Goomboo's Journal

[Goomboo]

Goomboo, can you teach us how to create those tables in NinjaTrader?

And BTW, why did not you use 11\21?

To create them in NinjaTrader:
- Export optimization results of a moving average crossover system into Excel
- Create a Pivot Table of results
- Apply conditional formatting

I didn't use the 11/21 because I am trying to avoid cherry picking (selecting the best results) and be closer to the middle of the island of green.  The markets shift through time and the underlying theory behind the charts is that in the long run, the best area of results will tend to continue to outperform and we should try and put ourselves within that area.

[Goomboo]

hi gomboo


hi do you have something for forex/precious metals

i m pming you

This thread was constructed by taking knowledge learned in the professional markets and applying it to the BTC markets.  These principles are pretty much uniform across nearly all (liquid and active) markets.

[Goomboo]

I wouldn't mind seeing this either. Given how much interest this post has got, I'd love for you to teach us more about technical analysis and backtesting in general (not just how to use 10/21 SMA)

That's an interesting idea, I'll give it some thought.  In the meanwhile, these resources are invaluable.  I would give serious thought to reading this list.

A list of books I've found to be very good:

Discretionary trading
Technical Analysis Using Multiple Timeframes
High Probability Trading
Technical Analysis: The Complete Resource for Financial Market Technicians

Systematic Trading
Trading Systems: A New Approach to System Development and Portfolio Optimisation
Trading Systems that Work

Psychology of Trading
The Psychology of Trading: Tools and Techniques for Minding the Markets
Trading in the Zone: Master the Market with Confidence, Discipline and a Winning Attitude

All-Time Classics
Reminiscences of a Stock Operator
Extraordinary Popular Delusions and The Madness of Crowds
Market Wizards: Interviews with Top Traders
The New Market Wizards: Conversations with America's Top Traders

Investing
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel
Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week!


I really wish someone had handed me this reading list years ago - I think it would have taken years off of my learning curve.

[hackjealousy]

A list of books I've found to be very good:

[...]

I really wish someone had handed me this reading list years ago - I think it would have taken years off of my learning curve.

I also recommend the babypips site, http://www.babypips.com/.  It does a pretty good job of teaching the basics without overwhelming the reader with technical details.  At the very least it is a good place to start.

[Goomboo]

I also recommend the babypips site, http://www.babypips.com/.  It does a pretty good job of teaching the basics without overwhelming the reader with technical details.  At the very least it is a good place to start.

Baby Pips is great as well - a good source to help people get grounded in the basics of speculative trading.

[PassiTheApe]

Interesting thread I think I need to go through that list at some time

[Psikopit]

Hello everyone! Just went through the 31 pages lol ! Goomboo that’s a very interesting strategy you’re exposing. I’m totally new in the world of trading and bitcoins so I have many things to learn… I still have some simple questions maybe you’ll say that they are noobish but I can’t find clear answers and not even the same questions lol!

So first, on which sites are you trading? I’m currently on Mt. Gox but I’ve read on one of the first page that it’s better to have 2 accounts, one for short and one for long… How can you do that? I mean you have to buy when it’s going “up” and sell when it’s going “down”.

Do you have any other site you recommend?

Second question it’s more a market/trading thing…
If for example I want to sell my BTC, imagine now at the current buying price (atm 124$ / 3 BTC available), if I sell 2 BTC, they’ll be sell immediately. But now if I want to sell 5 BTC I’ll sell 3 immediately and have to wait for someone to complete my offer? That’s it? But I’ll still have 3BTC available for trading.

I also wanted to thank you for this journal that is very helpful for me and it allows me to start trading with a strategy. I’ll of course study this strategy myself and change some settings. Could you tell us more about the turtle strategy? Or give us some links?

P.S.: sorry if my english is not that correct I'm french lol

Edit: for example use bitstamp/Mt. Gox but how would you do that?

[Goomboo]

So first, on which sites are you trading? I’m currently on Mt. Gox but I’ve read on one of the first page that it’s better to have 2 accounts, one for short and one for long… How can you do that? I mean you have to buy when it’s going “up” and sell when it’s going “down”.

At the time of writing, Bitcoinica was an alternative exchange which allowed shorting.  I have no recommendations as to any of the exchanges which will allow it these days - in other words, I haven't done the due diligence necessary to trust any except Mt. Gox at the moment, and they only allow buying of BTC.

Second question it’s more a market/trading thing…
If for example I want to sell my BTC, imagine now at the current buying price (atm 124$ / 3 BTC available), if I sell 2 BTC, they’ll be sell immediately. But now if I want to sell 5 BTC I’ll sell 3 immediately and have to wait for someone to complete my offer? That’s it? But I’ll still have 3BTC available for trading.

I'm not exactly sure what you're asking here.  I think what you're trying to figure out is the difference between a market and limit order.  Read this and let me know if this is what you're looking for:

http://www.scotiabank.com/itrade/en/0,,3969,00.html

http://www.investopedia.com/ask/answers/04/022704.asp

I also wanted to thank you for this journal that is very helpful for me and it allows me to start trading with a strategy. I’ll of course study this strategy myself and change some settings. Could you tell us more about the turtle strategy? Or give us some links?

