Question: my strategy has 45% winning trades but...

Discussion in 'Strategy Development' started by zwanatico, Jun 27, 2005.

  1. I got 9% average return on winning trades and -3% average return on losing trades. (only 50 trades)

    Do you think I could improve and be really successful (trading for a living) in a near future?

    I am a discretionary trader.

    My strategy is based on simple breakouts, support/ressistances, fibonaccis retracements, volume and a few more price signals.

    BTW I have been stocktrading just 18 months. I've got many trading books (Elder, Market Wizards..).

    Sorry for my bad English (i am Spanish)

    Thank you.
     
  2. jnash

    jnash

    How far back did you back-test your system?

    Did you allow for slippage/commissions?
     
  3. Have you though about doing a profit margin calculation?

    The way I analyze my performance produces a profit margin number that can be further analyzed to show where I could improve.

    For example, you might consider putting together the following spread sheet (I can post one here in excel if you want) with the following columns for each day of trading:

    Gross PL | Net PL | Fees | Shrs Traded | Net Profit Per Share | # Trades | % Winners |

    The Net Profit Per Share Column should give a true indication of your profit margin and you can see what costs the most (too many share, too little winners etc). You can see if your commissions are bringing you down or if it is your percent winners - whatever, it allows a breakdown of where the numbers are at on a daily/weekly/monthly basis.

    Mike
     
  4. =======

    Zwanitico;

    Your english is better than my spanish;
    and yes I believe you can trade profitable in a bull-uptrending market.

    And besides i had a lawn mower brand named ''TORO''[spanish for bull];
    that grass cutter really cut the green grass down!!!!!!!

    As far as trading for a living senior Zwanitico ,thats differs much from profitable trading;
    how much capital ???????????????
    and debt do you have???????????

    Those may be back test numbers and reguardless ;
    - 3% may be a little low for losses, but swing trading liquid stocks in a bull market is NOT
    that hard , usually,
    especially if you cut back size quick when losing.

    :cool:

    Wisdom is the principal thing.:cool:
     
  5. jrkob

    jrkob

    Well yeah Murray is right. The market has been in an uptrend for the past 1.5y, so you have to study the correlation of your trades to this uptrend.

    If you take both long AND short trades, and if you made as much money with the shorts as with the longs, then your correlation could be low. Which is better.

    The reason why you want to know if you are correlated or not is to have an idea of whether you have a chance to make money in a downtrending market too.

    Good luck.
     
  6. Thank you for your help and replys.

    Yes, I Know I've got these numbers in an uptrend market.

    BUT I Can sell shot via IB. I really want to know how this strategy will work in bear markets.

    I am still new trading US stocks (more experience in Spanish stocks).

    I am reading Elder, Darvas, Market Wizards... Too much books and too less time!
     
  7. Mike can you post a proft margin excel spreadsheet?
    Thank you in advance
     
  8. You should also add open P/L and the maximum drawdown.
    This information is essential for defining the risk you take.
     
  9. jrkob

    jrkob


    zwanatico, how many short trades has there been in your 50 trades backtest ?
     
  10. No short trades in my REAL Spanish stock trading (Spanish stocks sucks, you can only go long!).

    However, I know how to manage a short position. I have done some single stock futures operations (with a different broker) and some mini dow operations, as well as some US stocks short sellings (with IB).
     
    #10     Jun 28, 2005