I Was Once One Of The Millions Of Fools Who Believed That You Can Become A Successful Trader Quickly

The biggest problem of the trading industry is that it’s, unfortunately, full of dishonest people (mainly brokers and vendors) who constantly feed you with totally unrealistic promises and expectations (just to sell you their products).

An average Joe usually thinks that trading is an easy occupation, where you open a USD 500 FX account and the next week you’ll quit your job. That´s really hilarious! The truth is far from that.

When I started with trading and especially automated trading, I had plenty of false expectations that I’ve had to correct on the way.

The first false expectation was that you can achieve anything in trading quickly. Bullshit!

Trading is a serious business. I even call it entrepreneurship. Indeed, it is a super-serious business to me.

No business in the world starts making stable income overnight (not even drug-dealing).

Despite all the marketing hype and lies, no broker, no trading platform, no trading indicator can result in a shortcut of the experience you need to acquire. If you open any kind of business, the real perspective for the first several years usually is, that you’ll  be struggling, fighting, starving, and working many hours for free. Only when you go through this tough period, then there is a chance that your business could really start growing and hopefully make it up to the skies (or whatever your financial goal is).

In trading, it’s the same. Brokers and vendors can promise you anything, but from the very beginning, the probability that you’ll fail is insanely high. You’re working against the smartest, most creative and richest companies in the world. Do you really believe that your chances are high, just because you discovered “a new, fancy, secret indicator on the internet – for USD 500 only”? Get real!

What you really need to become a successful trader is an experience - a lot of it, real experience from real markets in order to go through all the best and worst possible scenarios, to learn what markets are really about and what trading is really about. It’s also necessary to make a lot of errors and then learn from them, figure out a few clever fixes and start over again, until you find the way to succeed. It will take years. And only if you  endure and  get over all those challenges that you can´t even imagine right now and all those sleepless nights, then you can start thinking if and how you possibly could get  to the next level and start making millions of dollars.

This is the very first expectation of any beginner trader that needs to be addressed. I’m quite often an impatient person and I’ve had to learn a lot to be able to keep my expectations within a realistic time limit. Everything takes time, plenty of time. It’s really painful how much time it all takes. I wish things could be faster. I wish the experience that is needed could be acquired faster. But it cannot, unfortunately. So all we can do is remain realistic, make a long-term plan, develop the right daily habits and with both passion and patience move forward in small steps. Like we say in Spain: “Poco a poco”. That is the only true, realistic and sustainable method. It cannot be skipped. There is no shortcut. You might not like it, but I’m really honest with you. I can guarantee it. To become a successful trader, it took me longer than I’d have ever imagined.

Author: Tom Nesnidal

Don't build a better backtest

Ask any experienced system developer about backtests, and you’ll likely get an exasperated look. On one hand, he’ll say, backtests are great because they can demonstrate if a trading idea has any historical merit. On the other hand, he’ll counter, many times backtests tell you little or nothing about future profitability because you are curve fitting or over-fitting a system. Because of this, backtests are both a blessing and a curse.

Those new to trading, however, rarely see the duality in backtests. On the contrary, they see a world of historical profit in optimized tests, parabolic hypothetical equity curves and a sea of dollars just waiting for them in live trading. They expect the historical performance to continue well into the future. A few failed strategies later, though, the trader usually laments why the terrific backtest always fails to emerge in real-money trading.

So what is the big problem with traditional backtesting? Before we examine that, it is important to define exactly what a backtest is and what alternatives exist. These are shown in “Backtest comparison” (below), assuming testing ends on Dec. 31, 2014. First, there is the traditional backtest. This is by far the most popular test method, and also the most dangerous. Most trading software encourages this type of test. Simply pull up a chart, insert a strategy, and optimize all the parameters with all available data. The best result of the optimization is then what is traded. This method is very financially dangerous for most traders.

For many, bad experiences with a traditional backtest will lead to the next variation: Backtest with an out-of-sample evaluation period. Instead of testing on the whole data history, the trader will test with the first 50% to 80% of the data, leaving the rest of the historical data untouched. The performance of the optimized system during this out-of-sample period then will be evaluated. This is a much better way when compared to traditional backtesting, although many people test and retest, which in effect converts the out-of-sample period to an in-sample period as the researcher gains familiarity with the data and bias creeps into the development process.

