a strategy that works!!! - page 3
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#1 on the other hand is very very hard to achieve. And exactly as phillip says - it's extremely easy to get a positive 'expected value' in the strategy tester. Even ridiculously easy. But the result has nothing to do with expected value, it's simply curve fitting.
If Op is right and #1 can't be solved, then whether its algorithmic based or not is irrelevant (other than the speed you go broke). So not only do EA's not work.... nothing works. Might as well ban all exchanges for the scam that they are...
On the other hand if a properly constructed and tested trading plan can produce a positive expectation then the best chance of making it succesful imho has got to be with an EA. An EA is tireless, emotionless and consistent. I can't trust myself to be any of these nevermind all three of them.
It's a very important point you raise about backtesting building false confidence. I've done my very own curve fitting more than once on my journey. To me, it boils down to trust. I know I can't trust myself, but what are the standards with which I can bestow trust upon an indicator / trading plan / EA. Fortunately, although I'm still learning, there are robust imperical techniques with which to quantify trust. Proper testing is critical in solving #1.
There will always be people who test last weeks data, think they have the grail and throw all thier money at it.... or for $20 buy "the best EA ever" from EA'sRUS and throw all thier money at it... or wake up one morning and say "I'm feeling lucky today, here put $1,000 on RISE".
Just becasue "they" can't do it properly doesn't mean it can't be done. I reserve the right to change this opinion if I find myself living under a bridge next year!
I agree with phillip on this... #2 and #3 are by far the easiest.
But of the 95% who fail (and I'm assuming we are talking of all market entrants), my instict is a large proportion don't even get #2 or #3 right. If we are saying that even after solving 2 and 3 this segement has a 95% failure rate, then that is a far more worrying (hypothetical) statistic.
Does anyone here have such an EA?
If an EA can achieve #1 (A trading plan with positive expectation) every other week for a year back-data I would like to try it in the real market with serious money.
Does anyone here have such an EA?
Well let me raise the bar a bit, does anyone have an EA they have been using for a year with reasonably good results and consistent success? I'm willing to put my life's savings into it and pay the owner a fee on a regular basis for the rest of my life.All I hear is the same contradictory bullshit of some people saying previous success is indicative of future results and others talking about how the market evolves and you have to keep adapting and if something works now or worked before, not only there is no guarantee it will work but it is likely not to work in some point in the future(I personally would love to learn more about this adapting they keep talking about) and another group talking about the market being so random because of the so many factors that make it up that the chance of you making consistent profits in it are no more than throwing a coin and having it show heads most of the time.
You THINK or you GUESS #1 is not impossible?that's not good enough for me in fact that's not good enough for any person in his or her right mind. PROVE it! I have stopped looking recently because I have lost faith and that's why I created this post. If I wanna go after something I first wanna make sure it exists! PLEASE, PLEASE, PROVE ME WRONG!
Account managers do exist, even in forex, and they are more than willing to do business with you. Barclays tracks cpa's and cpo's by fund size and rates of return. If you are looking for someone else to manage your money and investments then really you should stop caring whether the money is invested in forex and instead just focus on rate of return and standard deviation (sharpe ratio, risk of ruin, value at risk, etc).
People see things differently depending on where they are at on the experience and education curve. The guy who has lived thru a hurricane but never been to college is probably going to describe the meteorlogical experience in different terms than the guy who went to college and is a meterologist and wants to talk to you about hurricanes. They both may have the same first-hand experience with hurricanes but one of them is probably not the guy you want trying to predict for you when the next one is coming.
So you polled a forum that anyone can register and post their opinion, and you got contradicting opinions. I guess you got what you paid for, free advice/opinions are like that.
You THINK or you GUESS #1 is not impossible?that's not good enough for me in fact that's not good enough for any person in his or her right mind. PROVE it! I have stopped looking recently because I have lost faith and that's why I created this post. If I wanna go after something I first wanna make sure it exists! PLEASE, PLEASE, PROVE ME WRONG!
As I say, I'm new at this and my youthful enthusiasim is perhaps showing my niavity, however, I believe #1 is possible on the basis that the market is not random. Need proof, pick up any chart, it is not a scatter plot of random prices. There is structure in the progresion of price. We can identify this structure as trends, retracements, support and resistance to name a few. It's a noisy progression I'll grant you but not a random one. Seeing through the noise to grasp the underlying structure and identifying factors that drive that structure is not an impossible task. With enough grey matter anything with order can be understood and ultimatley predicted.
Need proof, pick up any chart, it is not a scatter plot of random prices.
You would be surprised, but a random chart has 'trends, retracements, support and resistance' as well. Actually, I'm pretty sure the majority of traders (and even the most experienced ones) won't tell the difference... See here for a simplified example (better ones can be easily done, ones that look like an MT4 chart...) -> http://www.ki.inf.tu-dresden.de/~fritzke/research/TS/example1.html.
You would be surprised, but a random chart has 'trends, retracements, support and resistance' as well. Actually, I'm pretty sure the majority of traders (and even the most experienced ones) won't tell the difference... See here for a simplified example (better ones can be easily done, ones that look like an MT4 chart...) -> https://www.mql5.com/go?link=http://www.ki.inf.tu-dresden.de/~fritzke/research/TS/example1.html.
I'm not going to claim it is necessary but for some strategies it is helpful to analyze/characterize price activity for the purpose of identifying phases of "random walk" behavior. Either to cease trading when the market enters such a phase or to extract information such as the background bias that is providing the gradient for the random walk.To be sure markets are not random, price represents the momentary equilibrium between supply and demand of the financial instruments in question and price movement in either direction is due to a momentary period in which the buyers out-volume the sellers or vice versa. Those transactions are based on decisions, the percentage of trade volume that occurs based on whimsies and motivations of truly random nature is without question really really small.
However that is not to say that the markets do not appear random, nor to say that their structure cannot be adequately replicated by over-simplistic models whose evolution of pricing activity is based entirely on random walk mechanics. But there is a difference between something appearing random versus being random.
The weather over time may seem random, and we can represent the variability in observed weather patterns by way of random walk models, but that in no way means the changes in weather that are coming tomorrow and next week are actually random.
Anyway, regarding whether or not the markets are random / appear to be random / are not random... That's one discussion I am not going to bite into :)