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Author Topic: Goomboo's Journal  (Read 250643 times)
Goomboo
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June 04, 2013, 12:42:18 AM
 #701

Nowhere, which is why if one is to accept the 7% "protection" (now officially 4.7% - without the fees), he must also have endured the previous losses.

Absolutely.  Losses are the name of the game unfortunately.

Edit - in case you're wondering, I do agree with you - it isn't the "best" example.  There are better, cleaner charts to be found.  However, I stand by what I said in my post - those who followed through with the system should have profited from that downturn.  It is entirely possible that these profits were clouded by commissions / whipsaw action, but that unfortunately is the nature of the game.

Best of luck with your trading.
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June 04, 2013, 01:27:35 AM
 #702

In order to provide full disclosure for the original system, I have backtested the 10/21 hourly crossover from the day of the market crash until now.  The system has continued to grind out consistent profits...with important caveats.



  • There have been 34 trades closed since April 9th of which 35% were winners and 65% were losers
  • The average winner has been 2.9 times the average loser
  • Cumulative return of 134% before commission and assuming no slippage

If you are interested in being a trader, you must critically analyze the above performance.  Specifically, you should take a hard look at the first two weeks of April.  During April, the system experienced a reversal of a 31% profit to a 37% loss.  This means that if you were following the system, you would have watched 68% of your account value erase over the span of two weeks.  This brings three very important points to the table.

  • It is essential that you have a plan to get out of the market when price roars against you
  • A method of trading less size during periods of drawdown is important for surviving in this business
  • To fully capture the profit potential of trend following, you should seriously consider only trading markets which easily allow buying and shorting
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June 04, 2013, 01:47:06 AM
 #703

To bring us back full-circle to the question which has relentlessly haunted this journal: should I systematically trade or buy and hold?  Examine the chart below and then let's discuss.



By all metrics, trading the crossover has outperformed buy and hold since the day the crash began.  Trading has returned 134% and buy and hold has lost 37%.  Traders experienced a 68% drawdown in value, investors watched 82% erode away.

Even though the metrics seem to say that trading has "worked" better than buy and hold, it's still pointless to make the comparison.  After all, when you're asking a question of "what works", you by definition must select a timeframe to make a judgement.  The last two months have been favorable for traders but the last 6 months have rewarded investors.  No matter which side of the aisle you stand, investor or trader, you can find supporting figures for your viewpoint.  There are only two ways to "settle" the debate: price instantly rises to $1,000,000 per coin and stays there forever or price slowly and indefinitely falls to $0.00.  In the meantime, it will remain impossible to definitively state which mentality is "better".

This remains an ideological question.  Are you "voting with your fiat" and supporting an idea, or are you here to earn a profit?  It is my viewpoint that disciplined trading is the most logical method of approaching the markets.  The purpose of this journal is to convey what it takes to profitably trade.
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June 04, 2013, 01:59:52 AM
 #704

Now you're talking! This is more in tune with the rest of this epic thread!  Cheesy
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June 04, 2013, 07:08:41 AM
 #705

Draw EMA's? Smiley and the volume available at a certain order.

It's done.

Volume will be added as well in the future.
What other technical indicators are useful for traders like you guys?

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June 06, 2013, 09:54:52 AM
 #706

What I lack in the bot.:
I want to specify a purchase price and a sell price. a minimum
In trend: do not buy above that price. Or: do not sell below this price
I want to define a sideways movement. (eg 119 -123) in the sideways movement is to be bought or sold anything.
Or show me a popup with "sell?" "buye?"
Limiting the amount of money (USD Other)
Note the existing orders. It should always be money or btc for this.
Or just the next step
Pop for a High / Low. Period input field

But good work: so far I do not let it run automatically. My hand orders are even better. I mean. If the price is high, is a feeling and i take all what i know ... news, FED EZB. A low price is the feeling, have btc a change or not.
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June 06, 2013, 09:06:47 PM
 #707

What I lack in the bot.:
I want to specify a purchase price and a sell price. a minimum
In trend: do not buy above that price. Or: do not sell below this price
I want to define a sideways movement. (eg 119 -123) in the sideways movement is to be bought or sold anything.
Or show me a popup with "sell?" "buye?"
Limiting the amount of money (USD Other)
Note the existing orders. It should always be money or btc for this.
Or just the next step
Pop for a High / Low. Period input field

But good work: so far I do not let it run automatically. My hand orders are even better. I mean. If the price is high, is a feeling and i take all what i know ... news, FED EZB. A low price is the feeling, have btc a change or not.

Wrong topic I guess?^^

BTC: 15M4V2NXXP67JckzKjETsLa9jK2vgU6LCX
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June 06, 2013, 09:12:23 PM
 #708

To bring us back full-circle to the question which has relentlessly haunted this journal: should I systematically trade or buy and hold?  Examine the chart below and then let's discuss.