A step beyond out-of-sample testing is walk-forward testing. With this method, a longer out-of-sample period can be created. This approach is favored by many professional traders, although it can also become tainted through repeated testing.

A final method of testing is to simply start trading with no historical testing. This is the truest method because the test is in real time, with real money.

But, it can take an extremely long time to evaluate whether the strategy is profitable. Needless to say, it also can be expensive. The traders who succeed with this method likely have well-formed trading strategies and deep understanding of a market’s dynamics—based on years of experience—that allows them to “pre-qualify” a system before going live. There is no ambiguity in real-time results, though, unlike all types of hypothetical backtests.

As you can see, each of the three alternative methods of testing is more difficult than the simple “plug-and-chug” traditional backtesting method. Therefore, most people, especially newer traders, just stick with the easiest method. Traditional backtests can be very dangerous, though. Many people start to believe that improving the backtest is the goal of testing—that a better backtest is always desirable. An example trading system easily can show that is not the case.


Backtest overdrive

Let’s call our new trader “John.” John wants to develop a strategy for the gold market, using data from 2008-2012 for five years of test data. So, he pulls up a chart of gold daily bars in his trading software. He has learned from many books and websites that a moving average crossover system is a basic, and many times effective, trading system. So, he programs it into his trading software. This is what his system code looks like this:

input: mavg (2) If Close crosses above average (close,mavg) then buy next bar at market; If Close crosses below average(close,mavg) then sell short next bar at market. 

Of course, John utilizes the optimization feature to optimize for the variable “mavg” — the moving average length. After running the optimization on 49 iterations, he gets a best net profit equity curve, shown as System A in “Optimized performance” (below). That is clearly not good enough to trade, so John embarks on a backtest improvement project.

For system B, John decides that long and short markets will act differently, so the moving average lengths for long trades and short trades should be different. When he adds in this optimizable parameter, the number of iterations increases to 1,681, and his performance greatly increases (shown as System B in “Optimized performance”).

Now John is feeling good about this system. But, he wants even better performance. For System C, he adds in another moving average, which he also optimizes. Now he has 8,405 iterations to optimize over. Not surprisingly, he is ecstatic when the equity curve looks much better. This is shown as System C.

However, even this performance is not enough for John. So, he adds another rule to his strategy; this time to exit after a certain number of bars. Of course, he does not know what value to use for this new rule, so he decides to optimize across what are now 19,404 iterations. Another optimization, another improvement. John now has the equity curve shown as System D.


At this point, John congratulates himself. He has turned a barely profitable moving average strategy into a historically great looking strategy. But, has he really created a better system? He obviously has generated a more impressive historical backtest, but does that mean anything? Does better historical performance translate to better real-time performance?

Unfortunately for John, and unfortunately for most people who develop strategies this way, adding rules to create a better backtest does not mean the performance in real time will be any better. In fact, many times, improving the backtest actually makes the real-time performance worse.


Out-of-sample reality

To see this, let’s examine how John’s strategies do in live trading. Because John’s backtest was only until the end of 2012, we can examine what happened to his four strategies during 2013-15. This is shown in “Reality bites” (below). As you can see, the better-performing backtests actually have worse performance with the real-time unseen data of 2013-15. Thus, by focusing on making the backtest better, John actually made things a lot worse.

This is unfortunately a common occurrence. Many traders think they are doing the right thing by improving the backtest, when they are actually just hurting themselves. While this is not always true — sometimes adding rules to a strategy improves both the backtest and real-time performance — a trader always needs to be aware of this possibility.

These are some tips to overcome this tendency to improve the backtest:

- Set realistic expectations. Don’t try to create a perfect looking equity curve. Real strategies sometimes have severe drawdowns and many flat periods. If your backtest results look too good to be true, the strategy probably will not work going forward.

- Don’t keep adding rules and iterations just to improve the backtest performance. Remember, “past performance is not indicative of future results.”

- Consider an alternative method of testing. Out-of-sample, walk-forward and real-money testing are all highly superior to traditional backtesting. Consider if one or more of these methods is appropriate for you.

Many traders find historical testing to be indispensable. It allows them to analyze different strategies and see which have held up over time. While it does not mean profitable performance will continue, it is reassuring to trade a method with a profitable history. The problem comes about when the trader tries too hard to create a better history. Many times, improving the backtest leads to the opposite effect in real time — worse real-time performance. Therefore, a trader always has to be careful when developing a strategy and resist the urge to build a better backtest and end up over-fitting the system. 

