suggest, other than one small point, that after 3 losses, maybe wait for the trade to trigger, wait for it to go against you by half your stop loss, and then enter the trade, for a much better risk reward ratio. The issue with this is that if the trade just zooms in favour, you are left looking at the screen with zero position.

For a mech system, only thing to do is to take all trades. Any change should go through testing phase first.
If risk is moderate and max dd is comfortable, then maybe one solution is to do full automation so that you wont have to face day to day pnl.
If you are trading with aggressive size in order to scale up, then probably no option but to follow MM plan and scale down just as you scaled up earlier. This is the trade off.

For my current system in stocks where i take a lot of trades and have some discretion in trade selection, my plan is to reduce activity (number of trades) in extended dd phases when market is trading adversely. I do this by becoming more selective in my entry criteria. This is not a binary on off thing though as within DD period we could have days with very good context and movement and i might relax conditions a bit.

I am now testing a plan in Nifty which works best with smaller stops and large RR. So win rate is very low and streaks of small losses are the norm. For this, I will have to take all trades, there is no option as any single trade can easily cover full/most of the DD.

The best edges for the mind probably have say 50-60+% win rate with say 1:1R - without too much clustering of wins and dependence on large wins, but i have yet to find such an edge in my testing so far in my market-tf, maybe due to high taxes. 1:1 is never optimal for my systems ..



Have you measured this ? Risk reward ratio will obviously change win rate, so this may just be a psych thing if the effect is not real. Otherwise why not take all trades in this way ?
A short term drawdown is likely to be random and so any action by us is in response to randomness and will yield random outcome. A more sustained DD env may benefit from change in tactics perhaps, not sure. There is an 'equity curve' trader who says this can work but i have not tested mechanically.
1. I'm using FRMM as base so contraction and expansion will be there in volume basing on results,its part of FRMM .profit crossed DD (point wise) ..size is increased and vise versa ,even starting capital is calculated on this...

2. TSL based trader ,obviously catching large moves is my advantage and so Strike rate 35 to 40 %...

3. Edge akka R:R 1:2.5 to 3...

4. Every body cannot trade this unless his MM is adopted ...so recovery factor should be tested with respective to decreased quantity in case max dd clocked ,which most don't do in back test...


Just adding Paul Tudor Jones quotes which we all should never forget..


“Trading is very competitive and you have to be able to handle getting your butt kicked.”

“The whole world is simply nothing more than a flow chart for capital.”

“At the end of the day, the most important thing is how good are you at risk control.”
 
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VJAY

Well-Known Member
Its tough time when we on DD pace ...sure its not easy who trading with gud position sizing...even small trader like me unable to handle it correctly when It occurs ...Only thing is to survive this pace is think we know our system...its hard to cross what DD we know historicly ...faith in it...just trade as deciplined as it is..If one trading pos size by risk per trade wud not much issue if abv said faith in his system...and these type pace we always expect in trading...few yaers ago I too seen some gud DD in bnf swing trade(though I always 1 lot trader :)) I totally disturbed by its...without any errors trade thrown by hitting losses...then I totally disturbed ...I took a break from trading for 15 days ...relaxed...I know market always there ...then returned with some fresh mind...within 2 month all loss recovered trading same method.....market always have some cycles that time even our tested method looks failing...but we know it its temperory....IMO mechanical method no need break....just manage risk...as xray bro done lower pos size is also one of the way.....my views
 

TracerBullet

Well-Known Member
2. TSL based trader ,obviously catching large moves is my advantage and so Strike rate 35 to 40 %...
Can you give some idea on how you trail mechanically ? So far in my testing for my system, i have not been able to get a trailing stop that adds to the edge in Nifty. Just leaving it open till eod + a target works just as well and a bit more consistently. Just looking for ideas.
 

XRAY27

Well-Known Member
Can you give some idea on how you trail mechanically ? So far in my testing for my system, i have not been able to get a trailing stop that adds to the edge in Nifty. Just leaving it open till eod + a target works just as well and a bit more consistently. Just looking for ideas.
I'm just following Structural pivot method as thought in TJ..but without VPH,VPL,EVRL and VRL....basic pivot for tsl ignore pivot when it is formed after large candle until it breaks it.i could not find a target based exit...so moved to trailing based exit.
 

TracerBullet

Well-Known Member
I'm just following Structural pivot method as thought in TJ..but without VPH,VPL,EVRL and VRL....basic pivot for tsl ignore pivot when it is formed after large candle until it breaks it.i could not find a target based exit...so moved to trailing based exit.
1) Do you have a mechanical definition of the pivot or do you use your eyes ? Did you test mechanically say in AB backtest or did you test your system bar-by-bar.
2) Without the large candle, do you not wait for Breakout for trailing ? So Just for the pivot to be confirmed based on whatever rules you use ?
3) If there is straight move do you allow v reversal then ?

I used some variations of min bars and min atr distance filter based definitions mechanically to define the pivot and then only trail on Breakout. So for ex min 3 bars before making pivot and say min 2 atr distance from previous opposite pivot etc. This looks good enough to me on chart. But it has a more or less neutral effect on both my stocks system and Nifty. The shakeouts balance out the reversals.

With stocks i did find some other rules that help consistently and use pivots too as a way to manage risk with multiple positions, but so far not getting anything clearly useful in Nifty vs simply holding till eod with a small stop. They work fine but do not add to the edge and so just adds complication.

Thanks !
 

XRAY27

Well-Known Member
1) Do you have a mechanical definition of the pivot or do you use your eyes ? Did you test mechanically say in AB backtest or did you test your system bar-by-bar.
2) Without the large candle, do you not wait for Breakout for trailing ? So Just for the pivot to be confirmed based on whatever rules you use ?
3) If there is straight move do you allow v reversal then ?

I used some variations of min bars and min atr distance filter based definitions mechanically to define the pivot and then only trail on Breakout. So for ex min 3 bars before making pivot and say min 2 atr distance from previous opposite pivot etc. This looks good enough to me on chart. But it has a more or less neutral effect on both my stocks system and Nifty. The shakeouts balance out the reversals.

With stocks i did find some other rules that help consistently and use pivots too as a way to manage risk with multiple positions, but so far not getting anything clearly useful in Nifty vs simply holding till eod with a small stop. They work fine but do not add to the edge and so just adds complication.

Thanks !
Ans to 1

Mechanically defined but not converted to AFL ,there is no if and buts whats so ever..,i'm not good in coding so i tested bar by bar manually ...my entire system is based on MP(trend,entry) only TSL is pivot based..

Ans to 2

obviously!!! have to wait for pivot formation as per my rules

Ans to 3

Yes

Pivot as full blown system !! well !!! i cannot trade...so using MP for trade location ,trend, filtering etc,,many are using it @VJAY in particular ..is he using it in mechanical way or some sort of discretion i don't know..anyways tsl or target based go as per your comfort ,i'm failure at determining target so moved to this tsl way
 

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