Selectivity vs turnover

[ruthlessimon]

*cracks knuckles*

( btw I hope this’ll be an interesting insight Stu )

2 is confusing but seems to advocate changing your personality.
3 seems to say find angles to trade at the times you'd otherwise need to be patient.

2 & 3 are linked “rather than be negative, & tailor the method to your personality (i.e. if there's a lack of trades - focusing on becoming more patient etc), focus on solving the reasons why you're having to be patient (that's what I do day to day)”

That’s absolutely what I’m saying. Imagine taking a course, but the strategy being taught lacks frequency – which many of the students cannot handle. Why not understand why the strategy occurs infrequently, & take steps to rectify this? Is this variable completely necessary etc etc? What are the consequences of changing this variable? Etc. Now that type of analysis is incredibly difficult, because the person who solves those questions arguably outdoes the educator. Those IMO are proactive steps, rather than being negative, & changing your personality to fit the strategy.

Psychology isn't about tailoring your trading it's about tailoring you. Like me you pour your heart into the statistical research and the strategies but they are only half the story (I won't argue about the use of 'half' it's just a turn of phrase.) The other half is the execution, and that's done by the weak link in the chain, the human. Do you think you are utterly flawless in your execution? Don't you think there is any room for improvement?

Why have you assumed the statistical research side has no psychological/logical errors involved?

I personally believe most people struggle (myself included) because “what they think is edge, isn’t edge”. I reckon if a poll was done of the value of Fibonacci, most would say “it provides predictive value”. Whereas it's actually been proven that it’s no better than random. Yet people will still use it, & wonder why they still aren’t profitable after reading Trading in the Zone.

I’d love to see an entire series from BA on analysis biases & how to solve them in a trading context. For example, how does one solve the bias of “Pareidolia”? I’m currently looking at a technique called “Target Shuffling”. Again the words “target shuffling”, I don’t think have ever been mentioned on the forum. That’s an actionable technique that can be used to negate pareidolia – improve market knowledge - & increase overall profitability. Potentially with no negative consequences (i.e. drop in frequency/scale)

My argument is if I understood that bias – suddenly that solves execution problems, before they even occur.

Are you advocating only trading styles that suit your current personality, or changing your personality so you can exploit every possible situation?

I don’t understand how the latter changes your personality. If I’m a “greedy/competitive trader” rather than suppress the greed, use it to find more angles in the market. Use it to aggressively increase your trader networking etc. Surely that’s more natural, than trying to castrate the greed through psychological coaching?

The other thing is that many of us won't ever become the perfect trading android and for those people I see nothing wrong with adapting their style to suit their personality. I try and improve 'me' mostly to eliminate the destructive stuff, but I'm never going to be perfect, some imperfections I quite like actually, so I'm going to work with the tools I've been given.

But I think people do it because that info is easily accessible – saturated knowledge. There’s a physical limit to the quality of the execution (android status) – but there’s no limit to the potential of the original strategy. I personally think there’s far more to gain from increasing knowledge of the market, over improving execution. But it’s bloody difficult, no question – that’s why Peter’s are so rare. Hence why the “execution psychology” (assuming you have an edge) is extremely saturated.

Hang on a minute! You come across as being Mr anti psychology, but who's the person who keeps mentioning all different types of bias and posting up wall charts? What are they if not 100% psychological insights? Utterly pointless apparently?

Two types imo

1. Execution psychology (saturated)
2. Analysis psychology (bone dry – because the answers are hard!)

Let’s take survivorship bias, that’s not useful to a trader during the execution of a strategy – but it certainly can be applied when analysing data.

Don’t get me wrong; I’d love to see an entire series from BA on analysis biases & how to solve them in a trading context. The moment a video comes out on the effectiveness of target shuffling; I’ll be screaming with excitement.

Sorry to blur your thread stuey but I believe who you are has as a lot to do with your results. Eg Is being selective more profitable, or is it more profitable because you execute it better?

Yah sorry Stu mate, but I really hope that was “different” insight I do like a debate, & hopefully a synergy of “true knowledge” emerges. It’d be borin if we all agreed with each other!

[stueytrader]

Wow, must say some pretty monster answers on here from all who have posted - I had thought my question was a lot simpler, but seems to indicate some big ideas underlying the issue also here, about selection vs turnover.

I certainly hadn't posted originally about psychology (as I would usually focus on in many of my posts, lol) but I do get the link for sure, especially those very detailed suggestions above.

Food for thought, indeed in this area of operation, and maybe more deep than I'd originally considered, that choice of modus operandi links very closely to our original intentions in trading.

[stueytrader]

Though essentially my question was not only what I should use, but whether others here focus on turnover or specific selection that rules out many races altogether from their trading?

I use race length to make my selections. If the race is of 9 furlongs or longer I'll trade it if there's a horse within the price range that I'm comfortable opening a trade at (95% of the time there is). If the race is of under 9 furlongs then I'll not even look at it.

My other main rule is UK races only as I find trading the Irish races too difficult - I can't explain why though but the fact that I struggle with them is reason enough for me to not trade them.

Yesterday (Sunday 17th) I only had 5 races to trade all day. The day before (Saturday 16th) there were 26 races for me to trade. Today (Monday 18th) I have 10 races to trade - though I might ignore the Ayr 2:30pm because it's a solitary outlier in terms of time as my other 9 races are all between 4:45pm and 9:00pm.