About the Author Kevin J. Davey has been trading for more than 25 years. Kevin is the author of “Building Winning Algorithmic Trading Systems.”

El lado oscuro del Trading

Son muchos los obstáculos con los que se topa un trader en el camino antes de lograr el éxito, la mayoría de esos obstáculos provienen de nosotros mismos, de nuestra formación, de nuestra forma de ser. Sin embargo la industria del trading, no se conforma con ello y siempre está buscando la forma de ponernos piedras en el zapato.

 Los Brokers patrocinan a los supuestos “expertos” que invaden Internet, para que ofrezcan cursos y formación que convierten a los aspirantes a Traders, en perdedores potenciales. Este patrocinio tiene diferentes modalidades, de tal manera que muchas veces no son patrocinios directos, como por ejemplo el BI, o el Broker partner. Los BI realmente no tienen un vínculo tan estrecho con los Broker y ciertamente no quieren que pierdas, o al menos, eso no les interesa, ellos solo quieren esa muy jugosa comisión que les entrega el broker por cada persona que ingresa por su link (Normalmente una cantidad superior al dinero con el que ingresas). Y para llevarte al broker se hacen pasar por expertos y te enseñan cosas que ni siquiera ellos dominan al 100% porque las aprendieron el “día anterior” y al “día siguiente” ya están haciendo un webinario para alimentar su ego y/o credibilidad… Si, La otra fuente de ingresos para ellos es la enseñanza… No se les olvide que en el trading teorizar es muy fácil, y teoría en internet hay, y hay para que leas durante varias vidas seguidas, lo difícil está en llevar la teoría a la práctica y conjugarla con la correcta sicología y el adecuado manejo del dinero. Chicos, en el mundo del trading no sean crédulos, y tienen que volverse expertos depurando información.

Cuando alguien les vaya a enseñar, exíjanle sus cuentas, y a largo plazo, pues a corto plazo gana cualquiera y más si se usa la martingala (Pero verán caídas dolorosas…). En cualquier otro empleo, pedirle a alguien que te muestre sus ganancias se podría tomar como un irrespeto, pero en el trading NO… Imagino que a esta altura de la lectura ya te quedó claro el por qué.

Espero que nadie se lo tome a mal en este grupo, y justamente lo posteo acá porque es donde creo que hay un nivel relativamente menor de influencia negativa, y dónde hay varias cosas positivas. Mis respetos para todos los que ayudan honestamente a las personas, pero por favor, antes de enseñar asegúrense de testear extensamente y comprobar cada cosa que mencionan, ya bastante sabotaje hay en el mundo del trading como para que nos auto-saboteemos  por culpa de las buenas intenciones.

Todo esto lo menciono porque estoy intentando disminuir un poco mi egoísmo, e intentaré con mi trading sacarle el dinero a los “especialistas” y no a ustedes; se que detrás de la mayoría de los Trader retail hay historias difíciles….

AndrEAs

Acá también se pierde...

Una de las cosas que no dejan de asombrarme es que aún hoy en día, con el supuesto conocimiento que ya se tiene o se debería tener sobre el trading online dada la inmensa cantidad de información de la que se dispone, continúo viendo personas que piensan que algún trader retail tiene lo que buscan, la gran panacea universal, el santo grial para ganar dinero rápida y cómodamente, en menos tiempo de lo que se tarda en pensarlo, y sin perder prácticamente nunca porque como bien suelo decir, en el trading se pueden desarrollar sistemas consistentes.

Pues la verdad es que es bastante sorprendente que todavía se confunda la rentabilidad consistente con la ganancia permanente. No se engañe, alcanzar cierta consistencia en las inversiones financieras implica perder operaciones y consecuentemente dinero también, por supuesto, de hecho considero que el mejor modo de enfocar este negocio es siempre hacia las pérdidas y no hacia las ganancias, ya que éstas vendrán por sí solas si se hacen las cosas como es debido y se gestionan adecuadamente aquellas.

