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Profitability

Backtesting Settings For the Logical Trading Indicator V.1Since creating the Logical Trading Indicator, my trading game has changed in a big and positive way. But I have been curious as to how I can make an automated strategy with it and how much it makes. The Logical Trading Indicator has many different signals and alerts that you can use to create your own trading strategies that work best for your trading plan. Over the weekend, I have been tinkering around with the base strategy of buy when I get a buy signal and sell when i get a sell signal. I have played around with both a long and short strategy mainly focusing on the BTCUSD pairing. I am really doing this to help me find the best settings possible for each time frame and letting the strategy do the backtesting for me. This really helps me to figure out how it does over the past year or so. So far, at least for BTC, a LONG only strategy has yielded the best results. Mainly because I couldn't get it to fire shorts the way I wanted it to. This is where machines still need some human guidance, as well as your trades, haha. Dialing It In What I am doing is going into different timeframes and finding the best settings for the ATR multiple and length in combination with basis length and the long period moving average. I have been recording the results primarily on the 5 minute as well as the 1 HR and 4 HR time frames because those are the main time frames I focus on. I have played around with different variations of functions, but TradingView can't seem to get things to fire on the strategy the same way I can get the main indicator to fire. But based on this, I set the strategy to a simple LONG only strategy where it buys when you get a BUY signal and then closes when you get a SELL signal, with the addition of a stop loss function that let's me set a stop loss percentage to provide some additional risk management to help with the drawdown percentage. In this backtest, the strategy was not taking the 'Take Profit' signals into account, or when I tried to include them in the logic, they weren't firing properly, so I kept it simple with just the BUY and SELL signals with a stop loss. If you used the built in take profit signals, you can do even better than these results. On the 5 minute time frame, the most profitable settings ended up being: ATR Multiple: 3 ATR Length: 1 Basis Length: 15 EMA Long Period Moving Average: 50 SMA These settings yielded over 100% profit for the backtesting period, which is about a year. For the 1 HR time frame, the winning settings were: ATR Multiple: 3 ATR Length: 6 Basis Length: 20 EMA Long Period Moving Average: 100 SMA These settings yielded over 200% profit for the backtesting period with almost 60% win rate! Again, you could maximize this even more by utilizing the take profit signals and using short trades when the trend is right and if you are trading on a futures exchange. I have been doing more spot trading on DEXs lately, so I have been trading long only lately. The Importance of Backtesting I cannot stress this enough, you have to back test your strategies to make sure they are going to be profitable. This can be done manually by going back in time on the charts and finding all of your signals and seeing if it was profitable, or you can create your own strategy like this using TradingView's Pinescript and let the program do the backtesting for you. However you do your backtesting, just make sure it gets done! You don't want to just think an indicator or a strategy works, you want to KNOW it works! If not, you could be throwing your money down the drain. This is Only A Test- But Great For Info Gathering I am only using this strategy for my own backtesting purposes, not publishing it. I simply used one part of the strategy that is built into the Logical Trading Indicator, and it honestly doesn't properly utilize multiple options for exits as far as the automated strategy goes. I know that if I use these settings, but also use my built in take profit signals, I can do much better than these results are showing. What is great about this is you can see the performance and find trades that you wouldn't have taken in the first place, or entries and exits that could have been done better by trading manually. For example, after looking at the list of trades, I saw several trades I would have either gotten out of for better profit using the take profit signals, or trades I wouldn't have taken in the first place due to consolidation or accounting for the larger trend. When trying to program some of the other functions from the main indicator, TradingView would freak out on me a bit and not want to provide any results, or results that just didn't make any sense. But that is all a part of the process. It helps you figure out that the machines don't always have it right, and that having just a bit of 'human' in your trades can make your performance even better than the strategy suggests! Living That Trader Life This is the life of a good trader, at least in my opinion. Based on my trading plan, I do not trade on the weekends, even though the crypto markets are open, it isn't always the best time to trade. I like to take this time to go over my trading journal to see where I can improve, perfect my strategies, and hone in on the things I need to work on to get better. What this development work does for me is show me that automated trading is great, but with the combination of a great indicator that can produce trading alerts, and my own trader's intuition, I can give the markets a serious beating and come out with some amazing gains, as long as I stick to the plan, as well as trade manually with the signals! This helps me keep the emotions out of the game and let's me use the data with the correct settings to make the best decisions possible in my trades for the biggest gains! So get out there and do some backtesting on your favorite strategies to see if you really are trading logically!
