Strategy development

[dbphoenix]

You appear to be advocating a 'mechanical' form of trading rather than bespoke trading

What is "bespoke trading"?

 

[sulong]

sulong

Your post # 96

My own preference ( due to the time I need to analyse and make decisions ) is not day treading by design but occasionally by necessity. So what I have to say may not be relevant.

You appear to be advocating a 'mechanical' form of trading rather than bespoke trading as a result of considered analysis.

I know that previously you have said that you are looking for patterns ( or something similar ). Does this mean that you are looking to 'mechanically' trade the patterns you identify ?

I am not decrying this form of trading but I am very wary of it, having read a number of methods of this type on this site which appear to have varying success.

Does this mean that you are looking for the mechanical as opposed to the bespoke ?

The above is not meant as a criticism ( sulong you may not think it is but others may ) but seeking clarification if the thread is aimed at the mechanical as opposed to the bespoke.

Regards

bracke

bracke,
Good question.
To start with, I really don't know what "bespoke" means ( maybe it has something to do with the different looking flags under our names. )

My goal is to take as much of the guess work, out of my trading as possible. And the best way to do that, ( as far as I know, at this point) is to have a way of recognizing the set ups that have the best chance of succeeding.

For instance, it's my belief that the best place to observe a change of price action, is at S/R. And with that change, is opportunity. Therefore, that part is mechanical, I need to have price at S/R, to set up any trade.

As far as a pullback, I have to define what it is, that price is pulling back from, so that I will recognize it in the future, if and when it presents itself. So yes, I'm trying to make that part mechanical as well.

As far as "patterns", it does seem like markets are continually changing from expansion to contraction, and back to expansion, over and over.

So I look for conditions that will tell me when one cycle will "likely" stop, and the other will "likely" begin. Once I recognize that possible change, I then need to be mechanical with my actions, to be able to take advantage of the change.

I hope this makes sense.

 

[bracke]

What is "bespoke trading"?

I used the term bespoke as a means of describing a trade based on the varying individual aspects of a chart as opposed to looking at the chart for patterns that fit a pre-determined idea.

Regards

bracke

 

[bracke]

bracke,
Good question.
To start with, I really don't know what "bespoke" means ( maybe it has something to do with the different looking flags under our names. )

My goal is to take as much of the guess work, out of my trading as possible. And the best way to do that, ( as far as I know, at this point) is to have a way of recognizing the set ups that have the best chance of succeeding.

For instance, it's my belief that the best place to observe a change of price action, is at S/R. And with that change, is opportunity. Therefore, that part is mechanical, I need to have price at S/R, to set up any trade.

As far as a pullback, I have to define what it is, that price is pulling back from, so that I will recognize it in the future, if and when it presents itself. So yes, I'm trying to make that part mechanical as well.

As far as "patterns", it does seem like markets are continually changing from expansion to contraction, and back to expansion, over and over.

So I look for conditions that will tell me when one cycle will "likely" stop, and the other will "likely" begin. Once I recognize that possible change, I then need to be mechanical with my actions, to be able to take advantage of the change.

I hope this makes sense.

sulong

Thank you for your reply

My use of 'bespoke' is described in my reply to dbphoenix above

I understand the need to identify certain aspects of charts eg s/r and the need to remove guess work.

I suppose my difficulty is with deciding when chart analysis becomes 'mechanical' trading. I thought I knew but I am now having doubts. Perhaps someone can define the difference between them.

Regards

bracke

 

[dbphoenix]

sulong

Thank you for your reply

My use of 'bespoke' is described in my reply to dbphoenix above

I understand the need to identify certain aspects of charts eg s/r and the need to remove guess work.

I suppose my difficulty is with deciding when chart analysis becomes 'mechanical' trading. I thought I knew but I am now having doubts. Perhaps someone can define the difference between them.

Regards

bracke

You seem to be equating planning a trade with mechanical trading. If you don't define your setups, how can you test them? If you don't test them, how can you detemine the probability of success? If you have no idea of the probability of success, how do you decide whether or not to take a trade?

 

[sulong]

I suppose my difficulty is with deciding when chart analysis becomes 'mechanical' trading. I thought I knew but I am now having doubts. Perhaps someone can define the difference between them.

Regards

bracke

I'm certainly no expert on this sort of thing, but the way I explain it to my self is, once you've determined a reoccurring pattern, and then determined the principals behind the pattern, that causes the pattern to react in a certain way, ( for me, a process of elimination), you then have the means to "act" mechanically.

 

[bracke]

You seem to be equating planning a trade with mechanical trading. If you don't define your setups, how can you test them? If you don't test them, how can you detemine the probability of success? If you have no idea of the probability of success, how do you decide whether or not to take a trade?

I understand what you are saying but can you define the difference between the type of trading which you describe and 'mechanical' trading please.

Regards

bracke

 

[dbphoenix]

I understand what you are saying but can you define the difference between the type of trading which you describe and 'mechanical' trading please.