Así que desde ya puedo decir, que si lo que espera de mí, es no perder dinero casi nunca y generarlo a manos llenas rápidamente, no está en el camino correcto porque yo también le hare perder dinero en ocasiones, claro que sí, pero ojo, no siempre, eso es un matiz importante y aceptar la pérdida en un sector como el de las inversiones ya es asegurar una ganancia, el tiempo es el que se encarga de demostrarlo.

Evidentemente la responsabilidad de esta forma de pensar en el trading online como en una fuente de la que manan billetes como hormigas sin ningún tipo de problema no es solamente de aquellas personas que se acercan a él fundamentalmente con desconocimiento e ingenuidad, sino que en un mayor porcentaje es por toda esa maravillosa publicidad que circula por internet, redes sociales, email, etc. que con cantos de sirena atrae a los incautos para atraparlos en sus redes, exprimirles y dejarles después con la sensación de que han sido engañados, cuya consecuencia directa es que como siempre, al final pagan justos por pecadores. Y también en este problema inciden mucho esos pseudogurús que publican a diario sus excelentes resultados operativos por todas partes y que, por cierto, curiosamente nunca son negativos.

Ante esto, hay que cuestionarse, será que me falta hervor o si simplemente estoy perdiendo y haciendo perder el tiempo, porque leo, veo y escucho a decenas y decenas de traders que siempre ganan dinero en los mercados financieros y además hacen ganarlo. ¡Qué maravilla, a esta gente le traen el dinero en trailers todos los días para repartirlo como reparten las furgonetas el pan en mi barrio y yo rompiéndome el espinazo para encima perderlo y hacerlo perder de vez en cuando!, pero ¿qué me pasa?…En fin, es más, tengo meses completos con pérdidas, y además lo muestro públicamente sin ningún pudor pese a que “podría resultarme contraproducente” según aconsejan sabios expertos (pienso que es todo lo contrario, creo en la honestidad por encima de la reputación), así que algo me debe fallar cuando no consigo ganar dinero en todas y cada una de las operaciones que introduzco en el mercado.

Por tanto, déjeme a mí también ejercer de gurú y anticiparle que perderá dinero: Con migo, con usted mismo, con aquel, con el otro, siempre perderá dinero, es inevitable y el que le diga que con él/ella no lo hará porque “es consistente”, francamente le está tomando el pelo, así que mi recomendación, si me lo permite, es que ya que va a perder en esta actividad, procure perder lo menos posible e intente hacer negocios con alguien que le haga perder lo menos posible, pero no en un día o en un mes, sino como mínimo en seis meses o en un año, o en dos, créame cuando le digo que la impaciencia es la peor enemiga de la consistencia.

Lo positivo, por si no lo he dejado claro entre líneas, es que efectivamente sí se puede ganar dinero en los mercados financieros de modo consistente: Con preparación, experiencia, disposición y gestión adecuadas.

AndrEAs

Sex And Trading

by jennifer 

Suddenly I’m so hot I wonder if I will discover the truth about spontaneous combustion. I feel heat throbbing into my skull as my pulse quickens, pressure welling up in my throat so I can’t swallow. I have no idea why I’m scared, but I can hardly take a breath. I need to do something so I go through motions I don’t even think about, searching for something unknown to me, and examining thin air hoping to find a sign that will register in my brain and lead me to action. I need to make a move, and I know that timing is everything.

I’m describing the moment I was sitting at my computer with the EUR/USD as price went racing in my direction, dumping hundreds of dollars per minute into my account. Or maybe I should say back into my account after watching a massive drawdown almost consume all of my capital in one giant terrible trade.

Sex is like trading. We work for it, we pay for it, and it evokes powerful emotion, feelings of desire, despair and bliss. Action produces consequence, so if you want it, you better pay attention.

Sex is like trading...

It takes some planning.
It’s the same with sex as it is with trading: Put in the time, and it’s all more enjoyable. Take some time to think it through and set up your charts before you enter the trade. Think about props you’ll need, and how much time you can devote to the task. There could be obvious support/resistance lines or other barriers in your way. Plan around those things before you get started and you will know exactly how to handle yourself.

Be objective before you become subjected to someone else’s mood, your own mood, or the mood of the market. It always gets emotional, of course. Nobody wants to lose money. Take care of the details before you trade. When the Non Farm Payroll Report comes out there is an emotional response in the market that you can plan around. You don’t have to avoid it, but know what you’re getting into. Know what time of the month it is, and plan appropriately. So many problems in trading can be avoided if you just think ahead and have your game on. Don’t start asking questions about trade size and stop losses after you already hit the button. Take control, plan ahead, and then just let go.

