Wednesday, January 3, 2018

At a late hour

Due o the fact that Oil is keeping me glued to the screen I have nothing better to do than write something in this blog. In the same tone with most of all of my other posts and with this blog. Honestly speaking there is nothing but nothing that can prevent me from making money in the markets if I really want to, I can make money in the markets in so many different ways as Messi or Ronaldo can shoot. Whatever I do I end up making money and it takes so many extreme conditions to be able to shake me a little that I doubt that if I really want I can`t avoid them, many times I`m playing the game with the same attention that you got when you drunk (its a demo) and I`m still winning but figure that, I can`t believe someone is actually able to beat me. Unfortunately not only that I believe the market can not do anything but I also believe I can check mate it if I want, which is not necessarily true every time of course because as with any game sometimes the opponent wins too. Its also very important to mention that the game I win, yes I, with capital I, won, is entirely out of my control and very likely controlled by the opponent. I guess you could say I`m beating them at their own game and they`re so pissed off they want to kill me.  The opponent wins very, very rare I have to say it loud and clear and straightforward and it wins only because I allow myself to get caught in the game of who got the biggest balls which with my demo isn`t that hard at all actually and anyone could bet against the market without losing anything so its probably natural to, at some point, allow the game to go beyond limits. Right now I`m in one of those situations and I still think I`m going to win, except in one case, if volatility goes off completely in the next 7-8 hours which its possible.
Now, I got tired of only playing this game, I will continue because I like it but...  I`ll also start another one which will be the supreme game if everything goes as I assume it will. It will take me some time but I`ve already started. I can`t really tell you about it but it will be fun and a personal goal to achieve.    

Tuesday, January 2, 2018

2018 hi :)

Yes, it does seem that people are actually trading today even if its the second day of this year. Usually around here work only start tomorrow and I`ve opened the platform today as I usually do to perform other task than trading but then I could not help it and I`m placing trades also as I`m writing this text in the middle of the day. It seems my demo account of 25K expired which required opening another one this time with 50K. I had a demo of 100K one of 25K and this one of 50K. As for trading this account I plan to start only Monday as right now I`m in a trade and the only thing I want is to get out of it because I don`t have the patience to wait so most likely second day of the year its to late to start trading - here is a lesson learned by the demo account, very valuable actually as you will know that trading in the second day of the year is perhaps not the best idea because you still feel like in vacation. Unfortunately, trading well in general is not as satisfying as I thought it will be or...should I better say that at some point you do get bored of it and want more. More in this case meaning faster. I do remember a time when just making a very little felt so good but then as things evolved I guess its human nature to want more and so, step by step, each time trying to become better and better being unsatisfied by the current level the progress appeared. Now, mind me not, but progress is the hunger of any intelligent form of life and if I wouldn`t know better I would say that everyone welcomes progress. Unfortunately its not so, usually everyone sees things trough their own eyes and their own possibilities and when those possibilities are limited so is progress and what is worst is  that some are so limited that not only they themselves do not progress but they are dong everything in their power  to prevent it everywhere around them. Its actually even amusing when you think that someone so limited actually believes that can stop a force so unlimited as progress. Speaking of progress, my newly open 50K account progressed today with 0.5% which if real money (its a demo for now) would be just enough for today to buy me some... socks for example... and I could get to that coffee with a blonde that I`ve seen on Instagram with 500K followers to explain to her that she's a genius, I barely can get two people listening to me and even those think I`m nuts. Hmmm...this must be the best post in this blog this year up to now and it was written while waiting for a position to make me some money which it did and now I`m done, bye.       

