direct statistical trading a "clearly" defined approach by NTW31

Discussion in 'Strategy Building' started by nukethewhales31, Dec 31, 2008.

  1. hey et,

    in this thread i hope to introduce my way of statistical trading by clearly defining my personal approach... taking away the guruish way of explaining my approach and getting to some of the cold hard facts that ive had to learn the hard way from learning to trade by reading endless amounts of books ... guruish "see what its doing" forum articles... reading endless amounts of research papers on theory and systems about emotions and money managements... learning to program my own thoughts in form of equations in mt4 and other platforms back testing and backtesting never being profitable from it forward testing... breaking my bank...

    but in an effort to repay the forums and some of the people that have contibuted to my success i want to introduce you to my style of trading .... i have nothing to sell .... nore do i even have a website with my name on it... i dont intend on anyone knowing my name or asking me to manage their money... this is strictly an effort to repay the place/places were ive gained my 'edge' et knowledge.

    if you dont believe in what I have to say thats ok i dont mind you trying to kick me in the teeth and prove me wrong but in doing so i hope you will follow a system ... state what you disagree with ... what you think... and then back it up with facts ... i grew up with my grandparents and something that ive always had that i felt other people lack is the ability to absorb and use other people knowledge about things in my own way... by learning from others mistakes and my own... so if you feel it your obligation to kick me in the teeth and teach me something then do so but back it up and not with guruish statements or i wont respond.
    as long as this thread gets conversation ill continue posting.

    love, NTW31
  2. looking forward to it.
  3. sorry about me taking so long to post this i was in the process of moving to florida. :) now its like im on vacation 24/7 :)

    lets start with what i consider "statistical trading".. and i do not mean reversion to the mean trades or statistically backtesting different trading systems...

    ill start with making a few comments about the obvious that im not going to say are fallacies but something that i do not personally agree with ..

    "in the business world the rearview mirror is always clearer than the windshield"
    -warren buffet

    trend - is a general direction of the market determined by a repeating HH/HL or LL/LHs

    is this trend? to me Price goes up or down .. if there is a positive bias .. in which more traders favor being bearish or bullish a trend is created... trends occur after the fact the key is determining bias...

    bias - which way directionally the market if being pushed by its influencers. if there are more bullish influences the market has a positive bias... if there are more bearish influencers.. the market has a negative bias.

    bias is measure directionally of influence which leads to creation of market candles which in turn creates a plotted example of bias called trend...

    bias is current pressure ... trend is plotted buy/selling pressures as they have occured...

    what does this small change in deff mean for me as a trader...
  4. well for me this means that bias or buy/sell pressure that creates trend drives trend ... and thus this is what i want to look for when i initially show interest in my trade...

    how do i find bias?

    easy enough the way i approach this is by looking on higher time frames.

    if you trade the hourly like me i look at the daily the daily shows my bias thus if the daily is showing negative bias ill only trade in the direction of that bias .. downward... also strong ema's why is the 20 period ema a powerful ema? i posted this question on another board and no one answered the answer is easy its a ema derived from 20 periods at the price lvl its calculating on the hourly it corresponds to other levels at different ema's so it has a greater psyc. effect on price... your syncing all the pressures at different lvls. so if your below a XX period ema your likely to have a downward bias until it changes and recrosses that ema.. note that bias does not change until the cross at close.
  5. ok now that im starting to sound like a trend trader.

    we wont get into stats yet but well talk more about bias ... ever wonder why confluence works things agreeing at multiple levels? or why support or resistance levels break at all? simple if bias is negative odds are support levels will have a higher percentage chance of breaking and higher chance of resistance levels holding.. if bias is positive than support levels have a higher chance of holding while resistance levels have a higher chance of breaking. if there is not bias or bias positive or negative is equal support/resistance have close to the same levels of breaking or holding consolidation forms till bias changes and it may fight a bit but will break in the direction of bias...

    note that the big boy do effect the markets greatly and have the power to create /destroy/change bias in one vehicle with a couple of moves of their hand.
  6. ok NTW31 where does the stats come in...?

    well for statistics to work you need to have fixed objects to sample from a population... population of candles lets say .... when the average candle forms what average lengths fall into what %tile ranges.?

    well this number i cant give you because all vehicles are different .. they all have traders that are watching waiting and trading them thus they all have different personalities and different movements and each have to have their own drawn stats.

    from open what movements are in the bulk %tile range? which means from OPen of the bar look at the open and draw a line youll notice one end is usually sigificantly longer then the other such as 90% of the time over the past 200 bars the shorter movement has been at max 10 pips from open as well as the longer end being 30 pips from open... this means that 90% of the time if you were to place a pend. order for 12 pips from open and exit 20 from open... with a stop at 12 from open in the opposite direction youd be successful 90% of the time on those trades while combinations of bars change and while order and trends changes bar average size and creation are usually nearly the same.
  7. this is what i consider beginning direct statistical trading..

    this is a simple profit extraction system.. not prediction system... i do not need to predict price movement to make profit.... thus my chance of accuracy is determined before entrance with predefined stop/TP/entrance not entrance and based on how close stop is and tp and needing to have 2:1 reward:risk to be profitable. this as well hinders most traders ... note that many traders try to make a few big trades and use those profits to whether all the small losses before the next big one.

    the real advantage is being able to consistently pull profits with small profits high % and losses being low% and low loss.

    a casino doesnt know which machine is gonna hit big for one of its guests they know through their sheer odds they are the winner whether someone hits big on the slots that day or not.

    i try to be the casino and the market is my guest...

    time for questions
  8. 1. how many trades do you place each day? on average.

    2. how long do you hold your trades?

    3. is it automated running off of a platform or do you trade execute yourself?

    4. how long has this been successfully running for you in years?


  9. about 4-5
    2min -15 min average prob
    i trade execute myself im sure it could be automated but i dont believe in that
    bout 3 years id say not directly the same every year as if refined a bit more often and i learn and apply new things
    but i blew 3 to 4 250$ accounts starting then ran a 250$ while making slight contributions to 43k as of recent of course that was over 3 years and the first 1.5 years was very slow i was always very statistical innature with my trades whether i knew it or not at the time
  10. 20 ema line on eur/usd every bar is entrance opportunity. look how the short side is 90%+ always minor move and the long side is large
    #10     Jan 4, 2009