COINBASE:BTCUSDEducation
by thelogicaldude
A Trader's Guide to Profitability and SuccessGreetings, fellow traders! As a seasoned veteran of the financial markets, we've witnessed firsthand the transformative power of trading, its ability to elevate individuals to new heights of financial freedom and fulfillment. Yet, we've also observed the struggles of many aspiring traders, their goals & dreams marred by a lack of guidance and a clear understanding of the intricacies involved. So, let's delve into the five key aspects that underpin long-term trading success: 1. Crafting a Trading Plan: Your Compass in the Market Storm. A well-defined trading plan serves as your beacon, guiding you through the turbulent waters of the markets. It's not a rigid set of rules but a dynamic roadmap that adapts to changing market conditions. 2. Unveiling Market Secrets: To make informed decisions, you must become an astute market detective, meticulously analyzing market trends, economic factors, and company fundamentals. This involves mastering technical and fundamental analysis, and always staying abreast of market-moving news and events. 3. Taming the Risk Beast: Risk Management – Your Shield Against Trading Perils Risk management is the cornerstone of trading success, shielding you from the perils of impulsive decisions and excessive losses. It's about setting stop-loss orders, limiting position sizes, and diversifying your portfolio – strategies that safeguard your capital and ensure long-term sustainability. 4. Conquering Emotions: Mastering the Emotional Rollercoaster The financial markets are a psychological battleground, where fear and greed can lead to disastrous trading decisions. To emerge victorious, you must cultivate emotional control, adhering to your trading plan and avoiding impulsive actions driven by fleeting emotions. 5. Embracing Continuous Learning: The Path to Perpetual Trading Prowess The financial markets are a dynamic entity, constantly evolving and presenting new challenges and opportunities. To stay ahead of the curve, you must embrace continuous learning, stay updated with market trends, explore new trading strategies, and adapt to changing market conditions. Continuously refine your knowledge and skills to improve your trading performance. Stay tuned for more educational content and don't forget to trade with care!
COINBASE:BTCUSDEducation
by financialflagship
Trading Plan that will help you become consistently profitableIn my trading career beyond having a strategy (actually multiple depending on market state and asset class) to base my trades on nothing has ever been as important as having a Trading plan. In this post I want to share with you my personal trading plan to help you create a set of rules that will help you stick to your plan and keep your emotions in check so that you can actually follow your trading strategy and become a consistently profitable trader. Something that was and still is key for me is the following realization: Never get attached to your opinion or view of why something should happen. The market is in fact always right and based on nothing but irrationality since its made by humans so the movements of the market do not have to make sense and at more times then not will not make sense. Trading is simply a mind game. Markets are a result of mass psychology which leads to exploitable edges. Mastering your own psychology is key to keep following the strategy that defines your edge. So now without further ado my trading plan template that has helped me so much over the years and I hope will help you as well: **General Rules** 1. Never enter a trade without a plan (TP,SL) 2. Once you are in a trade stick to the plan 3. Its ok to be wrong its not about being right its about making money 4. Be patient do not act on FOMO 5. Do not chase the market 6. Let your winners run and cut your losses short **The 5 fundamental truths** 1. Anything can happen. 2. You don't need to know what is going to happen next in order to make money. 