Another week of decent progress in trading strategy development. Working hard away in my office.
Collected good experience in articulating and formulating some of my evaluation and decision making processes into Microsoft Excel formulas. It is not as difficult as I had previously thought.
Here’s an overview of what progress I made….
Oil & Forex Trading Strategy Development
- Completed further analysis after rolling out the the trading strategy testing model to various periods in 2011 and 2014-2016 and increasing the sample size of test trades to 1,200.
- Plotted a subset of 100 test on MT4 platform and reviewed the entry, management and exit of the trades.
- This process was effectively identical to documenting and reviewing normal live trades. The difference of course being that there was no zero discretion in the setup selection nor the trade management, as this had all been systematized in the testing model.
- As I wrote in last week’s post, I had expected action points stemming from the review to focus on judging the trend context (bigger picture) and on where trades were being entered relative to recent highs, lows and turning points. Instead, the great majority of my insights focused on interpreting the price action preceding the trigger candle, on how to set targets and on how to manage the stop.
- Can I justify this to myself by saying that it was unreasonable for me to expect a single pin bar to produce profitable results, without having regard to the preceding price action?
- Then proceeded to start coding up the refinements and tweaks – will re-run the models, then plot the trades again, and review again, before going to address the trend model and the entry levels.
- One of my systematic trading colleagues, reminded me to ensure that whatever models I build, I should build so that I can use them as a platform for testing more strategies again and again. Doing my best to do that. Same goes for the historical data that I am compiling together.
- Again, two meetings with discretionary trader at hedge fund as usual – discussing the transition into systematic trading and testing methodologies.
- Lively discussion with several fellow traders at the London Traders Network organized by Paul Wallace.
- Good intellectual conversation with a good friend of mine who has excelled in the field of phonology/linguistics and is extremely smart. We had a thorough discussion about the trading, randomness, human psychology and probability theory. Very insightful & encouraging to articulate many of findings and impressions from recent months.
Good links, articles and reading
Have added 2-3 new links added to the Bitcoin Cryptocurrency page. Bitcoins aside, here are several interesting links I came across over the last week:
- Cambridge University: Gut feelings help traders
- Brett Steenbarger: Overtrading and Missed Trades – a brief discussion on how lack of clear setup opens the door for psychological issues
- Price Action Lab: Trading Psychology has become irrelevant
Onwards and upwards with more rigorous trading strategy development.