It is amazing how many people fall into this trap of trading month after month. I have been back testing and forward testing numerous different trading systems and strategies for more than two years. My focus however was on index futures and currency futures. Spending more than 6,000 hours with analysis for this venture, I did not find anything that would nearly be reasonable to call a somewhat viable solution. Her are just a few systems and indicators of my testing including any possible combination of them: - MACD - Stochastics (fast and slow) - CCI - Woodies CCI (incl. Woodies trading patterns) - Moving Averages (SMA, EMA, WMA, TMA, HMA) - Opening Range Breakout - 1-2-3 Reversal patterns - Trader Vic's 2B method - different price action patterns with and without any indicator - classic trendline/trendline breaks - etc., etc. None of the systems actually generated more profits than losses over time, even by reversing buy and sell orders against the signal/pattern. I have become suspicious that this is nothing but a monkey business, because trading systems strangely seem to be profitable only when paper/simulated trading instead of actual money. Finally, I have come to the conclusion that one cannot generate any profits by trading. This is an expensive and very time consuming hobby which comes with a daily agony. I do admire the industry and its marketing machinery, as it continues to lure people into this fruitless business for a sheer endless money supply. Greetings, TF Trader
Maybe you should try back testing based on fundamental data, such as buying stocks in which earnings and sales have increased every year for the past five years by 15% or more.
well damn, if you say it can't be done, and you are smart enough to do all that testing then I'm sure going to find something else...
1. There are more approaches to trading that TA based. 2. One has to refine their trading methodology over time as the market changes. 3. One can make $$$ trading on a consistent basis. I've been doing so for almost 15 years.
You chose the wrong signals ... that cannot be corrected. The indicators and their proper signals were invented long before the PC, computer science, and the financial industry making money with anything other than fees and commissions. Most indicators produce leading indicators of price. Do a self check and see if you believe this. Lets say the answer is no. If so, you have prima facia evidence that you chose the wrong signals. I'll also bet you used the wrong defaults ofr the indicators. Consider this: most indicators were invented and defaulted before the PC was invented. Did the PC affect information rate of transfer? If you get the snswer no; then you used the original defualts. If you didn't figure this out (that there was an "effect", then you should have only used pre PC information. If you only used per PC indictors and you only used post PC data, then you were screwed from the get go. There are many more reasons for your failure. Read the novel "Trend Following" to see how bad it can get on an eight year hazardous journey. Read "the Predictors" to find out how long it takes post doctoral quants to find out the is a "best bid/ best ask". Its after page 150. Do you have a PhD? My guesss is yes. If your mother is an immigrant and has a million dollar business and you are president of the university trading club and you pay Timmay to speak does that mean you will be a successful trader? The answer is no. Will your mother be? The answer is yes, BUT she will just hire someone to do her trading. Welcome to ET. Note: it is impossible to prove something doesn't work.
You have just learned that trade signals all by themselves without anything else will not make someone a profitable trader. With that knowledge of knowing that trade signals is just one chapter in the book of trading...do you plan on reading the remainder chapters of the book Simply, there's arguably more important things that profitable traders use with their trade signals (e.g. market experience, money management, proper capitalization, discipline et cetera). However, all these ingredients work together as a team. Thus, they need each other to succeed. Therefore, you can continue testing how losing traders do it (trade signals without a team) or test how profitable traders do it via team work involving those ingredients I mentioned above. However, I do understand that it's much easier to test trade signals alone considering many traders imply it's the only thing they use. Sports Analogy - Pretend you're a good quarterback (a.k.a. trade signal)...you will lose all your football games if your teammates (market experience, psychology of the trader, discipline, money management, proper capitalization, position size management, stress management, proper broker platform, proper trade workstation, proper trade environment, team collaboration et cetera) don't do their job (a.k.a. trading plan). Therefore, it's impossible for a good quarterback to overcome or compensate for the poor performance of those on his offense or defensive unit in order to consistently win football games. P.S. It sucks that you spent 6,000 hours to find out that trade signals alone will not make someone a profitable trader. Next time...please read the entire play book because there are no short cuts.