3. There is a random distribution between wins and losses for any given set of variables that define an edge. 4. An edge is nothing more than an indication of a higher probability of one thing happening over another. 5. Every moment in the market is unique. **Rules of consistency**I AM A CONSISTENT WINNER BECAUSE: 1. I objectively identify my edges. 2. I have predefined risk of every trade. 3. I completely accept risk or I am willing to let go of the trade. 4. I act on my edges without reservation or hesitation. 5. I pay myself as the market makes money available to me. 6. I continually monitor my susceptibility for making errors. 7. I understand the absolute necessity of these principles of consistent success and, therefore, I never violate them. **Risk and Money Management** Do not increase the standard trade size before you doubled the account. 1. The maximum amount you are allowed to lose in a day is $XXX.  2. The maximum amount you are allowed to lose on any single trade is $XXX.  3. The maximum number of losing trades in a row you are allowed to have in a day before you stop trading is three.  4. The maximum number of losing trades you are allowed to have in a day before you stop trading is five. (You may have had a win or two between losses, but there is a time to stop trading.) The maximum number of losing trades in the same direction you are allowed to take in a day before you stop trading is three.  1. If you are up $XXX on a single trade, you will put a profit floor of $XXX underneath the current price to protect a portion of those profits.  2. If you are up $XXX on a single trade, you will take the money and close out the trade.  3. If you are up $XXX for the day, you will take the rest of the day off, stay away from the trading screens, and do something you enjoy doing—other than trading !4. If you are up $XXX for the month, you will put a profit floor of $XXX underneath the month's profits to protect a portion of those profits. If you are up $XXX for the month, you will take the rest of the month off, stay away from the trading screens, and do something you enjoy doing—other than trading! Take a vacation, sleep late and read books, or do something else fun.
Education
by TradingPit
3
Winrates required to breakeven relative to stop & target sizesTaking AUDUSD as an example here, the spread is not the smallest relative to ATR nor the largest. The formula to get a breakeven winrate is 1/(1+reward/risk). Because we want winrate*reward = loserate*risk <=> winrate*reward = (1-winrate)*risk <=> winrate*reward + winrate*risk = risk (never 0) <=> winrate = 1/(1+reward/risk) For example with a 20 pip stop, base risk to reward of 1 to 5, and 2 point spread, reward or winners = 98 pips, risk or losers = 22 pips. So the reward/risk = 98/22 = 4.4545454545... So the breakeven winrate will be 1/5.4545454545 = 18.33% That is just the breakeven winrate. Profitability will of course depend on: - Frequency: How many trades you are able to take - Winrate: How much higher than the breakeven winrate it is - Position size: Profitability does not go up the higher it goes If a strategy or trader only gets a couple of trades a year and his winrate is barely above breakeven, he will not be very profitable, and it will be very easy to lose all profits. And as the stops & targets in pips go down, the hit rates needed to actually make money go up exponentially up to a point where the trader needs to own a crystal ball and be able to predict the future. Take costs into consideration with any strategy and before placing any trade. And 1 other thing to keep in mind is spreads can also fluctuate, depending on the broker, at certain hours they can go up 3 fold, sometimes more, it can really hurt. A cool thing you may notice is with a stop of 20 pips, the spread/stop = 10% and also the winrate to breakeven is increased by 10% for both risk to rewards. Same thing with the 5 pips stop. And so on. The required winrate to breakeven increases by 100*(spread/stop)%. Easy to quickly calculate when you are considering trades.
