Profitable trading strategy? How easy?

[qwertyuiop1]

How easy is it to come up with a profitable trading strategy generally speaking?

Im about to get into backtesting proper and just wonderiung if profitable trading strategies are a dime a dozen oince yuou stick in a few basic indicators?
Or is it a case of it being a complete eureka moment tpo stuble across one?

I read in Van Taharps book that there are "Hundreds of thousands" of profitable trading strategies out there. Befiore I read that i presumed designing one would be near on impossible and it's a complete holy-grail to stumble across one.
But now I'm beginning to think that if i tinker around with a few moving abverages and teh like that i will probaly stunble across a few before i even eat my brfeakfast.

Where does the truth lie?

 

[Hoggums]

There are plenty of profitable strategies out there. Unfortunately they either limit the drawdowns resulting in poor profits - or the opposite where they do really well long term but suffer horrendous drawdowns and long periods possibly years with poor performance.

The trick is to find a strategy that doesn't have either of these faults - and that's the "holy grail".

My advice would be to ignore indicators, particularly if you are trading forex. Use a trading algorithm that is based on the price now - not an average.

 

[qwertyuiop1]

There are plenty of profitable strategies out there. Unfortunately they either limit the drawdowns resulting in poor profits - or the opposite where they do really well long term but suffer horrendous drawdowns and long periods possibly years with poor performance.

The trick is to find a strategy that doesn't have either of these faults - and that's the "holy grail".

My advice would be to ignore indicators, particularly if you are trading forex. Use a trading algorithm that is based on the price now - not an average.

Ok - so to stumble acroiss one that has tolertable draawdowns as well as fairly consistent returns is actually quite difficult / near on impossible you think yes?

Or is that overstating the difficulty of it?

Basically just trying to figure out teh size of teh challenge ahead once i begin my backtesting.

 

[Ivan88]

It all depends upon what your definition of a profitable trading system is. Simple profitable trading systems can be developed from the most common indicators but most won't be traded as most traders continue their search for the 90+% win rate Holygrail which of course does not exist.

The system also has to match your personality - for example if you're to use a moving average system then you will have to accept large periods of whipsaw and drawdown, with low win rates. Most of us can't do that - I know I can't.

The eureka moment for me was when I realised that with good money management and targeted reward/risk ratio I just needed something with a win rate of just over 35% to make slow but steady progress.

Good luck.

 

[timsk]

How easy is it to come up with a profitable trading strategy generally speaking?

Hi qwerty,
As a rule of thumb, the success/profitability of a discretionary strategy (which applies to most traders) is going to be dependant upon the trader trading it rather than the strategy itself. This is less of an issue for mechanical systems, although you may still get different results to the originator of the system due to using a different broker, data feed and trading platform etc. For more info on discretionary Vs mechanical trading - check out this FAQ: What’s the Difference Between a Discretionary Strategy & a Mechanical System?

Essentially, if you ask 10 traders to trade the same discretionary strategy - they'll all trade it differently. So, lots of members claim to have a profitable strategy and generously share it on here for other members to follow. However, very few of them are able to do well with it in the medium to long term and few, if any, do anything like as well as the trader who originally conceived it. This is a generalization and, doubtless, there are exceptions to the rule - although I suspect they are few and far between.
Tim.

 

[BeginnerJoe]

Have you noticed those who tell you that there are many workable strategies out there couldn't even point you to one ? This is likely what you find out for yourself in the end, not even one. Money is easier if you just get a job. An ideal job would be one in a spread betting shop. They have a trading strategy that is guaranteed to be profitable, and so would be able to give you job security.

 

[the hare]

I read in Van Taharps book that there are "Hundreds of thousands" of profitable trading strategies out there. Befiore I read that i presumed designing one would be near on impossible and it's a complete holy-grail to stumble across one.
But now I'm beginning to think that if i tinker around with a few moving abverages and teh like that i will probaly stunble across a few before i even eat my brfeakfast.

Where does the truth lie?

That's the problem, its extremely easy to find "profitable" systems by tinkering around with a few moving averages. However, It's unlikely that those systems will be profitable in the future.

I do know people who successfully use the inverse of this method, they trade the parameters that historically gave the worst results.

I think the answer to your question is that it isn't easy.

If your are even thinking of tinkering about optimizing moving averages and the like you probably need to take a few large steps back and re read Van Tharps book.

 

[qwertyuiop1]

If your are even thinking of tinkering about optimizing moving averages and the like you probably need to take a few large steps back and re read Van Tharps book.

Thanks gor response - but I don't understand your comment above? Can you elaborate please. Thanks.

 

[NVP]

How easy is it to come up with a profitable trading strategy generally speaking?

