What actually works. -
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thread: What actually works.

  1. #11
    It's called the coin game, basically you use a coin to choose if you go long or short then manage the transactions (cut losers, let winners run), you may make money over time. Also you can run simulations on MT4, basically you randomly decide a time and put limit orders below the price, you can optimize the MM parameters to make the system profitable.

    By no means does this produce the most profitable system ever, but it makes the point that MM does have a major impact on system profit.

    There are different things which can swing the odds in your favor (support, resistance, trend), but those things are normally tough to automate in addition to a human can pick it, I focus on automated systems mainly, simply to clarify my remarks.
    Craig, cash management has a very specific definition and means something other than what you're describing. Here's the definition from Wikipedia:

    Money management deals with the question of how much http://en.wikipedia.org/wiki/Risk a decision maker must take in situations where http://en.wikipedia.org/wiki/Uncertainty is present. More precisely what http://en.wikipedia.org/wiki/Percentage or what part of the decision maker's wealth ought to be put into http://en.wikipedia.org/wiki/Risk in order to maximize the decision maker's http://en.wikipedia.org/wiki/Utility_function.

    Money management gives practical advice amongst the others for http://en.wikipedia.org/wiki/Gambling and for http://en.wikipedia.org/wiki/Stock_trading as well.

    Money management can mean gaining greater control over outgoings and incomings, both in personal and business perspective. Greater cash management can be achieved by establishing budgets and analysing prices and earnings etc..
    Boiled down to its essentials, cash management deals with what percent of this account to risk on a given trade. Money management will not turn a system profitable but should you risk too much per transaction, you can blow your account with a profitable system by taking on too much risk for the account dimensions.

    What you're talking about when you add stop loss and profit target is trade management or depart rules. They could turn a system with no entry edge, if your departure rules have an edge. I don't have any issue with that statement. This can be a subtle but important distinction.

  2. #12
    Junior Member virr.exc's Avatar
    27
    I know what you are saying but beyond dicing semantics, both are connected. An individual cannot consider position size without loss dimensions you cannot compute your maxium loss. I am aware that there are different egies to manage risk, but they all involve a linkage between standing dimensions and trading method. I don't know whether there is a name for the idea.

  3. #13
    Member Kivva's Avatar
    38
    Rightly or wrongly in this case, I had been hoping to generate a system that managed to'live' in majority (if not all) market conditions, and I believed that back testing the system during quite a while framework gave it exposure to a greater range of market conditions and behaviours. From reading your reply, it seems you are suggesting that traders should be tweaking / change their systems in time to time since no one fixed system will endure for ever?

    Admittedly I am getting mixed signals on this one and will admit that I am confused on this. But many people including seasoned individual traders and professionals have recommened inventing a method, sticking with it for the long hual and under no position given into the urge to tweak / change your own system.



    Properly... Admittedly, I have never seen or managed to invent a system that may both excel in one type and actually breakeven from the other. By far and the large majority of systems I have come across have exceled in one and decimate trading funds in the other... and to drill down to core of my current dilema, is basically the systems have generated enormous amounts of volitility / changes in trading equity together with in the most, lack lustre or mediocre gains that could not even beat buying and holding blue chip shares.
    Only a system that follows the price, will last for ever

  4. #14
    ...2. When tested during quite a lengthy time frame (I am speaking about 2 decades and LONGER here), the net gain was only in the area of 1-5%, lower Rate of yield than buying and holding blue chips stocks...
    Why would you test a platform over decades of information? You might not think the market in 1982 is exactly the same? Each system that's even remotely profitable in the long term needs to be optimized at least once every year a lot more, especially if it's an intraday system.

    . . .Most Mechanical Systems think either operate in Trending -OR- ranging markets, but not both. It the market is not fitting the system, drawdowns will result...
    Yes, you're correct. There's not any system which will perform well in all market conditions. If a system may breakeven in 1 form, and excel in a different kind of market, you've discovered something worth trading. Drawdowns need to be your friend. You need to say it is time to earn some money, hell when you get into a drawdown! , not this egy has drawdown, I stopped.

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