Education
by MrRenev
Generating SRC ProfitsLet’s talk about SRC profits. We’ll talk about what they are, why you must have them, and how to generate them. So let’s get started. What are SRC Profits? Lately, I'm seeing all of these YouTube videos showing claims like this where someone said, “I made $1,088 in profits day trading.” Or someone claiming, “I made $1,253 in profits in three minutes.” Wow, look at this: “32,625 pounds in only 24 hours” And you know what? I believe that all these guys actually did these trades. But here’s the deal when you trade, you’re going to have trades that just work out perfectly. Yes, there will be trades where you make a lot of money. And for me, the question always is, are these SRC profits? So let’s talk about this here, because if you want to trade for a living, you must be able to generate SRC profits. So let’s take a few minutes and talk about this. S – Systematic So here is what SRC profits are. First, it’s an acronym and the S stands for systematic. Now, I don’t know about you, but I want to make my profits in a systematic way. Yes, of course, you can make money trading Tesla if you’re catching it at the right time. But you see, how exactly do you decide when to enter, and can you generate these profits again? You know me, I like to trade what I see and not what I think. I keep a special mug on my desk that reminds me of this. See, that’s why I use indicators. That’s why I have a trading strategy. Having a systematic way means that we have a trading strategy that tells me exactly what to trade, when to enter, and exactly when to exit. Sometimes you exit with a profit and sometimes, you do exit with a loss. Losses are part of our business as a trader. In short, I have a system. I love to trade based on rules and not based on my gut feeling, because whenever I traded based on what I thought, it only worked for a little bit. When I switched to trading what I see based on science, based on probabilities, based on rules, that’s when my trading turned around. R – Repeatable Let’s move on and let’s talk about the second point, the 2nd letter in SRC profits. So the second point here is repeatable. Without a system, it will be difficult to repeat the profits. Now, think about it this way. Let’s talk about Tesla . Let’s say that you caught Tesla when they announced a stock split on August 11th. And let’s say during this run you made 30% in a matter of a few days, or maybe you traded options and you made 1,000% in a few days. Can you do it again? Well, you see, if you rely on the next stock split then you might have to wait a few years. Think about it this way, is it better to generate $10,000 on a single trade, or is it better to know how to make $500 every single week? For me, I’d rather trade a system that’s generating $500 per week consistently than relying on the windfall profits. Yes, these windfall profits will happen in your trading career we’ve just talked about it. And it’s nice when it happens, but I wouldn’t rely on it. If you can generate $500 every week times 52 weeks, that’s $26,000. For me, that is better than being able to generate these windfall profits. This brings me to the next point. C – Consistent Profit The next one is consistent profit. I want to make sure that I’m getting consistent profits. Let me give you an example here. Would you rather have an equity curve like a EKG machine? Or maybe a nice steady line gradually growing from left to right ;) What is an equity curve? An equity curve is charting your account, of how your account is going. Now, I don’t know about you, but I wouldn’t want my equity curve to be like a roller coaster. Even if this roller coaster would make me more money I wouldn’t do it. I would rather make slightly less money but still have my hair instead of pulling it out with that equity. I’m not a nail biter but if I had this equity curve, this roller coaster, I would probably bite off all my nails. You know that there’s some traders who are doing exactly this. Now that you know what SRC profits are and why you need them if you want to trade for a living, let’s move on and let’s talk about how you generate these profits. 