The past means dick for the future. You can backtest a strategy all you want, but that strat will show it's results of the PAST, not the FUTURE. Simple as that.
OK, so the question begets: how to test Strategies if both forward and back testing are useless? Check!
I don't think testing is useless. It's better than no testing. But, it can not provide absolute certainty. You know? Lol Another great quote: “In preparing for battle, I have always found that plans are useless, but planning is indispensable.” –General Dwight D. Eisenhower
2007 – This is when I first started studying macroeconomics as a hobby. This may sound irrelevant but it’s really not. I’m actually disappointed how much this type of knowledge seems to be relevant to trading strategies. Unfortunately, due to the amount of leverage involved, it seems only the super short-term matters the most. This is also when I first got my feet wet with paper trading Forex and buying one share of MSFT down at Bank of America. I don’t remember if I ever put real money into the Forex account, but if I did, it was such a negligible amount that it doesn’t matter. (the entire time between 2007 and the present, I continued to learn about economics as a hobby). 2017 – I randomly decided to start investing with a TD Ameritrade account. I believe I bought a Palladium ETF and one other thing that I can’t remember. I sold the Palladium ETF for a small profit by the end of the year. Wasn’t anything more than $200, possibly less than $100 – don’t remember. I also got sucked into the Bitcoin craze this year and sold for a profit of a few thousand. September 2019 – I consider the beginning of my recent trading that I’m referring to. This was the first time that I had enough money that I felt it would be a waste to have it sitting in cash. Even if I would use it in my business eventually, I might as well try to “invest” it in the mean time. At the time, I probably didn’t realize that trading is not investing and that trading is a very active thing. At this time, unemployment was very low and “everyone” was expecting a recession to happen some time soon. The yield curve on 2yr vs. 10yr Treasuries had inverted in the previous year. My very inexperienced strategy was to buy 3x leveraged Bear ETF’s on the S&P, and to also short a Bond ETF. Both of these would benefit if the economy started to go downhill. You’ll notice that these are longer-term “swing trade” minded type strategies, which makes sense if I’m basing things off of macroeconomics. You’ll also notice that these two trades (Bear S&P and short Bond Fund) are basically making the same bet twice. This is something I didn’t fully acknowledge I was doing until years later. I lost money on both of these. I had put I believe a total of $60,000 between the 2 and ended up losing between $10-$15k if I recall correctly. Now whether or not this recession would have happened if Covid didn’t interrupt the world a few months later, we will never know. This loss caused me to stop trading for several months. March 2020 – This was in the beginning stages of the Covid lockdowns. Oil prices were tanking. This was around the time when there were negative oil prices in some places. This was my first time trading commodity futures, and I shorted oil. I will attach a picture of the chart to show about where I bought. I was actually correct that oil did continue to go down, but unfortunately it went up for a few days (OPEC had a meeting and decided to reduce output) and that caused me to get shorted out. I was actually correct on my long-term prediction, but got stopped out due to the amount of leverage and because I was wrong in the immediate short-term. I believe I lost $17,000 here. (This is all real money I’m talking about here). This loss caused me to “swear off” trading forever because it’s too unpredictable. I think at this time I was also randomly buying either Bull or Bear 3x S&P ETFs just because it was fun and I won 50% of the time. No real strategy there. Might as well be playing roulette. August 2020 – The loss on oil futures kept me away for 5 months until I returned to go long on gasoline futures. I will attach a graph to show where I bought. The picture I’m attaching isn’t the same contract that I bought because this is years later, but the shape of the graph is the same. I believe I bought at 1.3922 with 2 contracts, which had a total maintenance margin of about $20,400. Once again, my long-term prediction was actually correct. It was actually quite obvious that gasoline prices would go up, but unfortunately it went down in the short-term. I knew it would eventually go back up so I put in a few more thousand to keep it open. I eventually sold for a loss of about $22,000. It started going up about 5 days later. If I would have held it to expiration, I would have profit well over $100,000, because as we all know, gasoline prices went WAY up. This was another experience that “stung” so bad that it caused me to swear off trading forever and to stop wasting money that I’ve been earning through other means. October 2020 – I decided to try algorithmic trading with OANDA Forex. I purchased some scripts through various online marketplaces. Of course, they all backtest to some phenomenal percentage which is most likely not accurate. But when I ran them, I either broke even or had a slight gain. Either way, not enough of a gain to make it worth keeping that much money in an account. One script had lots of small wins followed by large losses that wiped them out. I had to admit that this method would not work. I never tried to create my own scripts at this time, although I did mull over some ideas on paper that I still have somewhere. (Something to do with Bollinger Bands and ATR, but I would have to go find it). March 2021 – I decided to get back into Forex with no algorithms. I was betting on the USD (mostly by shorting EUR/USD). This was the market sentiment at the time. I will attach the chart. Once again, my prediction of EUR/USD going down was correct in the long-term, but due to the short-term going opposite, I lost money. This time. I was up thousands of dollars, even selling some for profits before re-entering. But eventually, things turned against me and I lost it all. December 2021 – I saw that S&P was at near record highs so I