I have a friend who has introduced me to Bill Poulos' Instant Pips trading method. Wait, don't roll your eyes just yet...I am a beginner and this is the first method i am investigating.
A lot of posts refer beginners to numerous "great trading methods that are available for free" but it is like finding a needle in a hay stack. I am not out of pocket at all to Bill Poulos or his marketing ploys. I am just after a simple, profitable method, that doesn't require massive amounts of start up dollars.
I have looked on several forums and as much touting as there is about Bill Poulos' strategies, there appears to be no substantial evedince of profitability or even trade statistics. Let me remind everyone i am not spruiking Bill Poulos products, the way they are presented they seem to have a terrible risk reward ratio.
Reason's why i am interested in this method...
1) Trades take place on the open of the daily bar. This coincides with my lunchbreak and can therefore be executed manually in a regular fashion.
2) Method comes with easy to follow rules.
3)It is quite simply a starting point for me, i am hoping to mould the method into my own, more robust and less risky method.
My friend has been trading a demo account for 2 months starting with $50k. He has been trading about 12 to 16 pairs, but has simply taken every trade that has presented itself. It has just been a quick look on the surface to see if the method has some merit. He tells me he made 1700 pips over the last month. I am unaware of how many trades were taken, and the no. of winning trades compared to losing trades, drawdowns etc etc.
He hasn't been using money management principles i.e. only risking 2% of trading capital per trade, and has been using the demo account so i understand the results of a live trading account with a starting balance of say 10k will net entirely different results, like i said it has been a rough examination of the signals.
Why i am here is that i want to rigoroursly test/backtest the signals and i need a bit of help with that side of the process. i want to collect as much data as i can about each pair and each trade so i can hopefully tweak the rules created by Bill Poulos, which i understand to be quite basic, and therefore improve the win:loss ratio and risk:reward ratio.
The only way i know how to do this is to create an excell spreadsheet and manually enter the data of the set-up bar, and the trade bar for each trade for each pair over the last two years or so.
I am thinking of adding certain fields that can be used to filter the data to identify trades that have recurring characteristics that result in more probable winning trades and smaller stops.
For example, possible headers for columns would be...
Is trade bouncing off support? Or approaching resistance?
Does set-up bar close occur in top-third, middle-third or bottom-third of bar? with respect to trade direction (long or short)
Day of week
Suggested stop-loss value (this can be used to determine if the stop is too big the trade is too risky)
is previous bar too big to trade? Maybe can use 5 day average bar to determine if the price has moved too much already?
etc.etc
Does this seem crazy to experienced traders?
Am i wasting my time with this whole method,
Is my concept of back testing out-dated and too time consuming?
Do you have any suggestions for me regarding a trading method to investigate?
Do you have any suggestions for me regarding back-testing techniques?
I mean, i could end up spending hundreds of hours entering data to only find at the end of it all the method stinks and i have to do it all over again for the next method i come across?
I guess what i am getting at is how difficult is automated back testing and is it customisable to apply filters to the trades collected.
Am i on the right track???
Thank-you in advance to any advice i may receive.
Michael
i
A lot of posts refer beginners to numerous "great trading methods that are available for free" but it is like finding a needle in a hay stack. I am not out of pocket at all to Bill Poulos or his marketing ploys. I am just after a simple, profitable method, that doesn't require massive amounts of start up dollars.
I have looked on several forums and as much touting as there is about Bill Poulos' strategies, there appears to be no substantial evedince of profitability or even trade statistics. Let me remind everyone i am not spruiking Bill Poulos products, the way they are presented they seem to have a terrible risk reward ratio.
Reason's why i am interested in this method...
1) Trades take place on the open of the daily bar. This coincides with my lunchbreak and can therefore be executed manually in a regular fashion.
2) Method comes with easy to follow rules.
3)It is quite simply a starting point for me, i am hoping to mould the method into my own, more robust and less risky method.
My friend has been trading a demo account for 2 months starting with $50k. He has been trading about 12 to 16 pairs, but has simply taken every trade that has presented itself. It has just been a quick look on the surface to see if the method has some merit. He tells me he made 1700 pips over the last month. I am unaware of how many trades were taken, and the no. of winning trades compared to losing trades, drawdowns etc etc.
He hasn't been using money management principles i.e. only risking 2% of trading capital per trade, and has been using the demo account so i understand the results of a live trading account with a starting balance of say 10k will net entirely different results, like i said it has been a rough examination of the signals.
Why i am here is that i want to rigoroursly test/backtest the signals and i need a bit of help with that side of the process. i want to collect as much data as i can about each pair and each trade so i can hopefully tweak the rules created by Bill Poulos, which i understand to be quite basic, and therefore improve the win:loss ratio and risk:reward ratio.
The only way i know how to do this is to create an excell spreadsheet and manually enter the data of the set-up bar, and the trade bar for each trade for each pair over the last two years or so.
I am thinking of adding certain fields that can be used to filter the data to identify trades that have recurring characteristics that result in more probable winning trades and smaller stops.
For example, possible headers for columns would be...
Is trade bouncing off support? Or approaching resistance?
Does set-up bar close occur in top-third, middle-third or bottom-third of bar? with respect to trade direction (long or short)
Day of week
Suggested stop-loss value (this can be used to determine if the stop is too big the trade is too risky)
is previous bar too big to trade? Maybe can use 5 day average bar to determine if the price has moved too much already?
etc.etc
Does this seem crazy to experienced traders?
Am i wasting my time with this whole method,
Is my concept of back testing out-dated and too time consuming?
Do you have any suggestions for me regarding a trading method to investigate?
Do you have any suggestions for me regarding back-testing techniques?
I mean, i could end up spending hundreds of hours entering data to only find at the end of it all the method stinks and i have to do it all over again for the next method i come across?
I guess what i am getting at is how difficult is automated back testing and is it customisable to apply filters to the trades collected.
Am i on the right track???
Thank-you in advance to any advice i may receive.
Michael
i