3 Things You Need To Generate SRC Profits – Number 1 So the first thing that you need is that you need to have a trading strategy or trading strategies. The strategies that I use are based on indicators and probabilities. You see, I know exactly what to trade, I know exactly when to enter, I know exactly when to exit. I know my risk, I know my potential profit, and I know my odds of realizing that profit or loss. If you don’t know my trading strategies yet, let me briefly mention them to you. So my bread and butter strategy is the PowerX Strategy, and I have written a book about this. During the pandemic I was trading a strategy called Theta Kings. This was perfect as the markets were crashing, along with the PowerX Strategy. Now, another trading strategy that I’m trading here right now is a trading strategy called The Wheel. Anyhow, let’s move on. 2. To generate SRC profits you need to have tools What is the second thing that you need to generate these SRC profits? Well, I am using tools that make my life easier. You see, I know my odds. I know my probabilities, I know what to expect and I couldn’t do all these calculations in my head. This is why I’m using tools like the PowerX Optimizer that helps me to find the best stocks and options to trade. The PowerX Optimizer shows me for any given stock the signal, the position size, how much I should trade, how much money I can potentially make, and how long I’m in a trade. All of this is important to me so this is why I love to have tools. And for The Wheel strategy, for example, I use the wheel income calculator. I've built a calculator that I’m using for picking the best stocks and options for The Wheel. You see, I need to make sure that I’m getting the very best trades for my trading. I personally would never trade without the right tools. It’s like trying to compete in a Formula One race with a Toyota Prius. I mean, nothing against a Prius, but you won’t win a Formula One race with it. And when trading your trading against some of the smartest minds in the world. Don’t bring a knife to a gunfight, have the right tools. 3. You need to have the right mindset So finally, number three, what is the third thing that you need here? It is the right mindset. What do I mean by this? You see, when trading there will be losses and you need to know how to limit your loss because otherwise these losses will be devastating. Who knows what I’m talking about? You see, you need to know how to control your risk. Take care of your losses. The winners, they can take care of themselves. Summary Now, here’s something to remember that is super, super important. Trading is a marathon, not a sprint. So super important and here’s why. Good for you if you made a $1,088 in profits in day trading, or if you made $1,253 profits in three minutes. And you know what? Good for you if you made $32,625 during the coronavirus in 24 hours. But let me ask you this, how much money did you lose before that? How much money did you lose right after you made these profits? Did you give it right back? You see, I see too many traders being blinded by these windfall profits, by these, “Hey, look at me. Look at what I did” stories and they don’t see the full story. This is why I’m doing this here to show you the full story. When traders don’t see this full story, when they just see this “look at me” stuff, they start chasing these dreams and they lose a lot of money along the way. You see, for me personally, I prefer SRC profits. Trading is a marathon, not a sprint. If you enjoyed this article, feel free to leave a comment below and share it with anyone you think may find this helpful.
NASDAQ:AMZNEducation
by rockwelltrading
1
Which method is the most profitable?Same strategy. 4 options on how to manage trades. Can use anything from a really tight stop and win very often but small to a very wide one and rarely win but win big. Which method really makes the most money? Let's look at the numbers after 100 trades: Strat 1 with a ridiculous winrate and profit factor => 1 RR 95 Wins 5 Losses => Get 90R out! Strat 2 with very high winrate and profit factor => 2 RR 80 Wins 20 Losses => 160 - 20 = 140! Strat 3 with a 50/50 winrate and high PF & RR => 4 RR 50 Wins 50 Losses => 200 - 50 = 150R! I think you see where this is going... Strat 4 with a rather low 1/3 winrate and high PF & very high RR => 8 RR 33 Wins 67 Losses => 264 - 67 = 197R / 200R! If you picked the one with the highest risk-to-reward as the most profitable congratulations, you fell for the bait :D Tihi Strat 5 with a very low winrate no one wants and ordinary PF => 16 RR 16 Wins 84 Losses => 256 - 84 = 172R The best strategy is the one that makes the most profit over the years, with the least risk. Another factor is how long it takes. Every market has its specificities. In the world of forex which is my specialty the realistic risk to rewards we get are in the 3 to 7 area. Less than 3 is not that great, and above 7 does not happen without big pullbacks (that take time). A reward to risk of above 10 is really not realistic. With crypto and stocks maybe, but with Forex no. With FX the time scale I prefer and think is best is 2 days to 2 weeks. The best moves with least noise happen on this one. Crypto and stocks holding times are also much longer (you could get 20 to 