Ditto on being contentious knot, and you've lost a day, it's Saturday, maybe you're from the future. Since you're being facetious, so will I,... The flux capacitor has been upgraded to a Variable Gravity Lock system https://www.strangerdimensions.com/2013/02/04/john-titor-the-man-with-the-machine/ John's original posts are archived on the way back machine; https://web.archive.org/web/2001041...:80/showthread.php?threadid=1203&pagenumber=1 Kidding aside and on a more practical note, it's easy enough to do some DD with this thread; https://www.elitetrader.com/et/threads/the-stochastic-indicator.14129/ Whatever you decide, it'll be true for you, who am I to argue? Even though decades ago, I've done 7yrs of full-time undergrad (still with no degree!) I'm not an academic. I appreciate all the various teachers in my life, especially the one's that spoke from life experience and travel vs reciting from books and a life spent in academia. My real learning started in the school of hard knocks which gets one out of their head and more into their body pretty quick. I'll take street smarts over book knowledge. Books are great and I enjoy reading quite a lot but it's no substitute for direct experience which I'll take over theory any day. The links above should give the trolls plenty of fodder.
If you don't understand your own strategy, how can you prevent it failing, how can you improve it, how can you identify a better one?
So throw a dart to pick an instrument, risk no more than 2%, close position once 2R is reached. Rinse and repeat? You must have an amazing risk management system no one else was able to figure out.
@Buy1Sell2 has no clue what he's talking about. Poor risk management will make a good strategy bad, BUT good risk management will not make a poor strategy good
Love the creativity here, but some issues abide. First, is there a T/A indicator that wouldn't qualify as a lowpass/highpass/bandpass filter? The only thing I enjoyed about (the torture of) my first stat class was decomposing time series into cyclic/annual/seasonal/etc data. That was 1981. Nothing has changed: Find periodicity, account for it. Examine residuals. Rinse/Repeat. https://en.wikipedia.org/wiki/Linear_time-invariant_system Here's the thing: to allow for "negative group delay", you'd be claiming that some (as yet undefined) amount of price-as-signal has come from early-arriving genuine market signals -- to wit, speculation. The problem is, all of finance includes speculation as a given already -- you're double-counting. If you allow time to be squishable or squeezable, you've wiped out an essential part of all of market studies (from finance to econ to sociology) being, "I am first! I got here first! I thought of this great idea first! I staked my claim first!" Uh-ohhhh. At any rate, what is termed a 'leading indicator' needs an a priori interest in some ensuing event. Look at any of the Index Of Leading Economic Indicators. An increase in Building Permits this month does not signal an increase of Building Permits next month, it signals (signals! indicates!) an increase in Construction. No matter how many MAs we take of price, it lags what price will do next. It's math; it's 'by definition.' It's not my fault.
Yes. Even, "Of course." But you're follow-up mixes apples and oranges. (Still fruit, but should only be mixed under the supervision of a sweetened creamy sauce, and watch for too much exposure to the Sun. ) You bring up candlesticks, which are agglomerations of what could be *thousands* of prices into just four: Open-High-Low-Close. If it *is* thousands, then the likelihood that we might miss something important by some slip of how the candle (timing) is defined -- that likelihood is small. But if we're looking at a 1-minute candle, and there were only half-a-dozen trades, then the story which the candle 'tells us' is highly subject to being victimized by when the trades occurred. Takeaway? The fewer the trades in the candle, the less use the 4-priced summary of the candle is. Apples and oranges -- still fruit, but...... yowie. Second is that "The Patterns" of Japanese Candlesticks so overblown (and so often) are very different animals than the patterns of, let's say, a "MACD crossover" or a "Stochastic crashing through 80" or etc etc. (That's more like Crab-apples and Macintosh.) The "patterns" of use in T/A were coded long ago, put into trading algos, and their creators done very well for themselves. Testable, repeatable, reliable results, tuneble for robust outcomes over time. (And now, you've just gone from fruits to orchards....)
I think the more popular aphorism is that a bad trader can make a good entry into a loser (through bad management), but a good trader can make money even with a bad entry (through "proper risk management"). If "Capital Preservation!" is first on your Mantras Of Sound Trading, then ... well.... we're all good. (And if not, "Ohhhhhhh Brother!" )
Tom, you only make money when 2 things come to fruition. 1) You have a strategy that has a positive expected value. 2) You manage your risk so you don't blow up before you realize that positive expected value. Look at Roulette, If the casino allows you to bet WHATEVER you want. Then a billionaire can come in and clean them out. -> Poor risk management + positive expected value = Loser. BUT No matter what risk management the player does. He will ALWAYS lose in the long run. In fact his best bet is to walk in their and bet his whole stack on red or black and then walk out. saying "Risk management is the only edge" is so lunacy. Risk management is not even an edge. It is an equation LOL. Any monkey can look up the Kelly Criterion for optimal bet sizing.