How good is your system?

[wasp]

Hi,

I was just wondering how confident everyone is in their systems? I've been paper trading for the last six months and only just started trading for real in the last few weeks.

I know its impossible to be 100% perfect all the time, but I'm lucky if i manage 30% . Whats every/anyones opinion on a good ratio/percentage?

I'm happy with the profit I make on a week but the losses seem too many and cast doubts in myself and my system.

Should I be content or should I be looking to improve my system?

 

[FetteredChinos]

you should always be looking to improve your system.

your ideal stats depend entirely on your win/loss ratio.

you can trade with a 10% win rate, if your win/loss is 10/1 or greater.

30% is a good rate for a trend following system, but crap for a counter-trend system.

apples and pears, sticks and stones, Gilbert & Sullivan....

 

[rog1111]

I think that the problem is that, even for 50:50 coin tosses, the losing streaks can be substantial. For a 30% winning system, when you are relying on a getting large winners, the losing streaks can get very long, and psychologically you are bound to question things at times like this.

Personally I am far happier trading a 60:40 set up, even though $ profits over the long run may be less than a 40:60, since it is a far less bumpy ride emotionally, and the equity curve is smoother. IOW there's no point trying to implement a system that has been great on paper if I can't trade it in reality, due to my own psychological shortcomings.

Good luck
rog1111

 

[FetteredChinos]

well said rog, and i entirely agree..

having said that, i am now investigating automated trading to see if i can remove this psychological aspect of things..

fxengines looks promising, and having coded up a couple of fairly reliable systems im almost ready to just release them into the wild and forget about them. this removes one of the major obstacles in trading a mechanical method.....

 

[TheBramble]

Good point Rog. A 30% PW indicates the statistical probability of Chris encountering a losing streak (at some point) of 17 losses in a row.

But by the sound of your (recent) history Chris, your risk & money management is not only keeping you in the game, but making your efforts profitable too.

As FC and GJ state, it wouldn't hurt to improve your PW and the impact (positive) on your bottom line would be useful.

There was a poll conducted here on t2w within the last few months and IIRC the majority of t2w members claim their trading systems were in the 60-70% PW area.

So making profits on a 30% PW is not a bad start to your trading career...

 

[JumpOff]

It's good to see the the bramble is posting.
JO

 

[rog1111]

FC

I think that many of us aspire to such an automated system, so perhaps you can let us know how it goes if you implement it ? Depends on your time scale, but presumably you will still check on things quite regularly, and I'm keen to know whether you find that it does actually makes things any easier psychologically

rog1111

well said rog, and i entirely agree..

having said that, i am now investigating automated trading to see if i can remove this psychological aspect of things..

fxengines looks promising, and having coded up a couple of fairly reliable systems im almost ready to just release them into the wild and forget about them. this removes one of the major obstacles in trading a mechanical method.....

 

[rog1111]

chrisw

How did you do during paper trading ? IT may be too early to tell, but is there any significant decline since you started trading for real ?

rog1111

Hi,

I was just wondering how confident everyone is in their systems? I've been paper trading for the last six months and only just started trading for real in the last few weeks.

I know its impossible to be 100% perfect all the time, but I'm lucky if i manage 30% . Whats every/anyones opinion on a good ratio/percentage?

 

[FetteredChinos]

no worries Rog. will do..

basically my premise is on a simple 5 min breakout system..with no fancy filters.

currently just has a simple trailing stop and an achievable profit target.

since jan 03 it seems to be averaging 150pts a month net of costs.. not bad for a simple set-and-forget system really...

will look to improve things further when they go live properly, and perhaps introduce some more indicators and time based exits.

will keep you posted though. have been impressed with them as a whole already..

 

[rog1111]

FC

Is that for EUR ?

rog1111

since jan 03 it seems to be averaging 150pts a month net of costs.. not bad for a simple set-and-forget system really...

 

[FetteredChinos]

cable actually. which isnt too grand, but im working on it. no reason why Euro shouldnt offer a similar (proportional) amount...

am in the process of testing on other currencies to add diversification.....

 

[rog1111]

I've suffered some fair slippage on cable (Globex) stop orders, less so for stop limit orders, but these seem to get hit easily, maybe because they're more visible, and also there's the danger of no execution. Hopefully EUR would offer better assurance of low slippage if a stop out occurs using your autotrader.

rog1111

cable actually. which isnt too grand, but im working on it. no reason why Euro shouldnt offer a similar (proportional) amount...

am in the process of testing on other currencies to add diversification.....

 

[ChowClown]

Hi rog1111,

Like FC, I'm putting a few strats together for automation through fxengines. Over the weekend they turned off their GAIN fx feed and now use FXCM.

Cheers

 

[rog1111]

Hi ChowClown

Were you thinking of using break out strategies ? I am still working a modified 1-8 on GBP. I see that FXCM have now lowered some of their spreads, presumably they were losing customers after removing their guaranteed stops ?

Cheers
rog1111