This was my advice exactly. It would make a lot more sense and be much more efficient to be profitable trading manually and then working on tweaking it to a mechanical system. At least with the discretionary experience, you would be able to recognize changes in the market which will require you to tweach the effected parameters of your mechanical system. Unless you do this, you might find that once the system stops producing a return, you will have a hard time figuring out what is wrong with it and have to start over again. You first have to decide what time frame and style you want to trade.
Correct. The raw data cannot be systemized. If I may say so, this is observably so without years of work. You have to ask the obvious question. Without it, I am pleased to say that this is what prevents access to the Holy Grail for all programmers and code makers and indeed everyone in general.
Probably about 5-10% watching the market, 10% analyzing raw quote data and 80-85% coding and backtesting. I'm open to discretionary, but my previous life was business programming, so I started there. It seems there are many more (successful) discretionary traders. They also seem to concentrate on price action and don't use indicators. I think I could learn discretionary with a good mentor/personal training. But I'm interested in futures and most of the training seems to be in stocks. OTOH, I keep reading about some successful mechanical traders like Art Collins ("Market Beaters" book) or John Ehlers book. I'm (pleasantly) surprised to get so many replies from discretionary traders in this "Strategy Trading" forum. I am leaning towards the discretionary and just ordered "How I Trade for a Living" by Gary Smith and the Nicholas Darvis book. Thanks for all the helpful posts here. Brooks
Thanks for the post. The first link was 342 pages!!! Hard to know where to start. Are you trading it? 2nd thread was a more reasonable 33 pages. Got through most of it. Very interesting. This ARCARY fellow appears to be a very successful mechanical trader. Apparently both types of trader exists. Who to follow? Who to follow? Brooks
I believe two people have recommended ER2 over ES. Why is that? I assume it trends better ...? How can you measure that? Brooks
Nope, not trading that per se, but sort of an idea that came to me when reading the background material supplied in the first couple of messages of that thread. The rest of the thread is mostly just people asking for clarification in some of the concepts of that system. It is really, really long, and a large portion of it you can skip, but I'd read the introduction documents. I have no idea what your systems have been like, but reading about the way Jack Hershey has approached it made a lot of sense to me, and I liked some of the concepts he discusses. Yeah, acrary from what I gather off this site (but who reallys knows??) seems to be doing rather well. I really liked his ideas on applying three systems that have little or no correlation to smooth our your equity curve. Good stuff! I'm not a fan of following others work, but I am definately a fan of reading it if they are willing to share. I can't possible trade something until it makes perfect sense to me, and usually the way to do that is to take their suggestions and build my own system, even if in the end it ends up similar to theirs. The first link is also good because you can watch spydertrader trade in almost-real-time, and I know I learned a lot from that! - The New Guy
Brooks, Actually, these are pretty much the factors I look at also. I'd be interested to know what reasonable numbers you like for "profit per trade, profit factor, Sharpe ratio, maxDD/totalPL". With regards to the 60 day drawdown; I think there's a couple of ways to get around this: 1) finding a system that trades at a much higher frequency, or 2) diversifying with a number of low frequency trading systems. Richard
The ER seems to have a consistently larger range as well as moves in tenths of a point which gives you more oppurtunities to get out with a profit hopefully.
Discretionary trading is in the same category as price action trading. It will not lead on to your fortune. Consider this. "I want to trade for a living." This is the usual unworkable horsesh*t idea repeated endlessly. Consider this. "I want to amass a fortune from trading". Why are those 2 forms of enquiry so different? If you don't start with the right enquiry, you are not going to ask the questions you need answering (in sequential development).
I'll chime in here: Mech Trading is dumb, Discretionary Trading is psycho.....180 degree opposites. If anyone can find the "sweet spot" in-between the two disciplines, then you've found the "Holy Grail".