I have 3 systems that I trade, two of which are almost purely mechanical. I didn't have the confidence to start trading them together until February of this year. Together, I'm up 70% for the year. Before that, I used pure discretion , but I also made it mechanical. One of my systems is discretionary, but I've made it somewhat mechanical. The other two trade different time lengths, instruments and have different philosophies. I'm always working on others to replace the systems which the market digests and to smooth out my equity curve.
Before I developed these systems, I was a losing discretionary day trader/swing trader-- I did this for 2 years. I made the mistake of deciding my methodology of making money before I knew how to make money. I was trading at a prop. firm during this time and I stubbornly decided that I didn't want to scalp and that my way was better. I was going to impose my will and unproven methodology on the market. I would scrutinize trendline breaks for classical patterns and compulsively search for the best parameters to use. I would only use IBD stocks and I read so many technical analysis books that any out-of-the-box realizations were smothered by text book technical analysis doctrine. If my said goal was to make money I would have scalped and learned to read the tape like rest of the guys. To make a long story short, I've been around long enough to know what definelty doesn't work, what roads not to go down, who is full of it and . It wasn't until a short time ago that I also realized the right questions to ask, how to compete, how to do research and that I have a trading system that works. My first system that I "developed" is based on quantitative measures on how I feel about a chart. The reason this method works is because I have an intuitive feel for recognizing certain patterns-- which obviously comes from time in the market. The majority of the time, my feeling on a chart are neutral. I don't care what the technicals tell me. The quantitative part of this system is that I set a stopwatch on a chart that I like and I rate my feeling of the trade. I only take trades that rate as a 10. I also found a positive correlation between profit and how much I like the chart, but the trades where I would make the most money were the ones that I was uncertain because of fear or because I was looking for more confirmation. So, I also parameterize this. I also used my overall confidence level with my trading and profitability as a contrarian indicator for the market. I also make myself answer, "what is the market rewarding?". Sometimes it's related price patterns, sometimes valuation methods, sectors, mean reversion etc. I noticed that the market will continue to reward these patterns from the point of time that I feel like it's too early to trade them to the point that I feel like hot shot. The best thing you can do right now is come up with a list of questions that you continuously add to and look for those answers. You will find that as you progress, your questions will become more relevant. Don't worry so much about system development as much as understanding the markets and modeling the system devoloment skills of proven traders. Realize that anything that is easy to implement and common has most likely been priced into the market. Understand the barriers of entry into this game:relevant information, information processing, information translation, technology, etc. Also, think about overall strategy of any game. Who are the players? What is the setting? What is their agenda? What are the implications of these answers? Realize that most traders don't work on strategy and instead focus too much time on tactics. Educate yourself on quality of research. example: Lo vs. bulkowski Instead of thinking as trading as a business, think of making money in the markets as your ultimate business (tactics vs. strategy) and think of coming up with an "edge" as your first business objective. Learn how to identify an edge vs. identifying the best parameters of a market. Think about when technical analysis is relevant. Sorry for being not being more organized with this post. I could keep going, but that should suffice for now. Good luck! --- In [email protected], "Louis P." <[EMAIL PROTECTED]> wrote: > > Hi, > > I was only wondering... Anyone actually making money or making a living > with AB and trading? > > I've been working on ideas and plans for over 7 months now and didn't find > anything convincing yet. I've been searching daily data, then hourly, > 15-minute and now I am into 1-minute data and nothing seems satisfying. > Been searching RSI, MFI, ADX, MA, HHV, LLV... nothing seems to work. > > So... Anyone is making consistent money with this, and if so, at which > timeframe and how do you do it? > > I'm beginning to think about switching to tick database; it seems even > 1-minute is too slow for intraday trading. Anyone making money with > 1-minute? > > Thanks, > > Louis >