Regards

bracke

Why do you keep putting quotes around "mechanical"? I assume it means something to you or you wouldn't be making a distinction between it and what you call "bespoke" trading. Perhaps you could elaborate on the differences you see.

 

[bracke]

Why do you keep putting quotes around "mechanical"? I assume it means something to you or you wouldn't be making a distinction between it and what you call "bespoke" trading. Perhaps you could elaborate on the differences you see.

dbphoenix

This conversation is in danger of becoming a discussion in semantics.

Is there such as thing as mechanical trading ?

If yes, what is it ?

If no, end of this particular conversation.

Regards

bracke

 

[dbphoenix]

dbphoenix

This conversation is in danger of becoming a discussion in semantics.

Is there such as thing as mechanical trading ?

If yes, what is it ?

If no, end of this particular conversation.

Regards

bracke

I suppose there is, but I don't see how it is pertinent, which is why I asked. I may be mistaken, but the purpose of the thread -- as I understand it -- is to define a pullback or retracement and the conditions for taking a potential continuation trade (given the number of posts, forgive me if I don't look it up). Whether one calls it mechanical or not is less important than the business-like approach to the trade.

 

[dbphoenix]

Since the subject has come up, anyone who's interested in the process of choosing a strategy, defining the tactics required to trade it (the setup) and testing the plan may be interested in the following thread:

http://www.elitetrader.com/vb/showthread.php?threadid=40343

On the other hand, if this is off topic, I'll be glad to delete the post. Just let me know.

 

[bracke]

I suppose there is, but I don't see how it is pertinent, which is why I asked. I may be mistaken, but the purpose of the thread -- as I understand it -- is to define a pullback or retracement and the conditions for taking a potential continuation trade (given the number of posts, forgive me if I don't look it up). Whether one calls it mechanical or not is less important than the business-like approach to the trade.

dbphoenix

If there is what is it ?

It is pertinent only in as much as sulong appeared to be advocating what I thought was a mechanical method of trading ( oh dear here we go again ).

sulong has now said that he identifies the pattern and then acts mechanically. So be it.

But I would still like to know what mechanical trading is !

Regards

bracke

 

[dbphoenix]

dbphoenix

But I would still like to know what mechanical trading is !

Regards

bracke

Perhaps you could ask in the First Steps forum. Sulong may disagree, but I don't see how an extended discussion of trading styles is appropriate here (and I can virtally guarantee that it would become an extended discussion).

 

[bracke]

Since the subject has come up, anyone who's interested in the process of choosing a strategy, defining the tactics required to trade it (the setup) and testing the plan may be interested in the following thread:

http://www.elitetrader.com/vb/showthread.php?threadid=40343

On the other hand, if this is off topic, I'll be glad to delete the post. Just let me know.

The elitetrader thread is well woth reading.

The originator of the thread is day trading. Although that is not my own method the principles that dbp is advocating are applicable to any form of trading.

A number of thoughts occured about dbp which include: persistent, exacting, no place to hide, not for the faint hearted, cruel to be kind.....I think you will get the drift.

Regards

bracke

 

[bracke]

Perhaps you could ask in the First Steps forum. Sulong may disagree, but I don't see how an extended discussion of trading styles is appropriate here (and I can virtally guarantee that it would become an extended discussion).

I don't want to get into an extended discussion on mechanical trading so I am not going to ask in the First Steps forum. I will place it to one side and concentrate on the main task.

Regards

bracke

 

[zippy]

Very interesting thread. I don't think "pullback" or "retracement "has been defined as yet.

 

[sulong]

Very interesting thread. I don't think "pullback" or "retracement "has been defined as yet.

I think you're right. I've been giving that very thing some thought this weekend.
When I get it worked out in my head, I'll post my definition.

Thanks

 

[sulong]

I think you're right. I've been giving that very thing some thought this weekend.
When I get it worked out in my head, I'll post my definition.

Thanks

Perhaps I was making it harder than it ought to be. So here's my definition in it's simplest form.

A pullback is related to a "breakout"
A retracement happens in a "range"

 

[dbphoenix]

Perhaps I was making it harder than it ought to be. So here's my definition in it's simplest form.

A pullback is related to a "breakout"
A retracement happens in a "range"

Everyone has the option of defining words however he chooses. However, this can lead to communication problems if the words happen to be commonly used.

There is no essential difference between a pullback and a retracement unless one assigns a difference to them. What is more important is whether the "*" takes place in a trend.or not. In which case, one gets into the necessity of defining trend, and whether or not it's possible to have a trend within a range.

All of which gets back to the necessity of imposing one's own structure on what he sees, part of which is determining whether or not a given pullback or retracement or whatever is "important".

 

[zippy]

The market moves in 3 directions, uptrend, downtrend and sideways. This sideway move is what we regard as a trading range? " This type of sideways action reflects a period of equilibrium where the forces of supply and demand are in a state of relative balance."
As regard to retracement can we say a base is formed and the price plays between support and resistance of that range many times before "breaking out?"