What are the questions you ask yourself in order to eliminate false positives?

Discussion in 'Trading' started by rin4et, Oct 2, 2017.

  1. Jzwu2017

    Jzwu2017

    Excessive false positives indicate a low quality of the signal(s), and often times bad timing as well.

    When a signal results in a false positive when its conditions are met, it means the conditions are of inferior quality (i.e., incorrect conditions), or insufficient correct conditions are processed.

    Signals are of different qualities and they can be improved continuously with more trading experience.
     
    #41     Oct 7, 2017
  2. Simples

    Simples

    For mechanical trading, the question is about strategy/system development. The rules and execution remains the same unless the system is upgraded with new changes. It's about managing all your potential trades on average in a very fixed manner.

    For discretionary trading, the question is more of real-time intuition about what to fade and what to trade. The rules may or may not stay the same, and the interpretations and execution of the market/instrument could vary alot. It's about managing each trade / market situation in a very flexible manner.

    Another poster had a good question: Why should this be the right timing?
    You can also ask questions like:
    Is my system generating too many signals?
    What measurements in backtest may help avoid bad signals?
    How can multiple signals confirm eachother without causing too much lag to be consistently profitable?
    Are there signals that don't mix well and why?
    Ditto vica versa.
    Etc.
     
    #42     Oct 7, 2017
  3. Cswim63

    Cswim63

    When I saw this thread, I already had a good idea who posted it. My first reaction is to ask myself, "What would Ed say about this(Ed Seykota)." I think it would be something along the lines of investigating feelings of being unsure. It seems to be a common theme running through your threads. There may be other loops running as well, but that's my best guess. Ideally, you perceive the signal, you act on it, then manage the trade. But all along the line there's opportunity for feelings to interfere. As a discretionary trader, I try to integrate those feelings into my decision making, and it's an ongoing process. It still seems like you're trying to find the perfect system which is never wrong. Why not trade a mediocre system which makes money? Then deal with the issues that come up. You're in a different world, a probabalistic world. It sounds like you haven't fully grasped that. Embedded in your questions is an attempt to eliminate problems before they happen. In this environment, you put on the trade, then deal with what you get. You'll never be able to analyze your way out of that problem. Anyway, I suggest a little reading from someone with a similar background. Trading Tribe Ed Seykota.
     
    #43     Oct 7, 2017
  4. Cswim63

    Cswim63

    What happened to you in school if you got the wrong answer on a test? How about work? What happens if you make a mistake? If you keep making mistakes at work, what will happen to you? Ok, now try to trade.
     
    #44     Oct 7, 2017
  5. Cswim63

    Cswim63

    You analyze the market. The analysis says there are x number of false positives. More analysis isn't going to change the market.
     
    #45     Oct 7, 2017
  6. ironchef

    ironchef

    :thumbsup::thumbsup::thumbsup:
     
    #46     Oct 7, 2017