By all metrics, trading the crossover has outperformed buy and hold since the day the crash began.  Trading has returned 134% and buy and hold has lost 37%.  Traders experienced a 68% drawdown in value, investors watched 82% erode away.

Even though the metrics seem to say that trading has "worked" better than buy and hold, it's still pointless to make the comparison.  After all, when you're asking a question of "what works", you by definition must select a timeframe to make a judgement.  The last two months have been favorable for traders but the last 6 months have rewarded investors.  No matter which side of the aisle you stand, investor or trader, you can find supporting figures for your viewpoint.  There are only two ways to "settle" the debate: price instantly rises to $1,000,000 per coin and stays there forever or price slowly and indefinitely falls to $0.00.  In the meantime, it will remain impossible to definitively state which mentality is "better".

This remains an ideological question.  Are you "voting with your fiat" and supporting an idea, or are you here to earn a profit?  It is my viewpoint that disciplined trading is the most logical method of approaching the markets.  The purpose of this journal is to convey what it takes to profitably trade.
Goomboo is your graph implementing the fee's aplied by Mt. Gox or others when you do a transaction? I agree with you and your trading system but seeing you can lose 1.2% just by Buying/selling/buying at the same price make me a bit suspicious. Not about the trading method but about the profit you expose Wink

BTC: 15M4V2NXXP67JckzKjETsLa9jK2vgU6LCX
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June 06, 2013, 09:56:45 PM
 #709

^Well don't forget Goomboo only does daily trades now, specifically because commission rates are ridiculously high.
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June 08, 2013, 03:11:38 AM
 #710

  • Cumulative return of 134% before commission and assuming no slippage

Bingo.
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June 08, 2013, 09:01:41 PM
 #711

  • Cumulative return of 134% before commission and assuming no slippage

Bingo.

The chart below shows the performance of the moving average crossover system assuming a .6% commission per side and trading on the hourly chart.



Welcome to the simple, yet complex world of trading.  You can be right in your market direction but ultimately lose money due to the cost of doing businesses.

PS, this doesn't even include the slippage of trading.

Quoted for emphasis:

.65% is actually a massive commission.  In the currency markets, the EURUSD is currently trading at 1.3217.  A .65% commission on it would be .0085 or 85 pips.  The commission I pay on EURUSD is about 1.1 pips.  Mt. Gox is 77 times more expensive to trade than the typical currency markets.

$100,000 trade on Mt. Gox
-> $100,000 * .0065 = $650 commission

$100,000 trade on EURUSD
-> $100,000 * .00011 = $11 commission

The only way to be profitable in short-term trading in the BTC market is volatility.  If volatility dries up, commission will crush trading.

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June 08, 2013, 09:49:48 PM
 #712



If read you this journal very carefully, you will see something interesting: I am attempting to dissuade you from trading.  Even though I have posted backtests showing profitability and attempted to logically argue the merits of the field, I do not believe that trading is for the majority of the readers.  Simply put, trading is not for the casual participant.  If you are to succeed in this field, you must be willing to roll up your sleeves and work harder than you imagined.  The markets are always adapting and the casual, hobby-trader simply does not have the capacity to compete.

For those who are serious about trading, you absolutely must take a hard look at the chart above.  You have banked a 500% return on your money in the last 5 months with substantial volatility.  Is this acceptable to you?  Can you handle the volatility of earnings and uncertainty of results?  Did you even have the courage to stick it out after two months of stagnant returns?

Perhaps the most difficult aspect of trading is the emotional uncertainty of trading results.  Every time you move on an opportunity, you are exposing yourself to the psychological and financial uncertainty of your decision.  As we have seen through backtest, if you are attempting to follow the trend, you will lose 70% of the time.  This means that you will more than likely be wrong and lose money every time you make a decision.  In other words, a trader essentially exposes himself to a beating every time he enters the market.  Does that sound like a fun hobby?

To demonstrate my point: how many of the readers for the past 18 months actually earned a 500% return this year?  I'd bet fewer than 1%.  Isn't it ironic?  I post and demonstrate exactly what it takes to successfully trade the markets and 18 months later, most people simply cannot do it.  As the BTC markets mature, these simple strategy may experience a degradation in performance.  Do you have what it takes to innovate and continuously fight to improve your edge?  Do you even have an edge?



My genuine advice to most readers of this thread: allow a professional trader (or investor) with a strong track-record of success to manage your money.
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June 09, 2013, 05:27:40 PM
 #713

To demonstrate my point: how many of the readers for the past 18 months actually earned a 500% return this year?  I'd bet fewer than 1%.  Isn't it ironic?  I post and demonstrate exactly what it takes to successfully trade the markets and 18 months later, most people simply cannot do it.  As the BTC markets mature, these simple strategy may experience a degradation in performance.  Do you have what it takes to innovate and continuously fight to improve your edge?  Do you even have an edge?



My genuine advice to most readers of this thread: allow a professional trader (or investor) with a strong track-record of success to manage your money.

