Trader Question: Is there a way to make a strategy or an indicator to trade 10 tick bars and only take 7-8 ticks per bar in either direction. trade one bar reversal at the time.
A StopLoss thrown out in advance of the reversal might be better than a market order.
I think it will be a guaranteed loser without some filtering but it can examined for free. The MTDS SDK Price Action Strategy uses Bar Reversals price action and is installable from here install the whole SDK: http://microtrends.co/ninjatrader-downloads#MTDS
Caveats of thinking of i just want 7 ticks
To force a strategy to take 7 ticks when it might require a larger Is a common problem people want – but what they need is a different approach usually.
The best idea is to find out what a strategy can do and then see if your capital meets its requirements -to force a strategy to work on small capital is less likely to be fruitful.
A strategy needs to start off with no stops or very wide, no targets – and then you can see what its MFE and MAE is and work out where the stop can go and where the target can go based on 1 lot ,then work out a stoploss breakeven, trail stop as the compromise of max target and giving it all back. Then consider other brackets.
That should be run on many years of data for example sept 2009 to 2015 then look at each trade and check every single trade also then correlate market ranges, events, volume on higher time frames against its drawdown and winning runs then understand if you can trade with it based on capital, style psychology.
Then run it on 90 to 120 days out of sample data then if ok run it on Realtime sim and track it for several week maybe 3months and understand the ratio of efficiency between the sim world back test and the live work Realtime sim.
Then if you go live still keep 2 on.. 1 on sim and live to guide and compare -decide if the sim version will provide “launch control” to activate the live and so on.
Any other method is going to be a situation that can last for years of going in circles as you being guided by recency bias -based on short term experiences – which may show you results that are unfeasible in the long term or it may show you result which are in drawdown and so your guidance is based on an invalid amount of data and information.
So possibly really there is nothing wrong with that strategy it might work – however on what instrument timeseries and what account size is the quest.
I would recommend 20K per lot for myself – as my rule of thumb. If I don’t have it I wait or look for systems which fall into my capital range etc. and I look at the market to see if its sensible to even use it that system as I would research and know why it works and when. Etc.
So there is no valid reason not to follow a professional methodology just as we are retail traders it does no exonerate us from the process. The best policy is to get historical data and a setup/method to test and assess and store that info. So then over time candidate systems will be identified then it’s a case of equity… etc.
So anyone not going that route is less likely to succeed. And will probably go in circles for years losing money and buying software and throwing money down the drain, instead of learning how to approach it for the best chance of success and budget. Etc.
So generally speaking if a system has a sound premise and meets the trading technique perhaps winning on a manual systematic basis can go into a Realtime test environment for a duration and still be successful and maybe skip some of the more formal back testing phases/ selection process – for a system perhaps is manually traded systematically etc. and has shown proven stats etc.
“And has not missed out from its logic some unconscious competence from the trading rules that a trader is using based on their experience.. etc”
Time Proves everything
Even so. Time and testing is the key and recording the test data and giving it sufficient testing over many weeks/months is the best chance I use for my trading as it provides me with the insight, statistical evidence, confidence and belief and a trade plan…
So anyone not doing the above needs to get some training or reading or take more time to test and not put artificial obstacles in the way such as I want to trade with a set target – or I want to do this now before I run out of money and have to work in the rat race.. personal desires reasons to make money …none of those reasons are valid in trading and will in fact curtail any chance of success with their influence. It takes as long as it takes. The circles are still their – but we call them test cycles and phases and they are planned and controlled and productive.. time is to be ignored.
I can’t say anything more honest than that as guidance. The training I give is $950 per month and goes on for many months. Say 3months before someone has any chance of what I consider to be a level playing field and foundation where someone may stand a chance a lot wander off back into the woods off the paths and go chasing rabbits so to speak a few will stay scientific and ambivalent – and they are the minority, the majority are losers.
So I’m not sure what else to recommend to you if you are hunting a 7tick winner – or in fact just a chance to win:
>>Less is more. Especially with retail technical style of trading where data and systems are extremely slow compared to low latency high frequency trading systems used commercially. it’s the difference between a hot air balloon and a surface to air missile. So less trades per day, less slippage, less commission, greater risk reward is the easiest way to start – 35 to 45% win ratio and a positive risk reward average for a trend following system.
>>Data is really key…and instrument selection.
>>Capital you can never really have too much
>>There are books and methods on the internet such as:
Mechanical trading systems – Earik Beann Mechanical Trading Systems – Pairing Trader Psychology with Technical Analysis – RICHARD L. WEISSMAN
Now you need to understand this also