Hi asimpleplan,
"The problem is that no one is telling you what you want to hear."
Maybe you're right. I'm trying to convince myself frustration is part of the learning curve..
With one notable exception, trading is by far and away the hardest and most frustrating thing I've ever attempted to do. It's second only to trying to understand the way my wife's mind works. Frustration for novice traders - and a good many seasoned ones too - goes with the territory.
"It helps if you're given the right information from the start though....
This implies that you think you've been given information that's wrong?
It's important to understand that trading is a unique human endeavour because, at it's heart, lies disagreement. In other words, for every buyer there is a seller. So market participants have very different views about what's happening now and what may happen in the future. There are few areas of consensus upon which everyone agrees. This is a necessary feature of the markets for them to function effectively. Keep in mind that you're not learning to be a doctor or a mechanic where there are standard procedures for diagnosing an illness or a fault in a car. This is reflected in forums like this where views will vary from one member to the next. Ultimately, you have discover your own truth about the markets and work out what's valid for you. So, my advice is to assume that anything you read about trading is prefixed with
'in my opinion'. In trading, the only information or advice that one can claim to be 100% right or 100% wrong is factual stuff, i.e.
'the FTSE100 comprises the top 30 U.K. companies' is just plain wrong.
'MACD is a useless indicator' is an opinion, albeit one that's firmly held by many traders, but not all. Learn to distinguish between fact and opinion.
"So should I go and throw money at backtesting software? There doesn't seem to be much agreement on this issue judging from a thread I started a while back though cbrads with his 33% success rate seems to think it's enough confirmation.
As has been explained, you don't need to spend a cent on backtesting software. However, you will have to invest time and effort in learning how to use it. There are very few quick fix cookie cutter solutions in this game. It takes a lot of time and hard work, laced with bucket loads of frustration along the way.
The backtest that cbrads kindly spent time and effort doing on your behalf tells you that with the parameters used it only 'works' 33% of the time. So, if you wish to pursue using the MACD indicator, you can either look at increasing the success rate or, flip it on its head - and use a filter to try and reduce the 66% losing trades. One relatively simple way to do that is to only trade with the prevailing trend. If this idea appeals - and trading with the trend is one piece of advice that almost everyone will recommend you do to start with - then your next task is to define what the prevailing trend is. There are no standard ways of doing this; what one trader uses will not suit the next trader. That said, a good starting point is to pan out and look at what's happening in a larger timeframe. So, if you're trading an M5 chart, determine the trend on, say a M30 chart. As you like Heikin-Ashi, you could try only taking trades signalled by MACD on the condition that they're in the same direction as the previously completed ('printed') M30 candle. So, if the last printed candle is green - only take long trades: if it's red, only take short trades. That ought to reduce the number of losing trades. Whether or not it does so sufficiently to base a strategy on - I've no idea. You'll have to invest your own time and effort in testing it to find out.
Tim.
