Friday, October 14, 2005

My apologies

Sunseeker, I did not mean to be rude and apologize, if you understood my article in this way.

The thing is, I have been in a lot of chatrooms, where people posted live trades, my futures-trader can post live trades, but ask yourself, what does it help your trading, when I tell you, that I entered a Euro long at 1:37:28pm EST today at 1.2131 or a DAX long at 10:45:10am EST at 4989.0?

Nothing, absolutly nothing. And had I posted the trades in realtime, it would have meant zilch, nada, just another trade made by globetrader.

In my own blog, if I use it as trade-journal such an entry might make sense, if I add some comments to it like I did, when I wrote my trading journal, but the trade without further information is just that, a trade. It might be profitable, it might get stopped-out, but knowing that you made a trade will help noone. And you could be Warren Buffet and Jesse Livermore together, it still would mean nothing.

What would mean something, if you not only told people, that you have a profitable system giving you this and that entry today, but also why. How your tradesystem generated it’s tradesignal. You already said, that it is a always in the market system. That’s interesting and I would love to discuss such systems with you, especially, if they are profitable.

Other traders I asked always told me, sorry, but that’s a big secret, because if it were known to too many it would loose it’s effectiveness. If anything a widespread tradesystem generates more volume in your direction than a system known just by yourself.

But that’s beside the point I want to make.

The idea behind the two trading systems currently implemented in Futures-Trader came from reading “Zen in the markets” and Sport’s blog, where he posted day in and out about the First Bar trade. 
I just asked the question, whether it is possible to prove, that statistically these systems work. And everyone already playing with the Backtest Module will agree, that using the right trademanagement parameters, you can build a very profitable automated system, use other parameters and the same system, based on the same tradesignals, fails miserably. Actually it would be a sure way to the poor house, if you invested your money in such a system.

Again: The same entries, traded one way generate a very healthy income and traded differently are the sure way to the poor house. That was really the most astonishing result I got sofar from my backtesting.

And the consequence: It’s not the entry, which is important, which decides whether you become trading elite or just sheep. It’s your trademanagement.