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Other Added - Futures Trading - How To Win (Part II)
Blogs are the new buzzword in cyberspace. Anyone and everyone who uses the Internet now knows about the concept of blogging. Though males and females, young and old alike are blogging away, it is the teenagers who have the briskness to use this new virtual platform to its maximum potential.Having grown up using the computer and the Internet for a large number of their informational needs, these first generation computer users are at ease when they convey their opinions, thoughts and feelings using the web technology. The use of various platforms of communication on the net comes extremely naturally to them. Unlike older writers who sometimes tend to experience moment of stagnation, the teens can be seen blogging effortlessly.The rapid emergence of blogs can be attributes to the unequaled characteristic of the platform where teens can acquire a sense of satisfaction from expressing themselves while remaining anonymous if they want to. Teens create their own blogging space and invite friends, peers and even strangers to join in. This allows for them to receive the much-needed attention that many youngsters today want. But, one of the most frightful nightmares of a teen is the fear that a parent or a custodian will chance upon his or her b
For each date when the setup occurs, the trade result is entered as a number of points. In the soybean market, each point is worth $50, so the first result of -4.25 points represents a loss of $212.50 on the trade.
The third column shows the number of contracts traded. Next is a column showing the cumulative profit (in points), followed by the contract code (ZS).
Then there is a column indicating whether the trade is a win or a loss. Note the runs that occur here. It is interesting that 4 out of the first 5 trades were losers, although the strategy as a whole has proven successful. This illustrates the futility of relying on small samples for useful information.
Next come columns showing the cumulative winning amount, cumulative loss amount, number of wins and number of losses. This enables calculation of the Average Win and Average Loss.
Finally, the three highlighted colum
Branding consultants provide various strategies and ideas that help your business and branding become more effective. Branding consultants develop brand communication techniques and brand identity. These consultants offer branding of products according to the needs. They analyze your brand which includes its value and identity. Branding consultants give a better idea and strategy to improve branding of product.There are several branding consultants who offer you with the best service and consultation for your business. They guide you, and provide services like strategic thinking, creative branding, innovation, quality, and value for money. Strategic thinking develops a basic plan before creating branding for your business. It includes complete analysis of business, brand offering, brand positioning, and target audience. It is an important task that develops your business in an effective manner.Several branding consultants offer state-of-the-art services that include consulting for business development and branding, tuning, product branding, or re-branding your corporate identity. Branding is a positioning strategy that involves architectural strategy, effective brand identity, and popular brand names for a successful branding strategy.
You apply this strategy consistently, without variation, as often as possible. The positive expectancy asserts itself in the long run and profits accrue, although there will be bad runs which cause short term losses.
When you look at examples like tossing a coin or rolling a die, it is easy to see what the Probability of Winning is, but in real trading situations it is far from obvious. The only way of determining system parameters is by estimating them from samples of market action.
The usual way of doing this is by obtaining historical data and back-testing your strategy to see how it performed in the past, or by paper trading the strategy for a test period. In either case, your objective is to get reliable estimates of the system parameters.
There are some important caveats to emphasize:
- Small samples provide unreliable estimates of system parameters! Your test period should include a minimum of 20 trades, and preferably 50 or more.
- A strategy may not work in all market conditions. If you back-test your strategy in different periods when market conditions vary (bull market, bear market, sideways market), your parameter estimates are more reliable.
- The greatest trap of all is curve fitting.
- This occurs when you define rules in your strategy to optimize results obtained in a test period. If you look at any particular set of historical data, you can often specify trading rules which produce magnificent results applied over that period. (If only we could trade in the past, we would all be wealthy.)
- Curve fitted strategies can usually be recognized by their complexity and large number of rules and exceptions.
- Curve fitting is a very natural thing to do, so it is vital that you are on guard against it. The problem is that markets are infinitely variable, and a strategy optimized on data from one time period is most unlikely to perform well in other periods.
- The other problem with curve fitting is that the sample estimates of system parameters are no longer accurate, since they have been deliberately optimized.
- The best way of avoiding curve fitting is to define a strategy based on a trading idea (I will look at some of these in future articles). A strategy based on an idea of how markets work, or other traders react to certain events, can be developed independent of past data. If you then back-test that strategy, the results will not be curve fitted.
- But if, as a result of observations you make during the test period, you decide to make adjustments to the strategy, that is the time to beware. Any change you make must have a logical trading rationale - otherwise you will be falling into the curve fitting trap.
Consider a soybean futures strategy traded at the Chicago Board of Trade (CBOT). The strategy is based on the simple idea of trading price breakouts which occur during the first 30 minutes of the trading day. If no breakout occurs, there is no trade for the day. Otherwise the market is entered with a Buy or Sell order in the direction of the price breakout.
