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Old 12-20-2010, 01:14 PM   #9

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Re: SST Money Management Warning & Backtesting

Quote:
Originally Posted by MadMarketScientist »
I feel the point he was trying to make was his win/loss was fine with the system, just when he hit a short losing streak he was way over-leveraged - not necessarily on an individual trade basis but by trading a large group of currency pairs all at once that tend to follow the same pattern/direction. It would be like daytrading the Nasdaq, S&P, Russell and Dow e-Mini futures all at the same time with perhaps modest risk per trade, but in sum you will likely see them all move in same direction - increasing risk substantially.
If the system he is trading gives him an edge, he should take every single signal the system gives him. Otherwise, the system only gives him signals and it is his discretion that gives him the edge. In which case it isn't much of a mechanical system at all. Its a finite set of instructions that paints a green or red dot when a,b,&c happens.

The system should take into account whether or not there is a lot of capital betting in related instruments in the same direction.

During the back test that provided the positive expectancy, you, then, have to expect that there were also instances where the system bet in the same direction on multiple pairs and it led to a positive result. That was OK, but its not OK when betting in the same direction leads to a large draw down. Can't have you cake and eat it too.


Accept the draw down or return the system for a refund.


MM
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Old 12-21-2010, 09:24 AM   #10



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Re: SST Money Management Warning & Backtesting

I respectfully disagree.

If you have a trading system/style that can be attached to limitless number of charts I don't think you can say that you should take every set-up. Nor do I feel a system/strategy has to always be responsible for also having you trade the ideal number of positions.

If it works, and is effective across dozens/hundreds of charts over time than as traders it is our responsibility to trade it responsibly - meaning using the correct leverage, using the correct number of pair and not over trading. I think this was a case where someone had over-used the system they were following. Which I think many do and get themselves into trouble when it turns out it's not the system itself, more likely the abuse of it (and I mean that tongue in cheek)

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Old 12-21-2010, 05:26 PM   #11

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Re: SST Money Management Warning & Backtesting

Quote:
Originally Posted by MadMarketScientist »
I respectfully disagree.

If you have a trading system/style that can be attached to limitless number of charts I don't think you can say that you should take every set-up. Nor do I feel a system/strategy has to always be responsible for also having you trade the ideal number of positions.

If it works, and is effective across dozens/hundreds of charts over time than as traders it is our responsibility to trade it responsibly - meaning using the correct leverage, using the correct number of pair and not over trading. I think this was a case where someone had over-used the system they were following. Which I think many do and get themselves into trouble when it turns out it's not the system itself, more likely the abuse of it (and I mean that tongue in cheek)

MMS
MMS,

Disagreement is good.

My point regarding the above is that if during the back test period trades where taken that resulted in the system being over leveraged and those over leveraged trades contributed to the positive expectation of the system, then if you want to trade the system, you have to expect to get over leveraged.

Whatever you do to generate the edge in the back test, you should do exactly the same in real time to gain that same edge if you are of the mindset that you can trade mechanically. If that means over leveraging then, then you have to over leverage, if it means trading without a stop, then you have to trade without a stop. You can't data mine and expect to duplicate the same results or make them better.

If he didn't want to get into a situation where he had 10 times the risk in 10 correlated positions, why did he? Is it the systems fault or his fault?

If you are running an EA on 10 currencies at the same time, you have to expect that at some point they are all going to have some bullish or bearish reaction to the, say, US dollar, and a system will generate a signal that can end up being wrong and you will pay with 10 times the hide.


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Old 01-07-2011, 08:56 AM   #12

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Re: SST Money Management Warning & Backtesting

At first I found your message very disturbing since I am a new member to the SST. I was afraid, like you, I was duped. After giving it some thought I find your posting very irresponsible.
The SST has only been on the market since August 2010. So assuming you were one of the first to purchase the system and did your 2 months of backtesting that would put you into mid October before you could have possibly started trading. You must have taken way too many trades in 2 1/2 months to blow through half your account. Also, with any system if you're talking about having 70% winners that would basically mean 8 winning months and 4 losing months. With any trading method you have to expect draw down periods. November has only 2 1/2 weeks of trading with the sst if you consider many traders stay out of the market a few days before the first Friday of the month and Thanksgiving week. If you traded then you did not have the volatility needed for the system to work properly. December is a month that historically has choppy price action. If I'm looking at a years period and know the odds are I'll have 4 losing months I would say you just started your trading during 2 of them and I would expect 2 more during the summer. I just started using the sst live this week and by no means am I off to a blazing start. But I will give the system more than 2 months before blasting it in a public forum. If you can not stomach draw down periods than perhaps you are in the wrong line of work.
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Old 01-07-2011, 09:12 AM   #13



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Re: SST Money Management Warning & Backtesting

Dollartrader,
This is why most traders fail. They simply freak out at the first sign of anything negative. The expectations of perfection, and the moment that reality presents a different picture they crumble.

Not wanting to be harsh but here's the reality. You can put 10 people in a room, teach them a quality system and I guarantee you at least 8 will still fail and blame the system, the broker, their neighbor, the dog, the cat, whatever. It's amazing how people find a way to fail especially when it comes to trading.

The parameters mentioned on the system sound fine -- get realistic, trade it responsibly, follow the rules - sounds like you'll be fine. Don't be one of the panicky 8 out of 10.

MMS
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Old 01-07-2011, 10:58 AM   #14

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Re: SST Money Management Warning & Backtesting

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Originally Posted by MadMarketScientist »
Dollartrader,
This is why most traders fail. They simply freak out at the first sign of anything negative. The expectations of perfection, and the moment that reality presents a different picture they crumble.

Not wanting to be harsh but here's the reality. You can put 10 people in a room, teach them a quality system and I guarantee you at least 8 will still fail and blame the system, the broker, their neighbor, the dog, the cat, whatever. It's amazing how people find a way to fail especially when it comes to trading.

The parameters mentioned on the system sound fine -- get realistic, trade it responsibly, follow the rules - sounds like you'll be fine. Don't be one of the panicky 8 out of 10.

MMS
It's delusional for a trader to blame his system, broker, neighbor, dog or cat when deep down he knows that only his wife is to blame.
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Old 01-07-2011, 07:54 PM   #15



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Re: SST Money Management Warning & Backtesting

MightyMouse,

Hilarious. Well done.
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Old 01-08-2011, 06:26 AM   #16

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Re: SST Money Management Warning & Backtesting

Quote:
Originally Posted by dollartrader »
At first I found your message very disturbing since I am a new member to the SST. I was afraid, like you, I was duped. After giving it some thought I find your posting very irresponsible............ .... But I will give the system more than 2 months before blasting it in a public forum. If you can not stomach draw down periods than perhaps you are in the wrong line of work.

Dollartrader :

I think your "blasting" comment is a bit harsh. A more charitable view of the original post is that it was posted by someone believes SST gives an edge, was carried away by that belief and screwed up, and is trying to help by publicly admitting the screw up as a warning to others who might make the same mistake? bharding seems to still believe in the SST method, and is now working to recover from their over-enthusiasm?

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