Glad you enjoyed it!  Here's some information about the strategy:

An overview: http://www.investopedia.com/articles/trading/08/turtle-trading.asp
In-depth discussion: http://bigpicture.typepad.com/comments/files/turtlerules.pdf


C'est pas grave pour l'anglais.  C'est pas mal!  Best of luck with your trading!

[Goomboo]

Here's 1 year of performance of the system tested on the daily timeframe.  This chart demonstrates the growth of $1.00 if individuals had traded the system exactly as prescribed since May of 2012.  The chart below shows the profit in terms of percentage return.





- Disciplined followers should have earned a 1,700% return over the past year (if they had reinvested profits)
- It is very important to understand that the past is no guarantee of future performance - be skeptical of these results


The resounding lesson here is this: design a system, test the system, have the emotional discipline to trade the system.

[Frozenlock]

Just to put everything in context, a buy-and-hold strategy would have given you a little more than 2000%

That's a little odd; I expected Goomboo's strategy to return a little more, especially with the funds saved in the crash from $266 to $50.

[Goomboo]

Just to put everything in context, a buy-and-hold strategy would have given you a little more than 2000%

That's a little odd; I expected Goomboo's strategy to return a little more, especially with the funds saved in the crash from $266 to $50.

In a market which tends to rise, on average, buy and hold will frequently outperform systematic trading.  The catch is that if BTC goes to $10, your buy and hold profit falls to 100% and your trading profit probably remains over 1000%.  I'd rather remain nimble and and defend my capital against the inherent risks of buy and hold.  Case in point - trade the S&P 500 for the past decade using buy and hold and the 10/21.  Buy and hold earned 5% (give or take a few) and trading earned 80% - different styles are rewarded in different market conditions.

It really boils down to your philosophy of the markets: are you an investor or trader?  Investors believe in a concept and invest in that concept (buy and hold).  Traders are after profit while maintaining the ability to live and fight another day (systematic/discretionary trading).

[Frozenlock]

Oh I completely agree.

I had simply the impression that the $266->$50 drop would have given you a huge boost.
(Sold at around $200, buy back at around $90)

Are you back in hourly?

[Goomboo]

Oh I completely agree.

I had simply the impression that the $266->$50 drop would have given you a huge boost.
(Sold at around $200, buy back at around $90)

Are you back in hourly?

With a more nimble system (faster moving averages), you could catch that move.  The collapse and subsequent rebound happened too quickly for the 10/21 to grab it - interestingly enough, the trade immediately following the crash resulted in a 13% loss.

I'm trading daily - less noise, less commissions, longer holding periods.

[Frozenlock]

I'm trading daily - less noise, less commissions, longer holding periods.

I wonder if you could get the best of both worlds by adjusting the trading intervals with the volatility.
For example, switching to hourly if the price moves more than 10% per day. 

[Psikopit]

Thank you goomboo, it's exactly what I was searching for
I've read the turtle system. And now I understand the market and limit order.
By the way the Bitcoin market isn't fluctuating this much this days...

[Crypt_Current]

The catch is that if BTC goes to $10, your buy and hold profit falls to 100% and your trading profit probably remains over 1000%.

But at that point, wouldn't the overall market trend have changed to "down"?
Wouldn't it take a VASTLY swift, totally unexpected direction change for even BTC to suddenly plunge to $10?
Don't you think that even slightly intelligent traders might have noticed said direction change and re-vamped their strategy accordingly by then?

[notme]

The catch is that if BTC goes to $10, your buy and hold profit falls to 100% and your trading profit probably remains over 1000%.

But at that point, wouldn't the overall market trend have changed to "down"?
Wouldn't it take a VASTLY swift, totally unexpected direction change for even BTC to suddenly plunge to $10?
Don't you think that even slightly intelligent traders might have noticed said direction change and re-vamped their strategy accordingly by then?

Yes, you can easily beat a mechanical system by applying a little intelligence.  But that's the appeal here... You only need to know 2 simple rules (buy on cross up, sell on cross down) and follow them mechanically.

[Goomboo]

Yes, you can easily beat a mechanical system by applying a little intelligence.

Not necessarily true.  Intelligence is only one part of the equation.  A significant factor is emotional discipline.  Quite a few intelligent people have lost vast sums of money in the markets due simply to a lack of emotional discipline.  The appeal of a mechanical trading system is twofold:

- Remove "gut" feeling which, for the most part, ends up losing money
- Allow you to test and validate your method

Case in point: the system multiplied your money 17-fold over the last year.  I'd wager very few of the readers here have actually locked in a comparable return.

[notme]

Just to put everything in context, a buy-and-hold strategy would have given you a little more than 2000%

That's a little odd; I expected Goomboo's strategy to return a little more, especially with the funds saved in the crash from $266 to $50.

From this same page even

[notme]

Yes, you can easily beat a mechanical system by applying a little intelligence.

Not necessarily true.  Intelligence is only one part of the equation.  A significant factor is emotional discipline.  Quite a few intelligent people have lost vast sums of money in the markets due simply to a lack of emotional discipline.  The appeal of a mechanical trading system is twofold:

- Remove "gut" feeling which, for the most part, ends up losing money
- Allow you to test and validate your method

Case in point: the system multiplied your money 17-fold over the last year.  I'd wager very few of the readers here have actually locked in a comparable return.

Yes, I immediately thought to come back and mention emotions, but then I got distracted.  Thanks for bringing that up.