(A price breakout occurs when the price moves out of a previously established trading range.)
The target profit for the trade is determined from the chart pattern forming the trade setup, and the stop loss is set at an equal amount. In other words, the amount risked is equal to the potential profit in this strategy. If neither the profit target not the stop loss are reached during the trading day, the position is closed at the end of the session.
Results for trading this strategy since Feb 6, 2007, are recorded in this spreadsheet.
For each date when the setup occurs, the trade result is entered as a number of points. In the soybean market, each point is worth $50, so the first result of -4.25 points represents a loss of $212.50 on the trade.
The third column shows the number of contracts traded. Next is a column showing the cumulative profit (in points), followed by the contract code (ZS).
Then there is a column indicating whether the trade is a win or a loss. Note the runs that occur here. It is interesting that 4 out of the first 5 trades were losers, although the strategy as a whole has proven successful. This illustrates the futility of relying on small samples for useful information.
Next come columns showing the cumulative winning amount, cumulative loss amount, number of wins and number of losses. This enables calculation of the Average Win and Average Loss.
Finally, the three highlighted column
The primary differences between a Post Office box (PO Box) and a Private Mailbox are:* The PO Box is only accessible when the Post Office is open, and perhaps an hour before and/or after normal Post Office hours. The Private Mailbox is generally accessible 24 hours a day - you get a key to the front door to come and go as you please (in most cases)!* The PO Box cannot accept any parcels on your behalf. If you receive an overnight letter via UPS, the Post Office cannot sign on your behalf and hold the letter for you; therefore, most common carriers will not accept for shipment any packages addressed to PO Boxes. The UPS Store can act as your Commercial Mail Receiving Agent and can accept parcels on your behalf. The staff will sign for your parcel(s) and then notify you that the parcel is available for pickup. They will usually ask that you sign a log to indicated receipt of the parcel from the store.* A PO Box address is just that - a PO Box. When you rent a Private Mailbox, you get a real street address. You can actually operate a business right out of the store because you have a real street address.There are other benefits to renting a private mailbox at a The UPS Store location, such as mail forwarding, mail holding, an
There are some important caveats to emphasize:
- Small samples provide unreliable estimates of system parameters! Your test period should include a minimum of 20 trades, and preferably 50 or more.
- A strategy may not work in all market conditions. If you back-test your strategy in different periods when market conditions vary (bull market, bear market, sideways market), your parameter estimates are more reliable.
- The greatest trap of all is curve fitting.
- This occurs when you define rules in your strategy to optimize results obtained in a test period. If you look at any particular set of historical data, you can often specify trading rules which produce magnificent results applied over that period. (If only we could trade in the past, we would all be wealthy.)
- Curve fitted strategies can usually be recognized by their complexity and large number of rules and exceptions.
- Curve fitting is a very natural thing to do, so it is vital that you are on guard against it. The problem is that markets are infinitely variable, and a strategy optimized on data from one time period is most unlikely to perform well in other periods.
- The other problem with curve fitting is that the sample estimates of system parameters are no longer accurate, since they have been deliberately optimized.
- The best way of avoiding curve fitting is to define a strategy based on a trading idea (I will look at some of these in future articles). A strategy based on an idea of how markets work, or other traders react to certain events, can be developed independent of past data. If you then back-test that strategy, the results will not be curve fitted.
- But if, as a result of observations you make during the test period, you decide to make adjustments to the strategy, that is the time to beware. Any change you make must have a logical trading rationale - otherwise you will be falling into the curve fitting trap.
Consider a soybean futures strategy traded at the Chicago Board of Trade (CBOT). The strategy is based on the simple idea of trading price breakouts which occur during the first 30 minutes of the trading day. If no breakout occurs, there is no trade for the day. Otherwise the market is entered with a Buy or Sell order in the direction of the price breakout.
(A price breakout occurs when the price moves out of a previously established trading range.)
The target profit for the trade is determined from the chart pattern forming the trade setup, and the stop loss is set at an equal amount. In other words, the amount risked is equal to the potential profit in this strategy. If neither the profit target not the stop loss are reached during the trading day, the position is closed at the end of the session.
Results for trading this strategy since Feb 6, 2007, are recorded in this spreadsheet.
For each date when the setup occurs, the trade result is entered as a number of points. In the soybean market, each point is worth $50, so the first result of -4.25 points represents a loss of $212.50 on the trade.
The third column shows the number of contracts traded. Next is a column showing the cumulative profit (in points), followed by the contract code (ZS).
Then there is a column indicating whether the trade is a win or a loss. Note the runs that occur here. It is interesting that 4 out of the first 5 trades were losers, although the strategy as a whole has proven successful. This illustrates the futility of relying on small samples for useful information.
