What it takes to develop a profitable trading system?

Discussion in 'Options' started by Aquarians, Dec 28, 2017.

  1. Well, as qxr would say, “It doesn’t matter what you think of me”. I enjoy reading his vulgar posts though. Crazy Ruskie reminds me of my old man, god rest his soul.
    #51     Dec 31, 2017
    Simples and sle like this.
  2. sle


    I think I made to his dark side, since he has blocked me :)
    #52     Dec 31, 2017
  3. Haha. How do I know who blocks me? Maybe I shouldn’t check.
    #53     Dec 31, 2017
  4. sle


    If the user ignores you, he will also be invisible to you.
    #54     Dec 31, 2017
  5. Sprout


    Yeah, I started out in a similar space.

    At some point, one makes a choice to value their time and make the most out of ‘staring at charts.’

    Most of what I looked at was non-comprehensible to me. However, it is possible to start with little building blocks of truth and with testing build on what you know.

    My strategy was similar to the lifecycle of an insect (short & fast feedback loops.) It is a strategic compressing of time so that it doesn't take 10 years nor 10k hours to understand and gain clarity of the market’s system of operation. Polyphasic sleep cycles supported the effort of purposeful learning.

    If there is anything that accelerated my learning here it’s building an active ignore list. Negativity is a dream stealer, it ripples out and creates doubt where none need exist.

    When beliefs do not support desires - there is internal conflict. This conflict extends outward and influences perception.

    Of the two, one is based in the past and the other occurs in present time.

    A recent quote I came across in one of the posted dataviz was the notion of seeing;
    whether one sees to learn vs
    one sees to confirm.

    Both paths lead to entirely different outcomes.

    Some ask for stats and numbers to back up the things I claim. However, I have no desire to interact with those that are interested more in ‘show me the money’ vs ‘I want to understand.’ The later have their attention on the very thing that that would make a difference in their own lives. That is the reason for my posting - to pay it forward and as a way to honor all the knowledge contained here by others with a similar sensibility whose work that I have greatly benefitted from.
    Last edited: Dec 31, 2017
    #55     Dec 31, 2017
    vanzandt, raf_bcn, djames and 2 others like this.
  6. Don’t waste your time staring. You’ll fool yourself. Study stats/probability, time series analysis, microstructure, position sizing, and you might give yourself a chance. If you do it correctly you’ll eventually realize how fragmented liquid markets are. Staring at charts creates illusions and delusions. Do the work. Organize and analyze data. No shortcuts or free lunches.
    #56     Dec 31, 2017
  7. Simples


    Only you can answer that for yourself.
    Congratulations and just keep moving forward. Before you can walk, you need to crawl, etc. I recommend you use it to the max and see.
    It's a good start though:
    • Formulas provide you with a functional stateless language to programming. Being stateless means you never change any values themselves directly, only indirectly so that all changes (mutations) to values remain, ie. visible for inspection in the spreadsheet. This has enormous pedagogic value for newbies to programming.
    • Cells provide you spatial/visual inspection/debug capabilities that imperative programming often lacks. This makes spreadsheets viable as prototype tools at any time you need simple linear prototypes.
    • VBA, is slow and warty, but gets the imperative parts of the job done. However, should be used sparingly since it starts to hide values, slow down calculations and create artificial boundaries in your system.
    At some later point, Excel might seem restrictive as you'd like more real-time capabilities, larger datasets or whatnot else. Platforms such as NT might provide better visual rendering av charts, etc.

    At some much later point, you've gone through several such platforms, made something work on some of them, and just need to codify what you truly need to go forward. You've got a list of ideas/requirements, but need space and clarity, so need to get rid of the clutter of other people's platforms and systems. This is when you start with a general-purpose language, and have enough know-how, to actually be able to create something that works as intended, rapidly in a way that fits your "special needs".

    Nowhere in this is there consistent profitability or guarantees. You could be profitable with just pencil and paper. Just eyeballing and waiting for the right opportunities, recognizing when they might be there and avoiding being caught on the wrong side for too long or risking too much. The game is as hard as you make it, but getting meaningful returns are rare and truly hard to get consistent.

    The tools are as good as its user.
    Last edited: Jan 1, 2018
    #57     Jan 1, 2018
    Sprout and digitalnomad like this.
  8. kellys


    1) Initial know how (math, programming, financial markets).
    Ask this question:
    What drives data? That is your starting point!
    (You do not need programming skills and you do not need to be a mathematical genius).

    2) Backtest system to research & develop trading strategies.
    This is so messed up it's not funny.
    Through proper objective research you will have a strategy to back test/forward test.
    Actually, if it's based on thorough objective research it will make money.

    3) Live (auto) trading (even if #2 is not great, because present reality is often different from the past snapshots).
    @#*$ me. Is this a joke?
    Getting #1 correct is critical!

    4) Analyze why you're not making money, tweak / improve and goto #1.
    I'm glad you haven't listed a #5

    These questions help you in what way to be profitable?
    What purpose do they serve?

    Come on, you're a smart guy! Let's step this up a few notches.
    #58     Jan 1, 2018
  9. ironchef


    Thanks. I am one of those who benefited from your paying forward.

    #59     Jan 3, 2018
  10. ironchef


    Thank you for your coaching.

    I learned VBA in order to model option pricing and strategy. I can calculate Black Scholes using Excel. However, if I want to do Monte Carlo to get the most likely outcome, even with BS, I don't know how to "do loop" in Excel except using VBA.....

    Since I got you here, do you know how I can calculate a "do loop" with just Excel without having to get into VBA?
    #60     Jan 3, 2018