Grid trading system, keeping DD to a min
Hi, I'm new here but I've already used a few resources so I thought I'd add something (hopefully valuable) to get people thinking. I am open to all constructive ideas and welcome everyone. Having said that, I would ask people to be polite, not use profanity, and read the entire post before posting any questions - I don't think that's too much.
Several people have posted some systems here recently with good ideas, and this idea has evolved from that - I'm sure it's nothing new.
First, I don’t think there is a “lossless system” – all systems lose. We just hope that the system wins in the long run (which could be daily or weekly, depending on my definition, but that's it). In order to do this, we need a system that can survive losses. In order to achieve this goal, the ratio of drawdowns to profits cannot be too high. My idea of excess and your idea of excess are probably two different things, so that's subjective.
In order to achieve a profitable trading system, we must use a positive expectations system. This means that our profit (in dollars) times the number of winning trades must be greater than our loss (in dollars) times the number of losing trades. Psychologically, I'm not a fan of taking huge losses over and over again, only to be overtaken by bigger winners in one fell swoop. Others may find this acceptable, but I don't. So the goal here is to minimize losses as much as possible (we all know losses happen, right?), which usually also affects the gains you might see - which is a double-edged sword. If your goal is to turn $100 into $100,000, this theme may not be for you.
This is a general overview of our main goals for the system, so let's see if we can work together to make this happen. If you want to add your comment, be prepared to back up your claim with the math behind it - I don't think it's constructive to reduce the post to a he-said-she-said style of debate. So while objections are welcome, back it up with math/statistics, otherwise use the "Start Thread" button to create your own topic.
Standby system idea v.01
Several people have posted some systems here recently with good ideas, and this idea has evolved from that - I'm sure it's nothing new.
First, I don’t think there is a “lossless system” – all systems lose. We just hope that the system wins in the long run (which could be daily or weekly, depending on my definition, but that's it). In order to do this, we need a system that can survive losses. In order to achieve this goal, the ratio of drawdowns to profits cannot be too high. My idea of excess and your idea of excess are probably two different things, so that's subjective.
In order to achieve a profitable trading system, we must use a positive expectations system. This means that our profit (in dollars) times the number of winning trades must be greater than our loss (in dollars) times the number of losing trades. Psychologically, I'm not a fan of taking huge losses over and over again, only to be overtaken by bigger winners in one fell swoop. Others may find this acceptable, but I don't. So the goal here is to minimize losses as much as possible (we all know losses happen, right?), which usually also affects the gains you might see - which is a double-edged sword. If your goal is to turn $100 into $100,000, this theme may not be for you.
This is a general overview of our main goals for the system, so let's see if we can work together to make this happen. If you want to add your comment, be prepared to back up your claim with the math behind it - I don't think it's constructive to reduce the post to a he-said-she-said style of debate. So while objections are welcome, back it up with math/statistics, otherwise use the "Start Thread" button to create your own topic.
Standby system idea v.01
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