50R or even more with BTC in 2016-2017 but it's a holding period not of a couple of days no it's a couple of months instead). Commodities (Oil Gold Metals Grains) are close to FX I think. Of course as with everything else the best risk-to-reward and TF is the one you do best with. Typical FX strong moves: What day traders and signal providers do: And that's a really wide stop... Can you imagine? It's so stupid to day trade for so many reasons xd Horrible trends with big pullbacks, missing out on big wins, noise all the time, wasting one's time, gambling what will happen during a few hours, awful risk to rewards no matter what, a small spread decimates them. Lmao. Bitcoin. You won't get much out of Bitcoin swingtrading (and day trading is a joke) And then stocks And then Warren Buffet If you bought Ko with 10% of your money and risked 3.3% You can still trade with 96.7% (can use leverage to pretend it is 100%), and in 10 years you get a profit of 115% + dividends. Pretty nice! I don't think trading stocks for a few days or weeks makes sense with all the gaps there are, even if you participate in pre and post markets it still gaps alot between them. Once a decade stocks go absolutely vertical George Soros said it's not about how often you win, it's about how much you make when you win. Strat 1 "always win I am a legend" (I doubt anyone wins that often with a RR of 1) => 90R Strat 4 (PF of 4) => 200R (about twice as much) And if you risk 1% each time? Strat 1 = 144.7% profit Strat 4 = 546% profit xd Not twice as much. Lots as much! GG Compare strat 2 & 4 Strat 2 80% WR & RR 2 After 100 trades we make 140 R Strat 3 50% WR & RR 4 After 100 trades we make 150 R / 7% more 1% risk => Strat 2 = 299% profit (twice as much as 1 btw) Strat 3 = 330% profit / 10% more One more reason higher RR is better. This does not mean one should be obssessed with it and then get stopped all the time and blow up. It's just that first start with whatever strategy and it's ok to have a RR of 1.5 to 2 maybe, and then when improving it over time the most important goal is to try and increase the payout. Increasing the winrate is harder and pays less. If possible ok but not the main focus. Nothing increases profit more than improving the RR. And keep in mind while trailing a stop you are doing the same as if you closed your trade and are opening a new one (so if the stop is very wide it is like having a poor risk to reward on a new trade).
Education
by MrRenev
3
AEP, American Electric Power Co. Inc. - Rectangle PatternNYSE:AEP People like to use indicators or oscillators many times to predict the next trend. Actually they can help you, but they will always be late. And above all, what do you do if they are in contrast with each other? Most importantly, do you have a backtest that proves in the long run that their use is profitable and valid on multiple markets and assets? We go ahead on our technical analysis, aware of what makes us through backtest statistics and confirmed in real operation for years now aware of the deviation that may have on the annual average. In this case we are waiting for a long breakout of this rectangle if it happens, knowing what is the Risk/Reward, the %Profitability, the size of the position aware of the entry and exit point and risk management. Stay Tuned! finance.yahoo.com
AEducation
by SwissTradingSchool
Bitcoin Trade Signals Review - 1H Since 2018 Jan To 20190730ukBITMEX:XBTUSD BITSTAMP:BTCUSD BINANCE:BTCUSDT Timeframes on Ribbons: 1H -> 45H Indicator: 9 Seasons Rainbow Multi TimeFrames Pattern This Tutorial Idea Indicates some important trading signals of Bitcoin given by the indicator since 2018 January, in order to help users of the indicator learn how to identify opportunities. Some Typical Trigger Signals: Long: Yellow -> Lime: Breakout Blue -> Green: Reverse Purple -> Blue: Fading Breakout downward Short: Blue -> Purple: Breakout downward Yellow -> Red: Reverse Lime -> Yellow: Fading Breakout Signals Pattern Trigger in Short Term: Ribbon 1 - Ribbon 3/4 Context: Ribbon 3/4 - Ribbon 12, which is the most outstanding ribbons with priority: Yellow-Blue, Lime-Purple, Red - Green, else. I appreciate your like or comment. Welcome to share your idea here. PM the author for a one-week free trial of "9 Seasons Rainbow Multi TimeFrames Pattern". DISCLAIMER This idea is only a personal opinion and does NOT serve as investing advice NOR as trading advice. This idea, "9 Seasons Rainbow Multi TimeFrames Pattern" indicators, and all related contents are for the purpose of trading strategies studying or paper trading. If a user or a customer uses any of these related contents for live trading or investment, she/he should take all risks.
BITMEX:BTCUSD.PEducation
by go8686