Jun 10

Quick Tip: Backtesting mistake to avoid

System Trading

Here’s one quick tip for a backtesting mistake to avoid: on Tradestation, if you develop a strategy using a stop market and a stop loss that gets you out on the same bar: the platform won’t be able to verify whether your stop or target was hit first unless you enable “Look Inside The Bar […]

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Jun 06

Scale up vs Scale out

Trader's Mindset

We will explore a simple concept in trading: scale up or scale out. Scaling up tends to be the preferred technique for the discretionary day trader. The idea is to get really good at trading one market and then increase size. Futures markets are ideal for scaling up. On the other hand, scale out tends […]

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Jun 06

Graybox design: Signals vs Indicators

Graybox Trading

Traditional systems are designed to trigger a buy or sell signal. Discrete buy and sell signals are very useful in that they give clear unambiguous direction. However, a simple buy or sell signal is authoritative and  doesn’t convey any additional information that the discretionary trader can make use of. Traditional indicators can be difficult to […]

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Jun 06

How To Graybox

Graybox Trading

The difficulty of building your graybox is that there’s no blue print. But, looking to identify both strengths and weaknesses in your trading may be a start: What do you do already do well? How can you improve what you already do well? Where do you struggle? What do you do poorly? Where are the mistakes? […]

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May 24

Value of Gray Box Systems

Graybox Trading

Anyone can trade well when they are winning but what defines the great traders is what happens when the losses mount. The default belief is that one can’t make money trading. The discretionary trader develops an alternative belief system as they learn they can accurately predict the market. The process is empirical and reflective. Every win reinforces […]

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Apr 05

Limitations of Algorithmic Trading

Trader's Mindset

The keys to successful trading often seem mysterious. One reason that trading might seem difficult is because frankly there are many factors that can impact the markets. The factors that influence the market are dynamic and in a constant state of flux with different factors tending to dominate at different wavelengths and in different time frames. […]

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Mar 12

Degrees of Creative Freedom

Trader's Mindset

The idea of “degrees of creative freedom” has bubbled up and started to percolate my consciousness recently. And, the concept is that the more degrees of creative freedom that a system enables then the greater the wealth that is possible to be created–where wealth is the expression of valuable ideas. And, system in this case doesn’t refer to […]

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Mar 11

Confidence Measures Part 1

System Trading

Accurate confidence is one of the most important skills a strong discretionary trader (or predictor) must develop and possess. A strong discretionary trader should be able to weight how good of a trade or prediction they have and use that weight constructively. If a trader can develop awareness of how good of a trade they […]

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