Im about to get into backtesting proper and just wonderiung if profitable trading strategies are a dime a dozen oince yuou stick in a few basic indicators?
Or is it a case of it being a complete eureka moment tpo stuble across one?

I read in Van Taharps book that there are "Hundreds of thousands" of profitable trading strategies out there. Befiore I read that i presumed designing one would be near on impossible and it's a complete holy-grail to stumble across one.
But now I'm beginning to think that if i tinker around with a few moving abverages and teh like that i will probaly stunble across a few before i even eat my brfeakfast.

Where does the truth lie?

Plenty of Decent trading strategies out there dude .....systems are as plentiful as Commercial Aircraft available for hire or charter

we just have a severe shortage of decent Pilots
N

 

[Pat494]

What a piece of luck, you coming from the Emerald isle !

If you can befriend " the little people " - who knows what you might not learn ?

:clover:

 

[tapu]

I want to learn about online trading strategy. Can anyone help me please? I am new in here

 

[Shakone]

How easy is it to come up with a profitable trading strategy generally speaking?

Im about to get into backtesting proper and just wonderiung if profitable trading strategies are a dime a dozen oince yuou stick in a few basic indicators?
Or is it a case of it being a complete eureka moment tpo stuble across one?

I read in Van Taharps book that there are "Hundreds of thousands" of profitable trading strategies out there. Befiore I read that i presumed designing one would be near on impossible and it's a complete holy-grail to stumble across one.
But now I'm beginning to think that if i tinker around with a few moving abverages and teh like that i will probaly stunble across a few before i even eat my brfeakfast.

Where does the truth lie?

It's not easy at all. But I wouldn't dispute that there are hundreds of thousands of profitable trading strategies. Because once you have one, a minor modificiation will likely also be a profitable strategy etc. So if you have one, you have many.

 

[Vasco da Banana]

How easy is it to come up with a profitable trading strategy generally speaking?

Im about to get into backtesting proper and just wonderiung if profitable trading strategies are a dime a dozen oince yuou stick in a few basic indicators?
Or is it a case of it being a complete eureka moment tpo stuble across one?

I read in Van Taharps book that there are "Hundreds of thousands" of profitable trading strategies out there. Befiore I read that i presumed designing one would be near on impossible and it's a complete holy-grail to stumble across one.
But now I'm beginning to think that if i tinker around with a few moving abverages and teh like that i will probaly stunble across a few before i even eat my brfeakfast.

Where does the truth lie?

You want a simple, profitable system? Easy. Go long on an index future and hold the position. You might spend days, months, years or decades with a paper loss, but unless the index hits zero (in which case you'll have plenty of other things to worry about, like the end of the world and being dead) you'll make a profit eventually.

 

[brewski1984]

Why not average down as well? I mean if it's going to come back eventually you may as well keep getting in at better and better prices.

 

[GazH38]

anyone got an opinion on the Dow Jones? It should go up on Monday after the late sell-off on Friday no? Or will there a lot of nervousness/indecision the day before the election and the rally will only start after Tuesday? I can't see if going below 13,000......(famous last words)

 

[Vasco da Banana]

Why not average down as well? I mean if it's going to come back eventually you may as well keep getting in at better and better prices.

Absolutely. Just keep spending until you run out of money.

 

[GazH38]

I was surprised how big a selll off in the last hour on Friday....this was on the same day of a pretty decent job report...there must be more potential in stocks after that.....or will Novemver 6th get in the way of a rally?

 

[malaguti]

It's not easy at all. But I wouldn't dispute that there are hundreds of thousands of profitable trading strategies. Because once you have one, a minor modificiation will likely also be a profitable strategy etc. So if you have one, you have many.

I'm not so sure. I've come up with plenty. the time is just perfecting it so that you can consistently see the same setup. Indicator based ones are useless in my opinion as they are often subjective.

But i'll agree with NVP. I can design the thing, but when I try and trade it I dont follow my own rules. My wife is much better at taking my strategies and trading them. She's a much better pilot. I just design the plane.

 

[D70]

You want a simple, profitable system? Easy. Go long on an index future and hold the position. You might spend days, months, years or decades with a paper loss, but unless the index hits zero (in which case you'll have plenty of other things to worry about, like the end of the world and being dead) you'll make a profit eventually.

This is not true.

 

[Liquid validity]

You want a simple, profitable system? Easy. Go long on an index future and hold the position. You might spend days, months, years or decades with a paper loss, but unless the index hits zero (in which case you'll have plenty of other things to worry about, like the end of the world and being dead) you'll make a profit eventually.

Dow Jones Industrial Average (1900 - Present Monthly) - Charting Tools - StockCharts.com
Long DOW at 1929 peak, only a 16 year wait to breakeven in 1955
Or 70's stagflation making zilch, or even now for that matter...