Never Lose Again

[razorboy]

I've seen divergence between two live feeds...........on a regular basis

I would cut ms forex some slack unless she is actually being intentionally malicious. If you just run the stats using a single time frame, without dropping down to a lower frame to trade, she is probably right.

When I was trading off of the fib lines on a 5 minute chart without really checking the h1 chart, there would be times I would be doing amazing - typically a trending market - up for half an hour, down for half and hour - back and forth - traces and retraces were spot on - then the market starts trending up and I would get killed when I went in for a reversal trade. Price would retrace to say the 38% level and then bounce the wrong way. I ran a number of spread sheets using only the 5 minute charts for Eurus and USJPN - sometimes there would win, sometimes lose - pretty much a zero sum game if you were lucky. I knew i was missing the obvious

Using the higher time frame to screen trades gets rid of the noise - yes, you miss a few, but you really do get focussed in on higher risk reward trades - the idea being that after 3 consecutive hours, price has moved too far in one direction and someone in the market will at least attempt to push it back

Sorry but the "automated idiocy" that sneaks into these threads really ticks me off sometimes. Some people act like they are the only ones who can code an EA or Strategy. As Michal told me - to do automated coding "you must know what you are doing". Never wiser words said. If you cannot code your own trading platform or a genetic algorithm from scratch then you aren't smart enough to accurately backtest squat. Doubt my word? Talk with Michal - he'll educate you.

I don't waste my time on automation anymore. I realize that isn't where my talents lie. What has and does continue to make money for me are reasonably good setups (i.e. ones that provide some statistical validity) and my ability to read the tape. I won't speak for Avery but I am reasonably confident (having watched him) that this is how he also makes money.

As an aside, yes watching a higher timeframe for a setup is a great filter. It is one of several ways to filter against trends when doing reversion to mean trading. There are several others - ADX, observation of the "stair step", bias in the T&S on the bid and ask, etc.

There are no shortcuts. I have literally spent thousands of hours training myself to trade. I am sure that for most other successful traders they have also put in this time. The lazy get no remorse from me. I just spent another 8 hours today replaying this weeks market and taking trades at 10X normal speed (thank you NinjaTrader). I typically spend 40-60 hours a week trading and reviewing trades (on top of everything else I do). I bet Avery spends much more than this (the man is a machine).

When Avery asks you to "see" the market action this is what he is talking about. So before you waste your time this week looking at a representation of the market (i.e. backtesting) I urge you to spend your time reading the tape. Watch what prices do at support and resistance. Observe the significant turning points in the market. Observe how prices move in waves. Now can you get on your surfboard and surf - or are you going to try to backtest it?

Edward

Edward,

Backtesting does have weaknesses and is certainly not a "holy grail", but it is very helpful in "pre-selecting" strategies and setups and getting market statistics in no time!

Certainly EAs can not (yet) trade as good as (some) humans. An EA can double your account in two weeks and then wipe it out I a single day. Thats because they cannot SEE any price trends or long term market actions - they work well for a certain period only and then need to be "adjusted" again.

But EAs/backtesting does have one huge advantage: EAs do not show any emotions! They do EXACTLY what they are told to do - so no "add a bit more stoploss" or "it would hurt to close this losing trade".

Again, the reversal has a 85% chance for success hence statistically still is not profitable - I think we all can very easily get fooled by this numbers...

Msforex,

No - you are missing the point! EAs do not and cannot work for backtesting. The very data that you are relying on for signals is absolutely no good. It is NOT timestamped tick data. It is not filtered. It is "reconstructed" 1 minute candles.

Don't believe me? My timestamped tick data from my broker Interactive Brokers is completely different from an Alpari or IBFX backfill. Indeed, out of the 200 or so banks and datafeeds that eSignal tracks (all time stamped tick data) NONE of them match a MT4 backfill. Why? Because the backfill at MT4 doesn't really exist. It's imaginary simulated data. Think this doesn't matter? I've had 5 minute candles in Alpari backfill that printed in reverse order (i.e. they went down when they should have gone up first) from what really happened on that same live feed!!!!!!!!!!!

Do you get it? So good luck with your imaginary simulated EA.

BTW, this is just one of the many many potential pitfalls of B.S. backtesting.

Edward

[ptejerina]

I think (at least) Part 4 should be of interest to many. Follow the link:

http://www.bjmath.com/bjmath/thorp/tog.htm

[pierre23]

Is it me, or does msforex and UKtradergirl from T2W sound uncanny like. I think its the same person. If so, we've heard what you have to say about Tro's methods and we've already heard about your EA backtested results. (Which are not viable, reasons explained by Edward and others.. as well as posts found in the thread you started in T2W)

[TheRumpledOne]

I don't think they are the same person.

[pierre23]

Perhaps.. I saw those charts she posted and I thought they looked similar to UKgirl's ones, without actually checking it out. Also, just saw both EA's are different file sizes.. Although they are both bringing up the same argument (not much ground to accuse you of being the same person). So sorry if I'm wrong =]

[razorboy]

Unless someone had an interest in using this system, why would anyone actually waste their time debasing it rather than finding something that actually worked for them?

Bizarre to say the least..........

[TheRumpledOne]

Human nature.

[pierre23]

Give T2W a visit and find UKTraderGirl and ask her the same question They would rather "prove" a method doesn't work instead of LEARNING and seeing for themselves how it does.

[pierre23]

I would say it's human nature to NOT put down people's methods in a community where we're trying to share and hope for everyone to one day be successful, but to encourage and find the good in systems and methods that are shared.

Not to go to great lengths of coding an EA just to prove something doesn't work. It's just negative and not constructive.

[razorboy]

I'll be the first to say that I am a critical person and will pull something apart in the hopes of understanding something, but if you really don't care, why bother - unless of course you can make money demonstrating why TRO's approach doesnt work - maybe they are hoping to take the opposite of every trade?

haha