Curve Fitting Knowledge

[cmmichaels]

I'm having a bit of trouble with trying to distinguish at the end of each day what aspects of the market action to take away and learn from and what to discard. By this I mean sometimes something happens and your trade then doesn't work out and it is tricky to decide whether to say, I'm going to learn from that and try and adjust my trading accordingly or to decide if it is actually something that will maybe damage your style of trading in the long term. By that I mean maybe it will happen again but more often that not it wont so it is best to stick to your old way of trading and take the losses when they happen. I hope this is making sense, you've obviously heard of curve fitting systems and I was thinking sometimes I'm curve fitting what I'm learning too much.

Anyway thanks anyone for reading and I would be interested to know anyone's thoughts on how they deal with these situations. Because it is almost constant obviously nothing ever happens exactly the same and you are constantly learning but you almost have to be quite ruthless about what you implement into your trading and what you don't.

 

[forker]

The trade didn't go anywhere because it's outside the liquidity hours. By the sounds of things you need a lot of screen time where you study what price does. Don't worry too much about trying to study everything because that won't get you anywhere. Work off support and resistance and study price around those areas. Place close attention to price reaction and you will see recognisable opportunities. Use that as a basis and include high level fundamentals and other markets in your analysis because they are all interrelated. There are plenty of threads on the forum to help, good luck

 

[cmmichaels]

The trade didn't go anywhere because it's outside the liquidity hours. By the sounds of things you need a lot of screen time where you study what price does. Don't worry too much about trying to study everything because that won't get you anywhere. Work off support and resistance and study price around those areas. Place close attention to price reaction and you will see recognisable opportunities. Use that as a basis and include high level fundamentals and other markets in your analysis because they are all interrelated. There are plenty of threads on the forum to help, good luck

Thanks for your reply with regards to the liquidity hours obviously this is the DJIA so it is going to get fairly liquid going into the close and that was a 140 point move that started 3 minutes after I closed my trade so there was a fair bit of action to be had. The reason I trade these times is because i trade as soon as I finish work until the US close for exactly the reasons you have mentioned to maximize screen time sometimes I don't really take trades during the US lunch but this one seemed to be setting up and I was right. That was 'half back' as Dalton calls it on that move down I didn't think it was the best trade ever but price was struggling to get past that 50% level and we were in a big downtrend and as you mentioned above price was reacting very well off that 50% level. I know I have a lot of studying to do been doing it for about 2 and a half years now I think I've read too much to be honest which is why I asked the question above. I learn something different every day now watching price and I just want to know how people deal with this obviously a lot of it is experience and knowledge but it must be a constant issue in some respects.

 

[forker]

Thanks for your reply with regards to the liquidity hours obviously this is the DJIA so it is going to get fairly liquid going into the close and that was a 140 point move that started 3 minutes after I closed my trade so there was a fair bit of action to be had. The reason I trade these times is because i trade as soon as I finish work until the US close for exactly the reasons you have mentioned to maximize screen time sometimes I don't really take trades during the US lunch but this one seemed to be setting up and I was right. That was 'half back' as Dalton calls it on that move down I didn't think it was the best trade ever but price was struggling to get past that 50% level and we were in a big downtrend and as you mentioned above price was reacting very well off that 50% level. I know I have a lot of studying to do been doing it for about 2 and a half years now I think I've read too much to be honest which is why I asked the question above. I learn something different every day now watching price and I just want to know how people deal with this obviously a lot of it is experience and knowledge but it must be a constant issue in some respects.

Reading to much can be detrimental. To be honest you really don't need to focus on everything price does outside of your methods. You say you learn new things all the time but is what you learning within your methods or outside? I think a person could learn something new almost every day for many years if they focused on everything but the key thing to take home is you don't need it, and not unless you're looking for new opportunities of course. By this I mean new type of setups. If you focused your energy on the meat of your trading you will get the most bang for your time. If you're happy with your methods then you only need as much screen time as it takes to find them which is a good place to be. The type of thing to focus on is the structure of price, it's location relative to other structures, it's potential risk and profit, the time of day, and the market mood (trending or range). If you did that you would certainly improve your performance. Even go so far as to grade setups so you know which ones you comfortable taking. I hope this all makes sense, you are on the right road at least you just need to be going in the right direction metaphorically speaking

 

[Enzzo]

I'm having a bit of trouble with trying to distinguish at the end of each day what aspects of the market action to take away and learn from and what to discard. By this I mean sometimes something happens and your trade then doesn't work out and it is tricky to decide whether to say, I'm going to learn from that and try and adjust my trading accordingly or to decide if it is actually something that will maybe damage your style of trading in the long term. By that I mean maybe it will happen again but more often that not it wont so it is best to stick to your old way of trading and take the losses when they happen. I hope this is making sense, you've obviously heard of curve fitting systems and I was thinking sometimes I'm curve fitting what I'm learning too much.

