Do you think there is any trading system suitable for all circumstances? - page 5

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Henry Asaba Achankeng #:
The right question is that why would someone be trading under every circumstance? It seems like a wrong approach to begin with. 

Touche . I think the question is the byproduct of so many eas being ultra niche + needing manual intervention frequently (sets , news ,symbols ) , or the underlying niche strategies go in a down phase , so maybe they are asking for a true set and forget system .

 
Lorentzos Roussos #:

Touche . I think the question is the byproduct of so many eas being ultra niche + needing manual intervention frequently (sets , news ,symbols ) , or the underlying niche strategies go in a down phase , so maybe they are asking for a true set and forget system .

I would state any trading system not suitable for all circumstances is incomplete.

Part of a trading system is also when not to trade.

Think of a manual trader. He trades only in certain times, this is part of the system.

Reducing a system to only the technical signal giving is a false approach, if the factor trading session, or trading times is not taken into account.

In fact, the whole life if a manual trader, also the times not trading, is part of the whole system.

A responsible trader would stay away from charts if he knows he is having a bad day. This is part of the decision process and needs to be taken into account.

So if you develop a strategy and it performs as you want it to, you have developed it for certain criterias, but not as a general approach to solve the markets.

Except, of course, you take into account the aspect of trading and not trading.

So the question itself is already flawed, as it presumes you would be trading always. Which is not the actual goal. The actual goal is to be profitable.

So in conclusion, any system that is profitable is suitable for all market conditions. Because it avoids the conditions in which it makes losses.

The thread would need to be retitled to: "Is there a trading system that can always trade and be profitable". Or something along these lines.
 
Dominik Christian Egert #:
I would state any trading system not suitable for all circumstances is incomplete.

Part of a trading system is also when not to trade.

Think of a manual trader. He trades only in certain times, this is part of the system.

Reducing a system to only the technical signal giving is a false approach, if the factor trading session, or trading times is not taken into account.

In fact, the whole life if a manual trader, also the times not trading, is part of the whole system.

A responsible trader would stay away from charts if he knows he is having a bad day. This is part of the decision process and needs to be taken into account.

So if you develop a strategy and it performs as you want it to, you have developed it for certain criterias, but not as a general approach to solve the markets.

Except, of course, you take into account the aspect of trading and not trading.

So the question itself is already flawed, as it presumes you would be trading always. Which is not the actual goal. The actual goal is to be profitable.

So in conclusion, any system that is profitable is suitable for all market conditions. Because it avoids the conditions in which it makes losses.

The thread would need to be retitled to: "Is there a trading system that can always trade and be profitable". Or something along these lines.

Yes

That been said , should a system also factor in regular withdrawals from its user during optimization ? 

 
Lorentzos Roussos #:

Yes

That been said , should a system also factor in regular withdrawals from its user during optimization ? 

I would say this depends on the strategy, but usually, yes. As this is reflected by the functions as a possibility, and usually you wouldn't just let the money sit there, would you?

Also, some strategies use the whole account balance as their SL. So the strategy uses multiple accounts for money and risk management.


 
Dominik Christian Egert #:
I would say this depends on the strategy, but usually, yes. As this is reflected by the functions as a possibility, and usually you wouldn't just let the money sit there, would you?

Also, some strategies use the whole account balance as their SL. So the strategy uses multiple accounts for money and risk management.


So you'd emulate a forced stop in other words if the "internal account simulation" had an account hit margin call . (assuming the margin call does not automatically move funds from other dormant accounts - hopefully). Good idea

 

It should be kept in mind that when we talk about trading systems, we're usually talking about getting in and getting out, with the goal of getting a profit from that. For many traders/institutions, the goal is more about overall positional profitability or what they can write down on some books about their positioning, or how they can take advantage of whatever positioning they have to leverage into various products, or whether they can hedge stuff, and as such, for them, they will be trading in all conditions, and failure/success may be much more of a gray area. For them, simply having lots of business being done (taking percentages from clients) may be more profitable than actually being profitable traders in a retail sense. Or, simply not being ruined and staying in business may be enough for them. In fact, with the help of governments that control their sovereign currencies, such institutions have infinite capacity to be kept afloat, or just reconstituted. Thus, they don't suffer from the rigorous challenges that we do.

One might say the easiest way to succeed in trading no matter what condition, is to simply be a massive institution that convinces people to pay you to manage their money. Win or lose, you make your percentage, and if your firm collapses, even if you committed fraud, you won't go to jail as long as you're in the C-suite! In fact, they let you keep your riches!

All that being said...