Next come columns showing the cumulative winning amount, cumulative loss amount, number of wins and number of losses. This enables calculation of the Average Win and Average Loss.
Finally, the three highlighted colum
Earning a University degree online can be an experience that is every bit as enriching, interpersonal, and dynamic as attending college the traditional face-to-face way. A big misconception is that online learning is impersonal. This isn’t the case at all. Programs offered online present the same opportunities for group work, independent study, and interpersonal communication as do traditional methods of learning. In fact, attending college online helps to facilitate the independent learning process, as well as developing time management skills. Attending college online takes just as much commitment as the old-fashioned way of going to school, and the potential career and personal benefits are just as great, if not greater.There are many advantages for a student seeking a University degree to choose an online institution. A student does not need to live locally to attend the school of choice. Attending all classes and submitting coursework online eliminates the need for commuting or relocating. Earning an online University degree is a convenient way to advance your education and training. A school may offer more sections of popular courses, as well as night and weekend courses, which allows a student more flexibility. This is an ideal situatio
Consider a soybean futures strategy traded at the Chicago Board of Trade (CBOT). The strategy is based on the simple idea of trading price breakouts which occur during the first 30 minutes of the trading day. If no breakout occurs, there is no trade for the day. Otherwise the market is entered with a Buy or Sell order in the direction of the price breakout.
(A price breakout occurs when the price moves out of a previously established trading range.)
The target profit for the trade is determined from the chart pattern forming the trade setup, and the stop loss is set at an equal amount. In other words, the amount risked is equal to the potential profit in this strategy. If neither the profit target not the stop loss are reached during the trading day, the position is closed at the end of the session.
Results for trading this strategy since Feb 6, 2007, are recorded in this spreadsheet.
For each date when the setup occurs, the trade result is entered as a number of points. In the soybean market, each point is worth $50, so the first result of -4.25 points represents a loss of $212.50 on the trade.
The third column shows the number of contracts traded. Next is a column showing the cumulative profit (in points), followed by the contract code (ZS).
Then there is a column indicating whether the trade is a win or a loss. Note the runs that occur here. It is interesting that 4 out of the first 5 trades were losers, although the strategy as a whole has proven successful. This illustrates the futility of relying on small samples for useful information.
Next come columns showing the cumulative winning amount, cumulative loss amount, number of wins and number of losses. This enables calculation of the Average Win and Average Loss.
Finally, the three highlighted colum
We seem to have the necessary technologies to make wind-powered cars, which use lasers to create artificial horizontal tornadoes or vortex airflows and the suction would propel the car down the road. But would it be a good business to get into to start manufacturing them? Well that my friends is a whole other story indeed.Due to the DOT rules in the US and the over lawyering it seems that without a special class for “Experimental” custom car kits it might be difficult try to run as a Rule Breaker, before becoming a rule maker although that in itself is also interesting. I would not be afraid to take the world by the balls again, but it needs proper funding and some really mean lawyers to run block and sack anyone who steps off the sidewalk to curb our forward progress you see.You have to play to win and the level you are inquiring about. That takes a maverick and hardliner entrepreneur, which we are also lacking due to the political correctness of our modern societies. There are a few out there, I am not alone by any means. And well, we do not believe in “Can’t” or “impossible” or “Never” we believe in “Show Me” and winning. So this is where I stand firmly and we are a group who Never Ever Ever Gives Up. You watch the future is much mor
Consider a soybean futures strategy traded at the Chicago Board of Trade (CBOT). The strategy is based on the simple idea of trading price breakouts which occur during the first 30 minutes of the trading day. If no breakout occurs, there is no trade for the day. Otherwise the market is entered with a Buy or Sell order in the direction of the price breakout.
(A price breakout occurs when the price moves out of a previously established trading range.)
The target profit for the trade is determined from the chart pattern forming the trade setup, and the stop loss is set at an equal amount. In other words, the amount risked is equal to the potential profit in this strategy. If neither the profit target not the stop loss are reached during the trading day, the position is closed at the end of the session.
Results for trading this strategy since Feb 6, 2007, are recorded in this spreadsheet.
For each date when the setup occurs, the trade result is entered as a number of points. In the soybean market, each point is worth $50, so the first result of -4.25 points represents a loss of $212.50 on the trade.
The third column shows the number of contracts traded. Next is a column showing the cumulative profit (in points), followed by the contract code (ZS).
Then there is a column indicating whether the trade is a win or a loss. Note the runs that occur here. It is interesting that 4 out of the first 5 trades were losers, although the strategy as a whole has proven successful. This illustrates the futility of relying on small samples for useful information.