Saturday, December 30, 2017

Backtesting engines and some initial results

The end of year arrived with a idea flourishing in my head. That to put some of the market insights provided by my algorithms in to a automated trading strategy, as I wrote in one of my previous posts (a serious post, most are not, nevertheless I don`t suppose you mind and if you do its not really my business, I do one thing very well -money- so either you like it or not that's the situation - I`m not sure why I`ve just remembered I need something from Ebay...) For that idea to become reality I needed to be able to build a testing engine from the scratch so, given the fact that this period of the year is not very active most people are thinking at other things than trading, I had the time to put together and figure it out how the testing engine must be done in order to allow me to accomplish most of the tasks I use in my discretionary trading. While I was doing that I`ve stumbled upon some unexpected results shortly after I begun. I`ve started building the testing engine around the most simple buy/sell "rule" or indicator or market insight, call it whatever you want, provided by my algorithms and obviously after I was done and satisfied by my most basic creation I hit the "Backtest" button and find out the engine is working and now I can add some complexity to it. As a parenthesis here, I do not have enough historical data to be able to say that any back test I do now its relevant, I`m only testing on last 4 months of data on Crude Oil but the point is to have the back testing engine and the strategies to be back tested in place. The results of my most basic strategy were not very good, as expected, but since that was not what I was after in this phase I`ve continued to the phase 2, that of adding some more complexity to it. Still basic stuff and without using other complex trading rules I`ve unexpectedly stumbled upon a reasonable good strategy that could have been applied in the last 4 months and produced a good return even for my discretionary trading. I have to remind here that 4 months is irrelevant however since the result is quite good and I have not optimized anything I will leave this system as it is curious about how will it do in the future. Here are the results:
    First and foremost the backtest is not relevant with 4 months of data I have to repeat this over and over again and after that the results, while certainly not extraordinary, show a trend following strategy that (assuming the same results would be given after real robustness tests would be performed on a few years of data) most people would be quite happy to have I believe especially since no optimization or curve fitting was used, nothing at all, there is not a single parameter in this backtest that was optimized in any way.
Now, lets move on. After the above strategy (I`m already calling it strategy even if its just the basic testing engine), gave me these results I left it as is and went to the next phase of building the engine. Phase 3, where I copied the above engine and added some more complexity, the point being all this time not to create a trading strategy but to create the testing engine that I`ll be quickly adapting to whatever idea comes in to my mind. The results of phase 3 of the back test engine building can be seen bellow:
One commentary on the result, it shows a improvement of the previous results but the improvement comes from a few trades that achieved a large gain however you know or you should know that many successful trading strategies results are given by very few trades that hit the jackpot as is the case of the well known trend following strategy the Turtles used back in the `80s. Anyway, I`m done with the phase of actually trying to develop the back testing engine as I have everything required (at least for what comes in to my mind now)  at this point and now I should start to feed this back test engine with some of the data I use in my discretionary trading. I will do so and feed it with data crunched and combined in many different ways in time but for the moment I`m done with back testing this year. What I`m actually puzzled now is how would these two strategies perform if back tested on 10 years of data. I know how I build them and what they have under the hood and I would not be surprised if they would actually prove to be reasonably good even if for me are much to simple to think seriously about creating the robot that would place trades automatically based on them. And now that I`ve remembered that's another headache, a robot that would place trades automatically requires more coding and, as I said since I know I won`t actually use it my mood of doing it is at very low levels right now. But maybe in time, when the level of my greed of making money from the markets simply because I can will be reduced and I have already got enough I will leave a robot to do the job for me, until then I`ll continue to trade myself and show you results you did not believe are possible. The advice that I have is ride with me or stay out of my way :) 
Happy New Year!    