One thing I've noticed discretionary/manual traders say often like a mantra is that no matter how good something is, there will come a time it does not work, because it depends on the "market conditions." The underlying assumption here is that there's no such thing as a consistently profitable system that doesn't eventually become obsolete, and thus, the trader must constantly be "evolving" in some never-ending quest, and can never get comfortable. I find myself disagreeing with this idea vehemently and I consider it an excuse for bad technical analysis.

On the other hand, the very definition of any trading system is that it requires certain conditions to perform certain actions according to its rules, and if those conditions are not present, the system cannot by definition be used.

I would say there is no such thing as a technical trading system that is successful in all circumstances, because if it was successful in all circumstances, it wouldn't even be a system. It would be like just automatically having money thrown at you for existing. For a system to succeed in all circumstances means that if everyone was using the system, everyone would be succeeding. This is impossible in a zero sum game of trading.

On the other hand, when it comes to how "versatile" a system is, or how consistently it can be used day by day, week by week, month by month, it probably comes down to the details of the system itself. I happen to believe many day trading systems can be set up to handle almost any day's overall conditions, and find correct opportunities multiple times per day. For my style, this would require watching a lot of symbols, because I look at timeframes up to the H4 and maybe even daily, but all the way down to the M5 or M1, and the system is not suitable for super high frequency scalping. Sometimes, not a single opportunity presents itself on a given instrument, but if looking at a couple dozen forex pairs, it's almost guaranteed to find setups multiple times per day. But someone with a more micro-scalp oriented system might be able to find slices of time that are correct for that system on any symbol on any given day, multiple times per day, perhaps even multiple times per hour.

For day trading, I believe the best systems are ones that look at the "anatomy of price action" which just means the patterns that display themselves over and over again ad nauseum on various timeframes in a fractal manner. The anatomy of price action never goes away as long as there is sufficient liquidity. These patterns simply show what happens when market forces interact in different ways, and they map out things according to such dynamics. They will show up in any market because by definition of high volumes of trading activity, they HAVE to show up, otherwise the market would simply be dead. Therefore, a system that is poised to capitalize on the most commonly occurring patterns in either direction is the one that will be most versatile and churnable on a daily basis.

So my ideal day trading system would not technically work in all circumstances, but it would be such that the necessary circumstances to trigger it tend to occur every day on a board of the most liquid instruments, many times per day, and that no matter what the long term macro trends/conditions were, certain timeframes would show coherent patterns on a daily basis that trigger the system, because they're the "anatomy of price action" on all timeframes.

 
Max0r847 #:

It should be kept in mind that when we talk about trading systems, we're usually talking about getting in and getting out, with the goal of getting a profit from that. For many traders/institutions, the goal is more about overall positional profitability or what they can write down on some books about their positioning, or how they can take advantage of whatever positioning they have to leverage into various products, or whether they can hedge stuff, and as such, for them, they will be trading in all conditions, and failure/success may be much more of a gray area. For them, simply having lots of business being done (taking percentages from clients) may be more profitable than actually being profitable traders in a retail sense. Or, simply not being ruined and staying in business may be enough for them. In fact, with the help of governments that control their sovereign currencies, such institutions have infinite capacity to be kept afloat, or just reconstituted. Thus, they don't suffer from the rigorous challenges that we do.

One might say the easiest way to succeed in trading no matter what condition, is to simply be a massive institution that convinces people to pay you to manage their money. Win or lose, you make your percentage, and if your firm collapses, even if you committed fraud, you won't go to jail as long as you're in the C-suite! In fact, they let you keep your riches!

All that being said...

One thing I've noticed discretionary/manual traders say often like a mantra is that no matter how good something is, there will come a time it does not work, because it depends on the "market conditions." The underlying assumption here is that there's no such thing as a consistently profitable system that doesn't eventually become obsolete, and thus, the trader must constantly be "evolving" in some never-ending quest, and can never get comfortable. I find myself disagreeing with this idea vehemently and I consider it an excuse for bad technical analysis.

On the other hand, the very definition of any trading system is that it requires certain conditions to perform certain actions according to its rules, and if those conditions are not present, the system cannot by definition be used.

I would say there is no such thing as a technical trading system that is successful in all circumstances, because if it was successful in all circumstances, it wouldn't even be a system. It would be like just automatically having money thrown at you for existing. For a system to succeed in all circumstances means that if everyone was using the system, everyone would be succeeding. This is impossible in a zero sum game of trading.

On the other hand, when it comes to how "versatile" a system is, or how consistently it can be used day by day, week by week, month by month, it probably comes down to the details of the system itself. I happen to believe many day trading systems can be set up to handle almost any day's overall conditions, and find correct opportunities multiple times per day. For my style, this would require watching a lot of symbols, because I look at timeframes up to the H4 and maybe even daily, but all the way down to the M5 or M1, and the system is not suitable for super high frequency scalping. Sometimes, not a single opportunity presents itself on a given instrument, but if looking at a couple dozen forex pairs, it's almost guaranteed to find setups multiple times per day. But someone with a more micro-scalp oriented system might be able to find slices of time that are correct for that system on any symbol on any given day, multiple times per day, perhaps even multiple times per hour.

