You are absolutely spot on! What I was suggesting is entirely unrealistic. I like your Holy Grail system better. Because under your system, I should be able to generate gains of "100% every month if not every day or every week", which breaks down like this: For a $100,000 trading account, A 100% gain per month = $1.68 trillion dollars in just 2 years. A 100% gain per week = $1.68 trillion dollars in just 24 weeks. A 100% gain per day = $1.68 trillion dollars in just 24 days. In any of those scenarios, I'll be richer than Elon Musk in no time! I can tell you that even the system I'm trading that has yielded a 55% gain in two months is unsustainable. After looking at my metrics, I understood this, dialed back my position size, and changed my risk management significantly to reduce FOMO and create something more sustainable. Now my system is earning approximately a 16% gain per month, which is more realistic and "possibly sustainable", at least for some amount of time. But at some point, my position sizes will become so large that I will affect the markets I'm trading in so that I end up with massive slippage, and my system will no longer be sustainable or profitable, and I will have to dial down my position size for it to keep working.
Okay, I understand your points. It's unrealistic to say I'll make $1 trillion someday with what I got. If you got an edge then all the good for you because at the end of the day if you're making money then who cares.But for a Holy Grail how did your system do this past Friday when there was a crash? I like my system because what I was doing before would have made me try to buy in on the crash and blow out my account because I didn't expect it to go that deep.
Are you talking about Friday, Oct. 25? First of all, I don't consider that a crash. It was just a typical red candle day for the S&P 500. But it was a tough day for scalping stocks, and I only eeked out a small gain of 26% of my daily target. Red candle days can be like that. The last really big red candle for the S&P 500 was on Friday, Sept. 6. And on that day I netted a profit of 3.68 x my daily target (368% of my daily target). So....... Even on big down days for the S&P 500, Dow Jones, and Nasdaq, you can achieve significant gains if you are trading the right system. But risk management and position sizing are the keys to doing it. Typically, on big red candle days, I end up taking around 50 scalp trades to hit my daily target vs. my usual 20 scalp trades. This is because the gains per trade are usually smaller when you only scalp to the long side (which is what I do), and you are "swimming against the current" of the overall market. This is a great discussion, by the way, and I appreciate you posting this thread. These are the kinds of discussions that help me improve my own system by analyzing it in new ways. It takes a bold person like you to throw around some radical ideas that stimulate people's minds and get them to push themselves harder. Thank you!
Glad I could help. I remember Sept 6th, but I was sim trading at that day and I was somewhat able to to predict a crash but didn't understand why or how I did it. The turning point for me was on Friday Sept 27th when I was both able to predict the rally and then the top and the crash down was when I finally realized I had something to work with. After that day it was a lot of work to simplify it as much as I can. And that is what the Holy Grail system. It's very much a simple system.
The more systematic you trade the less consistency you will have on trading. The more discretionary you trade the better. Then any algos cannot detect you as it is too discretionary for them. So your edge can last much longer. There is no consistent profitable algo over the longer run too, so it does not make sense to hunt for the perfect fully systematic strategy with all the hard rules it has. That is what I learned from my experience. And I went the systematic route for over one decade. Now I regret it, but I learned from. Key is to adapt all the time, as markets do change over time.
Sometimes you can even see the algos working against you when you're trading something that has a pretty good size spread. You will enter a sell stop order and immediately the algo will enter another sell stop order right under your bid by $0.01. Then when you lower your sell stop order again, the algo will instantly do it again and go $0.01 below you. The algo will literally try to take you all the way down to the buy order that's sitting there at $0.20 or $0.30 below where you started. So when I see it doing that kind of nonsense, I just issue a one share position size with each subsequent lower sell stop order, so the algo potentially risks getting burned with its 100 share sell stop order that may get filled when it keeps lowering it below mine. As for trading with some sort of systematic process, I really avoid indicators like macd, RSI and others. I mainly just use support and resistance lines, volume bars, and Japanese candlesticks. Those are really the only three things I need. Sometimes. I'll pop the VWAP in there, and maybe the 200ma, but I don't have hard and fast rules about them as to when to buy or sell when price approaches them. They just mainly give me a sense of how the price may react around those levels.
For the algorithms to destroy you, They need to reverse engineer your logic. Or they need to tag your orders to intercept them. Good luck with reverse engineering … As for intercepting your orders … You can use different venues and stay low profile. At least … that’s my guess. You might also introduce some “randomness”.
I agree. When algos start working against me and it's obvious, I try a couple of tricks to be sure that's what's happening, then move on to greener pastures.
Not the holy grail but pretty interested about this. One trade per session. Either TP, SL or get out EOD. Goes back as far as 2021 ... Looking forward