Wednesday, December 27, 2017

Correct me if I`m wrong

After winning the game of trading on the futures market (quite fast I would say, I`m new here), as I did on FX, all that is left to do is to think about the real scenario where real cash are involved. In which case one can not help thinking at the (very unfortunate I would say) other side that takes your trades hoping they will win and you will lose. Since I do not know what`s behind the scenes, nor do I care for that matter, I`m able to win a game that is supposed to be fair or at least on the surface pretend for world eyes to be fair, I have to assume that arithmetic's are real and the market really involves cash to move, cash that can be used to buy a house for example  (well, thousands of them but that is not the point here). So, in this case, how much cash is required to move the market? On a short term, not that much, and the market can be easily manipulated with a few millions however unless those millions are smarter than you those millions are lost. Why? Well, with Crude Oil for example the depth of market shows on average lets say 50 contracts/tick. That would be 5000 contracts for 100 ticks and 5000K to drive the market lets say one day (assuming nobody else is playing to provide more liquidity to rise your cost), not that much you would think. Trouble with driving the market is that unless you drive it in the right direction those 5 millions are lost because on a longer term the market will do what is supposed to do irrespective of the will of one or other particular group with enough cash to be able to drive and manipulate the short term price. So I would say that as a trader, you can be quite safe as long as you trade well no matter how small you are. Are 25K enough to play if the market can be manipulated against you? Absolutely, just be better than them for enough time and their cash are history and possible in your and other small trader`s pocket. That is why this game is beautiful....I`m not sure how things are with FX because in there I`m not even sure there are real money involved in moving the price so the theory might not apply there which kind of explains some things but then again I`m just someone who does not have a clue on how things work behind the scenes and as I said not care very much either. Anyway, I have an invitation open, if you got 250 mil and think ur wiser I invite you to trade against my demo meaning that when I`m selling, for example, you should use your cash to buy and drive the market up and of course keep it there whatever it takes otherwise I win (again and again) :))))), do it for enough time and I can quite assure you that soon you will find out how I feel trading on demo without cash. Of course the purpose of an exchange is to provide anonymity for all players and the above text is part of the fun after the trading day but nevertheless it is true. True in general I mean for any trader that is good enough.       

Friday, December 22, 2017

Last trading day of the year

Today was the last day of this year when one could actually enjoy making some money in the markets and normally what follows is 2 weeks of spending a part of the amount traders made in this year. If you ask me, these two weeks I would be able to spend everything I make in a year and not give a shit about it knowing that next year I would make it back. However since not a single one of you wise people seem officially interested in trading strategies I would have to do something else than spending during these two weeks when the markets are closed. The first thing that comes in to my head is to finish the mechanical strategy that I`ve started to create. I`m far from the finish and as I said its not something very appealing to me since I know I would not use it but it would be fun to see it in action. I`m currently in the phase of back testing and this phase is far from being done, actually I did not even start the real back test rather I`ve put some of the parts of my future back testing engine together. Working slowly , the software that I use (Amibroker) is capable of doing anything at the "cost" of not having something straightforward to follow -actually there is but its not useful for me. Which is a good thing, a straight forward path does not work in this business, you got to be creative and that takes time, time to think about ideas, time to think about coding the ideas and time to write the code and it all results in more work in verifying if the code is doing what you intended and so on so forth. For a good trading strategy to be developed, it would probably take months of testing, adjusting and double checking everything before real money could be put in to it and that only after you have algorithms that provide good market insights, which is also the explanation why an automated system that actually works is so hard to develop and so rare and I`m after the real thing just as in my discretionary trading so things are complicated enough. What I`m currently anxious to finish is the testing engine. The engine that can be quickly mold on any trading idea based on my trading algorithms and that is not so simple since the information provided by my trading algorithms and successfully interpreted in my discretionary trading is quite diverse and a lot and the machine needs more lines of code than I`m currently in the mood to write to properly interpret at least a part of it. After and if I manage to finish a testing engine that would at least partially satisfy me with its abilities I would have to feed it with information and do the actual back tests. The ideas of crunching the information`s are many and I do not expect to have the patience of testing and crunching more than a few of them before having a good automated strategy in place, as a matter a fact I was playing and testing some of the information in its most rudimentary form of trading and the results were quite good which makes me think that if I really put some work in to it the result would probably be an amazing automated trading system which I would not use. But having it does not hurt so the plan for this period of time its to do just that. In to what extent I would be able to finish it and what level of complexity it would have it remains to be seen. Other than that for now I wish you a Merry Christmas and a Happy New Year.       