For day trading, I believe the best systems are ones that look at the "anatomy of price action" which just means the patterns that display themselves over and over again ad nauseum on various timeframes in a fractal manner. The anatomy of price action never goes away as long as there is sufficient liquidity. These patterns simply show what happens when market forces interact in different ways, and they map out things according to such dynamics. They will show up in any market because by definition of high volumes of trading activity, they HAVE to show up, otherwise the market would simply be dead. Therefore, a system that is poised to capitalize on the most commonly occurring patterns in either direction is the one that will be most versatile and churnable on a daily basis.

So my ideal day trading system would not technically work in all circumstances, but it would be such that the necessary circumstances to trigger it tend to occur every day on a board of the most liquid instruments, many times per day, and that no matter what the long term macro trends/conditions were, certain timeframes would show coherent patterns on a daily basis that trigger the system, because they're the "anatomy of price action" on all timeframes.

Besides manual traders , what would you respond to a strategy creator who told you "I increased the price because if many traders use this it will stop working" . 

 
Lorentzos Roussos #:

Besides manual traders , what would you respond to a strategy creator who told you "I increased the price because if many traders use this it will stop working" . 

Despite having thought of that very thing many times before, namely the idea of a strategy not working if it's used too much, it's a difficult thing to wrap my mind around entirely to come with a fully unified and complete thesis on. However, I do have some thoughts.

Individually, retail traders have one luxury that the big boys don't have: Individually, we don't put on enough size to significantly impact the charts. This means that we can follow price patterns without worrying about changing them by our trading. It also means we can get in/out at a moment's notice. Our only job is to follow the patterns.

What happens, though, if so many of us join in on the exact same trading protocol, on the exact same instrument, at the exact same triggers? If this happens too much, it will affect the chart. I figure 2 things could happen. If the large herd of traders don't overwhelm the market, if their stoplosses are close enough, and they would all be in the same place roughly, it will be enough liquidity to be a self-fulfilling prophesy and actually make them get hit, probably before the move continues in their original direction. So too many traders on a system may actually trigger the stop losses.

On the other hand, if there are so many traders on a system that they overwhelm the market, it will exaggerate the move they bet on, making the completion of the movement they bet on a self-fulfilling prophesy. The system will, at least for the moment, work even better than usual. The only problem is, as soon as it's time to get out, the opposite will happen, unless it induces some kind of stampede from other participants and blowing the lid off something that normally would have been contained :D But let's just pretend it overwhelms the market in both directions. Well... it could be the case that the winners will be the ones who get in first and get out first, and the losers will be the ones who get in last and get out last.

So the problem is that if any strategy is too widely used, or too much money is put behind it, it will create the chart instead of following the chart, or, it will create enough liquidity to potentially stoploss itself, if the stop loss is too close, or there is just too much equilibrium in the price pressure. On the other hand, if the take-profits are close by, that might create the liquidity to induce a movement to the take-profits, which could help the herd induce a favorable price movement by adding liquidity on that side, even if they aren't actually dominating the price pressure.

Ultimately what it all comes down to is once you trade too big, you're leading not following, which means your technical analysis gains new dimensions: having to analyze what you're doing to the chart, not just what the chart is doing.

Any mechanical technical strategy with too much size will end up undoing itself because the patterns it's meant to harvest will end up being changed by the trading itself.

 

Yes there is.
Not by analysis.
But by mathematics.

As the previous answers say, analysis always have period, After that, the chart movement would change and you should change your analysis basement or you would start losing.
So what is the exact time to change the analysis basement? I do not know. So I left analysis...
Actually I spent too much time to find a minimal good model, I got this: There were 2 models: Ranging vs. Sharp move.
I spent too much more time to separate these two. But found no robust solution without delay. And the delay was not fixed, sometimes it causes much loss.

I believe the reliable answer is mathematics. It is solid. I am all in.

 

I'm pretty sure there exists not only one universal trading system that works virtually all the time regardless of market conditions, but many out there. The problem is kind of alluded earlier in that, one will be very reluctant to even draw attention to one's profitable trading system for fear of allowing a critical mass of followers to follow on the same. It creates a problem if there's enough liquidity that may alter the aggressiveness of the bid-ask (ie, self-fulfilling prophecy).

That said, surely RSI, ATR, overbought/oversold are also useful. There's comfort to know a market can't trend or linearise indefinitely without a pull-back. What you do with that momentum or pull-back determines your so-called profitable trading system. One of course can use both intermittently, as I've known some trading systems that do.

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