Premature profit can leave your trading account unfulfilled.
If you don’t let your winners run, at least occasionally, the losses might not be worth it. You might think this is only true if your risk:reward ratio is upside down, like mine is at about 2:1. But this truth applies to all traders. Even if your risk:reward is sensational at 1:100, your account will suffer if you take 99 losses and drop out before the last good one. Whatever your strategy, make sure it’s worth it. Keep your eyes on the bottom line and make sure you let the winner go far enough to get the payoff. Maybe this all takes place in your mind. Practice makes you better, so practice holding on to your winners. You might want to practice holding onto your winners in your mind. It’s all mental, right?

Stick to your partner
Finding the right one is important. There is going to be one that is right for you, and when you figure out the right chart, financial instrument, and system that works for you, commit your time to it. There is no substitute for spending time together and finding out everything you need to know to make the relationship work. Of course you can make a trade or have sex without any commitment at all, but if you want lasting success that’s another matter.

If you’re afraid of commitment, don’t expect to get a lot of action. You give time and attention to your charts, you spend hours building templates, you compare multiple inter-day time compressions and study economic fundamentals, stay up late when the Euro wants to move – this is a commitment. Some people think that a commitment is boring. They even run away from the charts they know, thinking they can find something else more exciting.

The truth is that the best trades, the most exciting trades, can happen after you’ve done the hard work, when you trust your charts, you trust your analysis, and you can trust the rules of your trading system. There is only one way to be reliable — Be reliable!

Trading takes time.
Sometimes my best trade entry triggers at 11:00 pm, and I’m really tired. No, really. The derivative rewards can be exceptional when I’m willing to sacrifice half a night’s sleep for an inimitable trading moment.

Previous experience is good but it can also mess you up. My greatest amount of experience is  trading EUR/USD. Admittedly, I have all but lost my ability to make money trading this pair. The problem is all in my head. I can’t forget some experiences, like that one time I lost $80,000 right before the market turned and went $90,000 in my direction. (Did that really happen? ummmm. Yes it did.) Over time I have developed biases which cloud my analysis, and deep-seated resentment or maybe just regret. Sometimes you’re right and you still lose, and then you confuse your source of data from your data feed. The fundamentals and the technicals don’t always tell you the same thing at the same time. The more I know, the more I question; the more I question, the less I trust my system; the less I trust my system the more I trust myself, and… well… I think you get the point.

Quickies…
Every once in a while, indulge yourself in a quickie.

Keep a demo account accessible, and try this. When you feel frustrated with your regular setups – if your mind feels dull or fatigued from the ordinary setups you always do, you might need to just spice it up a bit. Take a few ultra-short-term trades from the 30-second charts. Spend 5 or 10 minutes, tops. Do it in a demo so you don’t risk real money. But be spontaneous. Grab the short-term chart and let loose. Pull yourself out of your regular trading mind. Get out of the rut, and into something fast. Get your heart racing. Remember why you trade in the first place. You’ll keep your mind sharper. It’s like a breath of fresh air.

Fantasies are great…
…but real money is better. Or is it?

I get annoyed with people who won’t do the work to make 2% per month because they would rather fantasize about making 40% per month. The truth is I’m all for fantasies, but I’m also  always trying to figure out what I really want. My fantasy is to make 12 million dollars in my trading account. My real life goal is to build my retirement and pay off college for my kids by the time I’m 50. I’ve got 7 years to do it, and I am working through a plan. Without the fantasy I might not have made the plan.

From Physchology Today:

“Fantasies are not frivolous. They can be entertaining, distracting, frightening, even arousing, but they also allow for creativity and help us plan for the future.”

If it’s possible to use the fantasy to improve reality, then for every 15 minutes you indulge in your fantasy, spend 15 minutes planning trades that will bring it closer to home. Do not spend your life, at your trading desk, just thinking about doing it. Do it with a system you can trust and start building something great.

Dress for the occasion.
It’s a fact that how you dress influences your performance and what kind of success you attract to yourself. To be sexy is to act sexy, and it’s hard to do that in my soccer uniform! (I don’t play soccer, but that’s not the point.)

