Hi Bob, hope you are well! I took note of your Journal idea in regards to your above quote. I am new here and glad I read you mentioned the Journals. In your opinion, should I search by views to find the best strategies available? I definitely want a 1:3 R/R minimum strategy, but there seems to be so many journals, and seeing which is the best strategies for a daytrader in the morning hours. Looking to trade 1 /ES contract with a profit target anywhere for 3 to 10 points per day.

Any help will be greatly appreciated, and I look forward to hearing from you.

Actually, the point I was making about journals was that if someone wanted to develop their own trading, they should start a journal of their trades, and use the documentation and self-criticism of their own trading decisions to improve them. In other words, do it yourself.

I think there is some value in reading other people's journals because you can, of course, always learn from others, and especially about the common issues that all traders have, which are mainly about personal discipline and the psychological issues of trading.

I think there is only a little value, if any, in looking for someone else's strategy to copy, if that's what you're asking.

You will find that there are roughly two billion ways to trade the markets (maybe three). You will also find that most traders struggle, and if you stay with it you will struggle too, for the same reasons -- which have very little to do with technique, and almost only to do with personal self-discipline in the face of risk.

Good luck, but don't go looking for the answer in someone's method. You do have to have a method, but that's just the start. Pick something that seems reasonable to you and trade it, and see how it goes. Refine as you go, and notice what you have to address in order to correct your own decision-making.

Bob.

I doubt there are 2 or 3 billion ways to trade the market. A strategy still needs an edge, and the edge cannot purely come from discipline to follow the strategy.

You are right, but I was making a definite point, and it was not about edges.

The person I responded to asked about which journals to look for, in order to find the right way to trade. I advised him not to do that. You are not going to find an edge that way. You are going to find it by starting with something that makes sense to you and working with it, until you either have made it work or until you have changed it or until you abandon it. So the point of journals is to journal your own work, not to look to others' journals for the answer.

I read most of the journal posts here, and have done so for a long time. I see many traders struggle using methods that others to do well with (and there are many methods that have worked, for some but not others.) In fact, I would say that the majority of posters here who reveal their trading are actually using something that could work, but it doesn't because of their execution. Their struggles are almost always of the sort of "Why did I do that?" or "Why can't I just follow my rules?"

So I advised his either starting his own journal and beginning the process, or at least not looking for someone else's answer.

This was my point.

Bob.

I agree with everything you said. A trader needs to start somewhere, and tweak their methods from there. But the question is what is the best starting method? They can't all be equal, some are much stronger than others. For example there was a recent post about someone asking about scalping for 5-10 ticks with an 80 tick stop loss. Most replies flat out dismissed this as a feasible strategy.

Sure a trader can grind it out and learn exclusively from their own mistakes. But why can't a trader learn from other's mistakes?

We're not really disagreeing here, are we?


He was asking how to best search through all the trading journals to find the best strategy to trade. I was suggesting that he use journals and journaling differently.

All this started from my suggesting to the thread starter that he might benefit from journaling his trades. Then came the question from another user about how to find the best strategy by searching for it in the journals, and I advised him not to do that. This is the reason it went in the direction it did.

That's all.

I learn from others all the time, at least I hope to.

Bob.

If you are disciplined and have at least the equivalent of $2,000 USD you don't need a combine/gauntlet/evaluator...etc . Most of these companies have rules designed for them not you.

Trade in Sim for 20 days straight.

Then answer the following questions:

1) What is my MAX DD? >> It should be not more than 10% , ideally not more than 6%
2) What is my Reward:Risk ratio per trade >> it should be at least 2:1
3) Compute your win rate and expectancy. Is your expectancy positive after commissions?
4) How much did you risk per trade? It should be not more than 2% of your account. I recommend .5%-1%
5) Do I have an edge? if yes write it down and see if it makes sense.
6) Do I have a robust statistical trading process? If yes write it down and see if it makes sense.

Testing:

1) Monte Carlo Test: 10 test runs of 10,000 trials each with parameters from steps #2 and #4 for R:R and trade size.
Plug in your win rate. Using 100 trials per run you may get better results on some runs
but the variance of the results will likely be greater. 10,000 trials will give you more reliable results.

2) Backtest: Find Correct Sample Space Sizes, Organize Sample Spaces by Regime,
Test for overfitting using PBO (Probability of Backtest Overfitting).
To help reduce the PBO and confounding factors use
Purged Cross-Validation Testing with Data Embargo (as needed)

3) Variance Test

4) Noise test

If all your tests pass (i.e. MAX DD is in the acceptable range), you are ready to trade 1 MES contract live.
After 30 live trades evaluate your MAX DD, Average MFE/MAE and Reward:Risk ratio.
If they are acceptable then move to trading 2 MES contracts live...etc

Some Monte Carlo Test output examples of 1 test run with 100 trials and 1 test run with 10,000 trials using parameters
specified in Steps #2 and #4 and evaluation based on Step #1 . (I used a 60% win rate for both test runs)



Monte Caro- 100 trades


Monte Carlo 100 Trades Equity Curve


Monte Carlo Testing


Monte Carlo Equity Curve

Wow! Thanks for such an answer.
Which software are you using for running the tests? Unfortunately I don't have experience in trading doing that but I understand what you propose.

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Monte Carlo Test >> I used an Excel/VBA app that came as part of a trial package to a trading room.
I think there are many good Excel/VBA Monte Carlo applications you can find.

BackTest >> I think you need to write your own program here. At least you probably need to prepare the data yourself before using
an 'off the shelf' backtesting program like https://strategyquant.com/

Variance Test, Noise Test >> Check out https://www.buildalpha.com/features/