Anyway thanks anyone for reading and I would be interested to know anyone's thoughts on how they deal with these situations. Because it is almost constant obviously nothing ever happens exactly the same and you are constantly learning but you almost have to be quite ruthless about what you implement into your trading and what you don't.

Hello,
Exactly for what you are telling, I think, it helps a lot to keep a record of every trade and most importantly, review it frequently when several new trades are added to it... this is what will tell you, if you recognize any pattern linking all your loses trades, no matter what the patter is, and this will help you identify if you need to pay attention to any "new" thing or adjust some other thing to refine your strategy...

 

[BeginnerJoe]

If it's worrisome whether something will happen or not then you are taking on too much risk. Imagine your were risking 0.1% of your account, would you care if something will happen given that it is impossible to loose your shirt from the threat ? Once the threat is rendered impotent, you will no longer need to curve fit it or be concerned by it. The 0.1% is just an example. By managing this number properly to fit your approach, you can eliminate a lot of threats, even those you have yet to come across.

Betting large because you are in a hurry is the quickest way to the exit. When it comes to trading, you have to stay in it to win it.

 

[alexander]

I hope this is making sense, you've obviously heard of curve fitting systems and I was thinking sometimes I'm curve fitting what I'm learning too much.

Do you think your systems are curve-fitted?

 

[cmmichaels]

Reading to much can be detrimental. To be honest you really don't need to focus on everything price does outside of your methods. You say you learn new things all the time but is what you learning within your methods or outside? I think a person could learn something new almost every day for many years if they focused on everything but the key thing to take home is you don't need it, and not unless you're looking for new opportunities of course. By this I mean new type of setups. If you focused your energy on the meat of your trading you will get the most bang for your time. If you're happy with your methods then you only need as much screen time as it takes to find them which is a good place to be. The type of thing to focus on is the structure of price, it's location relative to other structures, it's potential risk and profit, the time of day, and the market mood (trending or range). If you did that you would certainly improve your performance. Even go so far as to grade setups so you know which ones you comfortable taking. I hope this all makes sense, you are on the right road at least you just need to be going in the right direction metaphorically speaking

Great stuff mate thanks for taking the time. This is what I try and do but what you talked about above I suppose is sometimes what I have the most trouble with and this is maybe where the problems above come into play. defining a proper trend and when it is going to continue is tricky I think but that is all practice and time I assume. Knowing when to look for reversion to the mean and when to look for a trend and continuation is tricky and then you'll see something and you'll think ok so that happens when it wants to make a big trend but then obvisouly next time that happens it does the opposite. I really want to start using the market profile more I really enjoy learning about market profile and maybe volume anaylsis. Markets in profile was one of the best books I've read for sure and I don't use the market profile yet.

 

[cmmichaels]

Hello,
Exactly for what you are telling, I think, it helps a lot to keep a record of every trade and most importantly, review it frequently when several new trades are added to it... this is what will tell you, if you recognize any pattern linking all your loses trades, no matter what the patter is, and this will help you identify if you need to pay attention to any "new" thing or adjust some other thing to refine your strategy...

You are right definitely in my opinion stats. do not get talked about enough and i think it can make or break your trading. I have put together an excel spreadsheet detailing what I think is important to me and I keep it up to date but it still needs some more work. Thanks for your comments

 

[cmmichaels]

If it's worrisome whether something will happen or not then you are taking on too much risk. Imagine your were risking 0.1% of your account, would you care if something will happen given that it is impossible to loose your shirt from the threat ? Once the threat is rendered impotent, you will no longer need to curve fit it or be concerned by it. The 0.1% is just an example. By managing this number properly to fit your approach, you can eliminate a lot of threats, even those you have yet to come across.

Betting large because you are in a hurry is the quickest way to the exit. When it comes to trading, you have to stay in it to win it.

good comments but I certainly do not fall into that bracket I trade small but I try to maintain as best I can the mentality that I'm trading as if I'm trading any size. I try and trade the best I can regardless of the size I do not let that effect any of my decisions. I'm trying to make the most points with an acceptable risk the money is the by product.

 

[cmmichaels]

Do you think your systems are curve-fitted?

I don't have any mechanical systems to curve fit mate, I wish I did! I just discretionary trade the usual stuff levels and pullbacks etc