went long with one ES future. It almost immediately went the opposite direction. This was my first experience trading ES futures. I think I only lost $2000 or so here. March 2022 – I decided once again to start trading Forex pairs based on the current market sentiment. I won some and lost some, but had more losses than wins. July 2022 - Decided to buy one ES long. I doubled my money in less than 2 weeks, I believe. I consider this luck. August 2022 – This is what I consider as the beginning of my recent SUCCESSFUL trading. I didn’t even plan to start trading again, but I was convinced to do so in preparation of Jerome Powell’s annual speech at Jackson Hole, Wyoming. Recently, stocks had gone up because had begun to go down. CPI went from 9.1% to 8.5%. This was the first time it had gone down in a while so investors were getting hopeful. However, I knew exactly what Fed Chairman was going to say because he basically always says the same thing – that they will try to get inflation down to 2%. So I knew he was going to absolutely destroy the stock market after his speech. I shorted ES in advance and I was correct. This was the first time I made a lot of money and I knew that it wasn’t just luck. Ever since this moment, I knew that I could do this profitably if I’m willing to keep learning and adapt strategy to what works. Immediately after this success, I got ahead of myself and started trading all kinds of different Forex pairs (at one point I was trading USD/HUF for some random reason lol) and bond funds. But I quickly realized that I need to just focus on ES because that is the most easily predictable. Also because a lot of these bets are making the same bet twice just with a different name. For example, I can bet that the stock market will go down and simultaneously bet that bond prices will go down (bond yields go up), but that is just saying the same thing twice. At the next CPI release, I thought I knew what would happen. I thought that inflation will continue to have gone down further and that would cause the markets to rise. I bought ES ahead of the CPI release. I was wrong and I lost I think $15,000 before I could even blink. Luckily, I reversed position and I think I made all of it back within 2 days. From this experience, I learned not to try to guess the news release ahead of time. Just wait and ride the wave. “Riding the wave” immediately following a major news release is still part of the strategies I plan to use at this point. From August through October 2022, I mostly had the strategy of using news releases, but also just betting in the direction of the current sentiment. From October, I transitioned to more of a “scalping” type of strategy (while still doing the “news release” strategy). I would set a TP just 1.0 or 0.5 points in profit, and many times I would be down as much as 10.0 points before it turned around and I won. Doing this from October through December, I never lost, although does it make sense to let yourself be down $3500, just to turn around and make $150? From August-December, I profited $24k on a $69k account. I had one huge loss of $31k in early October because I thought the sentiment would continue to be bearish, but I eventually had to admit I was wrong and sell for a loss before it got worse. On that $31k loss, I was profiting $10k at one point, but held out hoping for more. I will also say that I had some close calls on some of my wins. I remember one where it barely hit my TP before turning around and going 50 points in the other direction. So that was a very close call and it happened more than once. The reason why I changed to a more “scalping” type of strategy since October was because of that $31k loss. And since scalping is more suited to an advanced platform and not Schwab, I took my money out of Schwab and haven’t traded real money since mid-December. I will take as long as I need before I can comfortably trade real money and know that if I win, it isn’t just luck. Overall, what I think I did right = I think I have a very good knowledge of macroeconomics. Even on some major losses, I was still eventually correct in my prediction. It’s unfortunate that the amount of leverage can make this macroeconomic type of knowledge meaningless it seems. I also like my idea of benefiting from the immediate aftermath of major news releases (CPI, NFP, FOMC speech, etc.) What I think I did wrong = not having clear entry or exit strategies. I think that due to the high leverage involved, there must be some way to make some sense out of the randomness that occurs on small timeframes, while hopefully keeping the larger trend in mind. Prior to August 2022, I basically did everything wrong, so I’m more referring to August 2022 until the present. Also, there is not a beneficial R:R ratio. Because even if I were have won some of my swing/position trades, in all likelihood, I would have closed out for a smaller win than the loss I would have sold for if it went the opposite way. In the attached images, I included the oil and gasoline on the same image because the charts and basically the same shape.
Why do you morons keep talking about SIM accounts when I've said numerous times that I'm talking about real money?
Well, this is a good point... you've mentioned SIM vs. real so many times in this thread it's become unclear when you're referring to SIM and when you're referring to real. As such, I'd suggest you keep accurate records for yourself. Else I think @Overnight might be proven right... you could develop bad habits in SIM that would be hard to break free of in real. I could see this especially effecting a discretionary agent like yourself. Interesting history btw. Anyway, I'm an algo trader though (because I cannot stand the emotional inconveniences) so I mostly read and code, then let the computer do it's thing. As such my advice w.r.t discretionary may be worthless. Whenever I trade discretionary I lose. Take my advice for whatever it's worth... dickhead
I'm completely open to switching to 100% algo if that's what would be profitable. What ROI do you expect to make each year? I'm a dickhead for defending myself against people that have been insulting me for ages. Strange place.
Did FJ send someone a cock pic or something ... or does he have too? He ain't getting much love round here.