Quote
The truth is that there are traders who believe that they have an edge, and there are traders who believe that they need an edge and are consequently looking for one, and there are traders who laugh every time someone mentions an edge, and then make another profitable trade. In other words, there is no such thing as an edge, not over the market, and not over other traders (unless you consider having received good trading instruction as an edge :-) ).

Successful trading is not about being in competition with the market or with other traders, and quite the opposite is actually the case. Successful trading is about being in agreement with the market, and being in agreement with other professional traders (specifically professional traders).

...مكتوب
Escape the plutocrats’ zanpakutō, Flower in the Mirror, Moon on the Water: brave “the ascent which is rough and steep” (Plato).
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June 09, 2013, 07:04:51 PM
 #714

To demonstrate my point: how many of the readers for the past 18 months actually earned a 500% return this year?  I'd bet fewer than 1%.  Isn't it ironic?  I post and demonstrate exactly what it takes to successfully trade the markets and 18 months later, most people simply cannot do it.  As the BTC markets mature, these simple strategy may experience a degradation in performance.  Do you have what it takes to innovate and continuously fight to improve your edge?  Do you even have an edge?



My genuine advice to most readers of this thread: allow a professional trader (or investor) with a strong track-record of success to manage your money.

Quote
The truth is that there are traders who believe that they have an edge, and there are traders who believe that they need an edge and are consequently looking for one, and there are traders who laugh every time someone mentions an edge, and then make another profitable trade. In other words, there is no such thing as an edge, not over the market, and not over other traders (unless you consider having received good trading instruction as an edge :-) ).

Successful trading is not about being in competition with the market or with other traders, and quite the opposite is actually the case. Successful trading is about being in agreement with the market, and being in agreement with other professional traders (specifically professional traders).

 Cheesy +1

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June 09, 2013, 10:19:19 PM
 #715

Goo - How are you backtesting?

QQ3331763418
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June 09, 2013, 10:41:32 PM
 #716

Goo - How are you backtesting?

Microsoft Excel.
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June 10, 2013, 12:06:12 AM
 #717

Goo - How are you backtesting?

Microsoft Excel.

Interesting. Are you recreating the indicators historical levels from price/volume levels yourself?

QQ3331763418
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June 11, 2013, 10:38:34 PM
 #718

Interesting. Are you recreating the indicators historical levels from price/volume levels yourself?

Yeah, it's not too bad
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June 23, 2013, 01:57:07 AM
 #719

A key trait of the successful trader is the ability to take an honest look at his performance.  Specifically, this means that you need to examine your trading results to actually determine if you are earning a profit or a loss in this endeavor.  If you are claiming that you are earning a profit from trading when in actuality, you are just continuously depositing funds and trading your hard-earned money away; you are lying to yourself and will eventually wake up with a lighter wallet.

The successful trader lets his profits work for him by growing his account through trading.  This means that as time progresses, your account should be growing regardless of any capital additions.  If you are currently trading and losing money, you should seriously consider not adding funds to your account.  You have proven that you are currently incapable of earning a return and it is foolhardy to let good money chase after bad.

After discovering that he is consistently losing money through trading, the wise trader will exhaustively study his losing and winning trades to find out if he is adhering to his method or simply trading from the seat of his pants.  It is through this painful process of examining our mistakes that we gain wisdom in this field.  I have found that my most significant breakthroughs tend to come during periods of time in which I am losing money.  During periods of loss, we can gain much wisdom through carefully examining the decisions we made which led us to this point and figuring out what tangible steps we must take to improve.
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June 24, 2013, 02:26:23 AM
 #720

For many traders, a key transition point in their career comes when they are able to separate their ego from their desire to profitably trade.  It has been my experience that the majority of market participants care more about the emotions associated from successfully calling market direction than consistently grinding out profits in their endeavor.

This mindset is embodied by the trader who will put on a position and will hold it until he is able to turn a small profit.  The trader finds a variety of reasons for holding his losing trade such as “It can’t go down forever; if I add more here it lowers my average price; I haven’t lost any money at all since I haven’t sold”.  All of these reasons are delusional.  Sure the trader may be right a time or two, but eventually, the market will deal a blow that will destroy him.  In other words, securities occasionally do go to zero, and chances are, if you have no method of quickly cutting your losses, you will eventually lose all of your money.

Ultimately, the greatest traders are the ones who are most “afraid” of the market.  I do not mean afraid as in they are experiencing literal fear, but rather than they respect its fickle nature.  Great traders know that the “impossible” happens quite frequently and they do everything in their power to ensure that their clients’ money isn’t destroyed.  It is when we are able to separate our desire of being “right” about market direction and actually focus on good trading techniques that we are able to thrive in this field.

Another way of thinking of it is this: would you play a game of dice in which you win $1,000,000 any time 1-5 is rolled, but if 6 is rolled you lose your life?  Of course not.   However, this is what the majority of investors and traders do through “dollar cost averaging” or other foolish methods of doubling down in risking endeavors.  You may have a high winning percentage of trades, but you’re flirting with destruction.
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