Next come columns showing the cumulative winning amount, cumulative loss amount, number of wins and number of losses. This enables calculation of the Average Win and Average Loss.
Finally, the three highlighted colum
Hold on for one second...Don't fire up that email program and start blasting away at me yet.I don't mean you have to totally forget about managing your business to extract maximum profitability out of it. That would be business suicide.Picture this with me for a second...You have two buckets, one above the other. The top bucket represents the value your offering to your customers with your product(s) or service(s).The bottom bucket, represents your business' profits.If the customer value bucket is directly above the other, you cannot start to fill the profits bucket until you fill the value bucket. No, you cannot tip the top bucket over either.In other words...your value bucket has to overfill in order to start filling the profits bucket.Are you with me so far? Good, because you absolutely must understand this concept as the small business environment keeps getting more and more competitive (both online and offline).You have to deliver more value than your customers expect in order to fill your profits bucket. As you can see, the profits bucket is empty with each new customer that you serve in your business.om/pub?key=pUm7Om973YR2qhZnE31AcLg" target="_blank">spreadsheet.
For each date when the setup occurs, the trade result is entered as a number of points. In the soybean market, each point is worth $50, so the first result of -4.25 points represents a loss of $212.50 on the trade.
The third column shows the number of contracts traded. Next is a column showing the cumulative profit (in points), followed by the contract code (ZS).
Then there is a column indicating whether the trade is a win or a loss. Note the runs that occur here. It is interesting that 4 out of the first 5 trades were losers, although the strategy as a whole has proven successful. This illustrates the futility of relying on small samples for useful information.
Next come columns showing the cumulative winning amount, cumulative loss amount, number of wins and number of losses. This enables calculation of the Average Win and Average Loss.
Finally, the three highlighted columns show the ratio of the average win to average loss, the probability of winning, and the Expectancy.
As results for each day are added, the sample size gets larger and a better picture of performance emerges. Note how the estimates in the highlighted columns vary a lot in the first few rows, but settle down as the number of results increase. After about 20 trades, the numbers do not change much, giving confidence that they are converging to good estimates of the system parameters.
On the date of writing this article, 23 April, 2007, the Win/Loss ratio is estimated at 0.97. This means the average win is about the same as the average loss.
The Probability of Winning is estimated at 0.66. In other words, the strategy wins about 2 out of 3 times.
The expectancy is estimated at 1.1 points (1 point = $50). So, on average, the strategy has made just over 1 point every time it is traded. Brokerage costs of about $5 would have to be deducted from this.
This is an example only. It shows how testing can be used to estimate the Expectancy for a trading strategy. It may be possible to improve this strategy in a number of ways.
- You can improve your win/loss ratio by using a tighter stop loss. For example, instead of risking the same amount as the target profit, you might choose to risk only one quarter of that amount before quitting the trade. That would mean your Average Win should come out at about four times the Average Loss, which is certainly a good thing. Unfortunately the Probability of Winning will also reduce, because some trades which are winners at the moment would hit the tighter stop loss point, and be closed for a loss.
- Alternatively you could increase the Probability of Winning by specifying a smaller Profit Target, leaving the stop loss amount unchanged. For example, if the profit target is reduced to just 1 point, then some trades which currently end up as losers would reach this reduced target, changing them to winners. However, the higher Probability of Winning will be offset by a reduced Win/Loss ratio because your average winning amount will be smaller.
- At this point you might be tempted to program your computer to work through all the different combinations of Profit Target and Stop Loss levels to see which gives the best Expectancy during the test period. However, this would be an example of curve fitting.
- The point is that the original trading idea puts the stop loss point just beyond a major support or resistance area on the chart. It is a logical thing to do because it is known that other players in the trading game will perceive the support or resistance areas as a barrier. That barrier would have to be penetrated before the stop is triggered. This trading idea is arrived at quite independently of the test data.
- However, if your computer analysis shows that a fixed stop loss level of (say) 1.5 points would have doubled returns during the test period, and you change the rules of your strategy to incorporate this value instead of the original rule, you are guilty of curve fitting!
- Remember this concept. You can not use test results to optimize a strategy and still expect those same test results to provide valid estimates of the underlying parameters for the strategy.
- If you truly understand this point, you will save yourself a lot of wasted effort. You will also look at the results quoted for advertised trading systems with a jaundiced eye, because many of them rely on curve fitting to achieve high returns.
- I will continue to update this spreadsheet with trading results on a daily basis. It will be interesting to see if the key parameters remain consistent as time passes and the market moves through different conditions.
Back tested results can be used to get an idea of how much capital you need to trade a particular strategy. As of April 23, 2007,
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