21/5 – Challenges in testing: Setup Clarity

Still in New Jersey, USA.

Got some testing done earlier in the week but faded off from the middle of the week. Planning to cram a lot on the flight to make up for my slackness!

Presently, my key stumbling block in my testing and development is pinpointing exactly when a valid setup occurs on the chart, whether in back-testing, forward testing or in live trading.

I also learned that even changing the size of the screen (say moving from 22″ office monitor to 15″ laptop) makes spotting setups more challenging.

I continue to believe that trading setups based purely on numbers – say buy when the 10-period exponential moving average (EMA10) crosses the EMA20 (just to use a simple example) – should not enable a trader to trade profitably on a consistent basis.  Why?  Because any trading strategy based on purely quantifiable factors should have been identified and traded out of existence by any trader with a reasonably-sized bankroll and trading technology long ago.  Hence why I am anxious to include subjective elements in my trading setup.  This should mean that a pure algo trader should have difficulty trading those setups using a fully automated strategy.

The downside of that is that it will take me some time to get really comfortable and quick to say “this is valid” or “this is not valid”.

I realise that they are a lot of ‘shoulds’ in the last couple of paragraphs!  Rather presumptuous.

I have got my work for the next few weeks quite cut out – but being clear on the definition of a setup is somewhat of a prerequisite.


And remember ‘Mr France’?  

Mr France and I worked together closely when he traded £5k of my funds back in late 2014.  We talked a lot about risk managment and psychology.  Well guess what – Mr France (real name: Chance Cisse) will be a speaker at the upcoming  London Forex Expo in early June – talking about trading psychology!!

Here are some earlier blog posts relating to Mr France:

Hopefully Mr France will promote this blog in his talk!




This entry was posted in Mr France, Testing. Bookmark the permalink.

One Response to 21/5 – Challenges in testing: Setup Clarity

  1. Pingback: 15/6: Strategy Development & Testing: Nitty Gritty Stuff | Trick or Trade - the story of a currency trader...

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