Monday, 23 April 2012

Rule Based Structured Trading System Part 2

The title of this series is part of the answer to achieving CP. Let's take things bit by bit.

Firstly, I say "rule based". This means that although we are discretionary traders, we create a set of rules within which we trade. Why rules? So that we can repeat what works. We don't reinvent the wheel every trade. The basis of how I trade is to identify the trend and trade the pull backs. This means I need to know when I have a trend and I need to be able to recognise a pull back. This means that we need rules. How rigid these rules are depends on us. It depends on how and what we back test. My rules need to allow me to be discretionary in my trading, but rigid enough to meaningfully back test.

There was a comment on Friday by a reader who reported that friends of his said my methodology would not work. Kind of the wrong answer. A trader needs to conduct his own testing based on his own interpretation of a methodology. He then doesn't need to ask anyone anything. He knows. We have a fairly high failure rate amongst new traders. It's partly because they don't put in the right effort to define what they do based on successful back testing. If you don't have successful back testing then you are only hoping. The traders who send me emails that they have reached CP after reading the blog are the ones who also put in the hundreds of hours of work before they risked their money. Defining rules are part of that work.

What a wonderful start to the week!!! The chart says it all. I'm using the Renko with wicks known recently as the Better Renko for those of you using Ninjatrader.

1 comment:

  1. jenrique42

    these are two of my tickets today, one is failed the other has been successful

    tell me why someone would know

    the explanation is in the graph

    for TylerPM, not how many hours have you been with this system but all I can say is that if the system works and is amazing, I've been throwing with no accounts or even 2.500h, I still lack a lot to get a degree master's but it is impressive and leads you to figure out what it can get the price if you do not see it yet you obviously have not spent enough time studying the system

    on the other comment that might come your losses are not consistent with the objectives range of candles, candle like that, that are 3 ticks, the goal would be between 5 and 8 ticks objective, if you put more the more likely it is that you go losing trades, you have to check this and some other point in the system that induces you to miss the trade

    PD. - For HIM lately are using a photo size too small then to want to increase q, is fuzzy, not why, like today, I can not even read what you put the sign


    esas son dos de mi entradas de hoy, una es fallida la otra ha sido acertada

    alguien sabria decirme el porque

    la explicacion esta en el grafico

    para TylerPM, no se cuantas horas llevas con este sistema pero lo unico que puedo decirte es que si que funciona y el sistema es increible, yo echando cuentas no llevo con el ni tan siquiera 2.500h, me falta todavia mucho para conseguir un cierto grado de maestria pero es impresionante ya que te induce a deducir lo que puede llegar a hacer el precio si eso no lo ves todavia es que no has pasado el suficiente tiempo estudiando el sistema

    por otra parte comentar que tus perdidas podrian venir a que no estan en consonancia los objetivos con el rango de las velas, para velas como esas, que son de 3 ticks, el objetivo estaria entre 5 y 8 ticks de objetivo, si le pones mas lo mas probable es que los trades te salgan perdedores, tiene que revisar esto y algun otro punto del sistema que te induzca a errar el trade

    PD.- para EL ultimamente estas utilizando un tamaño de fotos demasiado pequeño q luego al querer aumentar, se ve borroso, no se el porque, como el de hoy, ni siquiera puedo leer lo que pone el letrero