Sunday, December 17, 2017

And here we go again

The title of this post refers simply to my lack of motivation in trading demo accounts which in the end it always ends with a drawdown as is the case of this week when after first three days of the week being winners Thursday in the afternoon I started to play with fire because I was like up 50% anyway so, figure that, I could afford it. As a matter a fact, Thursday, the end of day was written somewhere at -10%, I was slightly profitable up until I thought its a good idea to just trade no matter what. I don`t know about you but for me 36.18% gain in 41 days of trading (this is where my performance including commissions is actually counted) isn`t exactly something to be proud of. However, given the fact that I`m new to futures trading and not only that but I`m also new to Crude Oil because I never traded the CFD on Oil available with some of my FX brokers, I have to say that I`m partially satisfied with the result. And yes, that drawdown is simply annoying and it should not be there but its the result of discretionary trading. As I was saying in one of my previous posts,  a discretionary trader can do much more than a mechanical system but it does come with a price, and that is that sometimes you can lose focus and forget what you're playing with. And contrary to popular opinion, its not the losing that its doing the damage its the winning. When you win and keep on winning its the time when you should take a break before you start feeling like asking "Jesse who?", btw the only book that I found useful about trading was "Reminiscences of a stock operator" and the only trader that I`ve ever heard of and admire is Jesse Livermore.
  Which lead me to this weekend work of having some fun in the attempt to put in place a completely mechanical strategy for the days when I`m not in the mood. Of course things aren`t that simple as to write a mechanical system that is able to get anywhere close to my discretionary trading  requires many work hours, more than I`m willing to dedicate, and given the fact that I know I will not use it anyway because I like to trade myself I do not consider it a task to be done but more close to lets see what do I get if I get some crunched numbers from my algos and put them in a mechanical system. Unfortunately for me I do not have enough futures historical data  and right now the test is made on 4 months of data which I use for my algos in my  Crude Oil charts. The coding is in progress and slowly advances as I am in the mood to write it, in truth being told I find myself enjoying more the part when I figure it out how to do it than actually writing the code for the whole thing, I seem to lack the motivation of doing so.

Thursday, December 7, 2017

The warnings of professional players

As an investor if you are interested in the financial markets, lately, as I`m sure, you keep on hearing about bubbles, and overvalued markets either from people who`s professions directly involves financial markets and hence they must be always fully aware of what's happening in the industry either from professional market players who`s jobs are also to make a living from the markets hence they too are, and must be, fully aware of what`s happening with the financial markets they follow. The reason why these guys started to send warnings, either from a technical point of view either from a fundamental point of view when analyzing the financial markets, and from what it seems to me at the current levels the warnings come from both point of views which makes them so much more worth of being taken in to consideration, is because of the abnormalities they observe in the recent (or maybe not so recent) behaviour of the markets. Every each one of these guys have their own tools that they use to asses the condition of the markets and lately probably many of these "tools" they use warns them about the fact that certain outliers are in play and that the current market conditions are under no circumstance normal. From my point of view an investor should take in to the consideration these warnings very seriously as while the markets usually do not react immediately and actually nobody can anticipate or predict what the markets will do, the professionals of this industry are already in full alert mode and their "game" is currently to ensure that whatever happens their capital will not suffer to much damage even if the markets continue to go up or the crash takes place the very next moment. They have already hedged their positions, reassessed the risks, and adjusted their exposure, a thing that actually might be responsible for the snow ball that is the current growth, and the snowball is still growing. Nevertheless the warnings are valid, the markets will do what they always do, sooner or later the bubble will break and the bigger the bubble the bigger the explosion. Most likely the question for an investor is what to do? Getting out might seems a bad idea when the market is growing like it never grow before - at least on certain instruments, take for example bitcoin. The safest answer to that is probably to take your profits and run until you run out of luck. Many have already done that, perhaps in doing so they are currently regretting however it is certain that they can be sure of the fact that the regret of missing bigger profits is fall smaller when compared to the regret of losing all the profits or for that matter losing more than profits. As I was saying, professionals have no risk, they are...hmmm listening Verdi - March Triumphal if I may say that :)).