What you put on your body could be a simple step to set yourself up for success. Can you imagine going to work in your pajamas? Of course not! So don’t go to work trading at your kitchen table in your pajamas either. Your mind is your most important tool, so do whatever you can to get it right.  The right apparel makes you feel powerful, graceful, strong, or smart. Send a message to yourself and to your partner when you dress for success.

It’s what we do every day, right? We have “meetings” in an international marketplace. I don’t know about you, but I dress up for that, and I intend to make the best deals I can for myself. No distractions. Not too much bling, but definitely not sloppy. That’s trading. If you’re learning to trade for the first time, or if you’re a stay-at-home mom or dad with a computer at the kitchen table, or if you’re like me and spend your life in your home-office with two computers a Mac and an iPad, (and about 7 old ones piled up in the garage), try dressing in a way that matches your intention.

Smile.
It’s not just attractive, it’s a tool for influencing others and you can even influence yourself.

It’s magic.

I worked in a hotel once, and part of the training I received was how to smile. It’s no surprise when you’re working with people face to face, that smiling influences them to follow your lead. It takes the edge off and makes everyone a little more at ease. But what is surprising is that it even works when you’re talking on the phone. Apparently, when you smile while talking on the phone you change your own psychology in a way that projects calmness and sincerity. Of course, I take stuff like that a step farther… I smile at my computer. I know it’s embarrassing, but it’s a trick for staying calm and being in control of myself when I’m setting up or managing a trade. Being influential and starting to get what you want is just a smile away.

Does size matter?
Oh, I’m not really going to use that one, am I?

Does trade size matter?

Yes… yes I am. I have to tell you about this, because the largest amount of money I ever made was trading 1 pip at a time. The greatest satisfaction of my trading life was trading for 1 pip, worth $300, which I tried to do six times a day. It was a great experience and the money stacked up very quickly. My trading lifestyle was fast and furious. I was over-loaded with pressure and sustaining myself deprived of sleep, but the 1-pip trades were sensational all the same.  I don’t trade that way now. Today, my trading is much different, much more stable, my trade size smaller, and guess what? It’s more satisfying. My life is more livable. The point is, don’t be unimpressed with my 1-pip trade, and don’t be overly obsessed with your 100-pip winner either. Trading is good. Don’t forget that. Size really doesn’t matter.

Bragging about all your gains.
“What? You didn’t get 7,000 pips on the Euro this month?” “You didn’t make $10,000 on Netflix?”

Bragging is the surest way to tell people you are a loser. Bragging is the companion to fantasy. Fantasy is when you’re too afraid to do it. Bragging is when you’re too afraid to admit that you haven’t done it.

People who talk big all the time are standing right at the threshold of their own dreams, but not crossing over it.

Doesn’t that drive you crazy? It drives me crazy because I have been at the threshold, too. You remember the part where I’ve been working at this for 12 years? Well, it doesn’t have to take 12 years, but it usually does, probably because we have threshold issues. Everything you really need to know about trading you can learn in about 6 months. I’m talking about sex and trading, remember. You already know everything you need to know to be successful at either one, and talking big about it isn’t necessary, isn’t attractive, and proves just one thing: You’re all talk. A lady, or the EUR/USD, doesn’t want a talker. The guy who says he makes 7,000,000 dollars a month trading for 20 minutes in the morning is not only lying to you, he’s lying to himself, and we all know it. He doesn’t get any action. He just likes to talk about it.

What’s the reason we talk about our dreams instead of making them a reality?

Maybe you would like to trade the Euro for 2 hours a day, and make a 2% gain in your account, reliably, every month. Or maybe it’s 10%. If you really want to make 20% every month trading the S&P 500 for two hours a day, while you keep your day job, raise your kids and coach soccer…

Stop talking about it!

Make it happen. All jokes aside, the good life you and everyone else wants is right in front of you. If it wasn’t true, you wouldn’t still be reading this. Maybe the only thing stopping us from living it is the fact that we won’t stop talking about it long enough to actually do it. Be the real thing and when you get close to something (or someone) you really want, do this: Smile, be calm and don’t say a word.

It takes courage
It is not easy to put yourself out there and be vulnerable. The pressure is immense because this is the real world. If you’re wrong about the trade, the risk is enormous. Nobody really wants to advertise what goes on behind closed doors. Did you know that 20 percent of the world’s population has an STD?

That’s a big number!

Why would anyone have sex at all? When all the potential partners are going to make themselves attractive and tell lies that people want to hear, and we know this ahead of time, it’s remarkable that so many people do it anyway. People become traders because they desperately want to do something special, and they know it’s possible, even though it’s risky. Forex traders who don’t die from STDs (Stupid Trading Decisions) find the right trading system, they spend enough time working for it that one good day they get the reward. Lots of pips, and you get to have them every day. What could be better?

We all like trading, we all like sex, we all spend time and money trying to get more of both. Why not take a minute to think about how you can improve your life – in sex and trading?

Sexy tricks could turn into sexy pips! (or ticks or points!)

Have a great day, be a great trader, and be great at everything else in your life, too. It’s worth it.

- Jennifer

Reflexión sobre el Money Management.

Es fácil encontrar en la web información sobre diferentes modelos para aplicar el Money Management a nuestros sistemas y sobre algunos de ellos quiero dejar una reflexión, pues veo un error de fondo gravísimo en algunos de los modelos más populares como por ejemplo la f. óptima y otros modelos tomados de los juegos de azar. 

Reconozco que en determinadas circunstancia pueden funcionar algunos, pero digo que son modelos de MM que no usufructúan las estrategias como deberían, no explotan su potencial al máximo, y que se requiere de estrategias muy poderosas para que ellos funcionen.

Ley de dependencia y el azar

Error gravísimo es decir, que los mercados no son llevados por el azar, como cualquier trader lo sabe, para luego usar modelos matemáticos tomados de juegos de azar. O bien, hay ley de dependencia o no la hay. Por ese error de fondo, los modelos con base en el azar son totalmente desaconsejables.

Para aclarar la anterior idea diré que, en el póker una vez sale una carta, la probabilidad de que la siguiente carta sea la x, depende casi exclusivamente del azar, mientras que en los mercados por la ley de dependencia las cosas no funcionan de la misma forma.

De ahí que en los mercados no hablemos de azar, sino de probabilidad. El problema es que es una probabilidad muy difícil de calcular por los múltiples factores que se deben ponderar.

Entonces, si sabemos que es más probable que haya una relación causa y efecto entre una operación y otra y entre un sistema y otro a que no la haya, como en el azar. ¿Cómo a alguien puede ocurrírsele tomar un modelo del póker u otro juego de azar y dar por sentado que no hay dependencia entre ordenes? Y sin embargo siempre la hay… El forex  tiene muchos otros mitos por desmontar, como para nosotros estar cayendo en falacias lógicas que no nos permitan avanzar.

Si entendemos que hay ley de dependencia en los mercados, ergo, corolario; modelos como la f optima no sirven.

“Es más fácil creer que pensar, por eso son más los creyentes”            

                                                                                                    A.Einstein

Ley de dependencia aplicada al MM

Quizá no debería llamarla ley, pues la dependencia en el mercado no es algo estable, incluso a veces parece desaparecer por ratos, y a veces la hay en menor o mayor grado en cada momento.

A lo que voy es que, cuando empezamos a encontrar ciertas dependencias entre operaciones, entre sistemas, entre horas, entre días, entre mercados, etc. Podemos modificar el código del EA (MM) para aumentar nuestras probabilidades de éxito. Por ej. Si observamos que un EA aumenta su probabilidad de éxito en un digamos 30% al abrir operaciones dentro del horario europeo, ¿por qué no aprovechar este plus estadístico y modificar el algoritmo para que aumente en un digamos 20% su lotaje en esas horas del día?

Se trata de un camino de investigación bastante complejo, que conllevara a un algoritmo aún más complejo, pero si lo que buscamos es el Money Management más adecuado, todos estos factores deberían ser ponderados, evaluados y ejecutados.

Acá un regalito que será muy útil para quien lo entienda y lo aplique en el portafolio adecuado: Usando esta lógica he descubierto que ponderar los sistemas tendenciales en base al equity (el dinero bruto en flotante, ya sea positivo o negativo) y no al balance potencia un portafolio de inversión. Y solo representa un cambio sencillo en el algoritmo. Así le das gas a las subidas y se los quitas a en las bajadas.

AndrEAs