Have to say, that was kind of the example I was originally considering. A fairly straightfoward filter based on some criteria that rules out many races. I find it interesting you suggest against the shorter races - I also have a similar filter and prefer longer races. I find Irish races double-edged, sometimes perfect, sometimes the worst - I'm working on filtering there for sure!

[FrogThimble]

Have to say, that was kind of the example I was originally considering. A fairly straightfoward filter based on some criteria that rules out many races. I find it interesting you suggest against the shorter races - I also have a similar filter and prefer longer races. I find Irish races double-edged, sometimes perfect, sometimes the worst - I'm working on filtering there for sure!

I only trade in-running so that's why I dislike the short races. The prices move too quickly so it can be almost impossible to trade out for a positive. Too often the market moves in the wrong direction and never turns back around. They're fabulous if the price moves quickly in the direction you want it too but there is just too much risk of it going the wrong way and never returning. With the longer races I find that the price of whichever horse I am trying to trade will be (almost!) certain to move price in both directions during the race and even if it looks like it will not I have enough time to get out for a small loss without any big risk to my bank.

I used to have the rule of just ruling out the 5 to 6 furlong races. So I would try to trade on races at 7 furlongs and over. Then, digging deeper into my results, I saw that I wasn't doing myself any favours trading the 7 and 8 furlong races either as I was only really breaking even on them. So that's when I decided on 9 furlongs as the lower limit. The longer the race is though the happier I am.

[spreadbetting]

I've always thought far too many traders get hooked up on chasing profitable trades rather than profits. Having a high strike rate might be good for the ego but being overcautious for the sake of that high win rate usually throttles your profit in the long run.

[Derek27]

It all depends on whether you have a strategy that works best on certain markets, whether it's applicable to any market, or if you can adapt your strategy (or have a different strategy) for any market.

[ShaunWhite]

Two types imo
1. Execution psychology (saturated)
2. Analysis psychology (bone dry – because the answers are hard!)

I get it. I should have realised the distinction.

Speaking of anaysis and analysis psychology, I've just been running some what-ifs on a project that I must have spent >90 hrs on....

Collecting data in a whole new way. Adding additional non-obvious content. Writing a new test rig with everything parameterised incl independant entry and exit triggers and including different trading styles (offsets, reverse prices, stops etc). Running tests to validate my data. New live monitoring and automatic bet placement engine, the whole 9 yards and then another 9.

My machine is just cooling down and the end results is.....the usual gentle slope downwards Unless you assume hypothetical matches at reverse prices on entry and/or exit, those always look much better on paper.

The initial charts looked so promising, the concept was given the wink by some serious guys, I've been excited about it for about a month....Now it feels like an absolute *&%^*!&" waste of time.

I 100% agree that info on this whole area, technique and interpretation, is very hard to find.

I'll keep looking, there must be something. You can't just stop can you

[ShaunWhite]

This what I always disliked about coding, switch off and there's nothing to see, and sometimes nothing worth keeping. At least when I spend 90hrs in the shed I have something nice to show for it. Is there any wonder it's a 'kin struggle booting up somedays.

[ShaunWhite]

lol sorry again stuey. Personal winge finished.

[Euler]

I think the answer is quite simple really.

When I first started trading I went for the one fits all approached and just tried a generic strategy across all markets. I then started cutting out errors, basically where my biggest losses were, and that led me to a selective approach for that strategy.

I would then try another strategy on just the markets that didn't seem to work and repeat the process until solved.

I now have hundreds of variations of individual strategies aligned to specific markets and scenarios.

I would recommend focusing on one problem until you solve it then branch that to new variations.

[spreadbetting]

I would recommend focusing on one problem until you solve it then branch that to new variations.

I think that's that's a very good point especially for people starting out. Usually they're trying far too many things at once and listening to well meaning but useless advice on the whole. So many times people ditch working strategies just because they're hidden amongst the poor trades they're also doing but they don't have the patience to separate what they're doing that works from what doesn't.

I'm sure we've all been there at the start with far too many ideas bussing around but you really do need to take things a step at a time to find what's working and just as importantly why you think it's working. Once you start to figure out how and why markets move it's much easier to find other things that'll work for you also.

[ShaunWhite]

I then started cutting out errors, basically where my biggest losses were, and that led me to a selective approach for that strategy.

This approach only works when the initial 'random' strategy is profitable on a non random set of data.

If you filter the results by all possible combinations of volumes, market profile (prices), time ranges, number of runners, distances, types etc etc, and no subset is significantly better than any other, where do you go from there? And where next when the best or worst performers don't have anything in common?

I'm certainly not doubting your approach, it's clearly extremely effective and without it I'll struggle, but it gives the impression that almost any strategy fits a certain set of markets that can be singled out in a logical way with the data we have at our disposal.

I'm so convinced that my approach is a logical conclusion to real world events that I don't want to share it openly. But unless I can find someone who'll take a look at it and give me some guidance, I'm snookered.

[ruthlessimon]

If you filter the results by all possible combinations of volume..... and no subset is significantly better than any other, where do you go from there? And where next when the best or worst performers don't have anything in common?

I'm certainly not doubting your approach, it's clearly extremely effective and without it I'll struggle, but it gives the impression that almost any strategy fits a certain set of markets that can be singled out in a logical way with the data we have at our disposal.

That's a really good post & exactly why I'm delving into "Target shuffling" etc.

Let's assume hypothetically, that I was working on a pre-of trend based lay strategy.

1. The losers median entry time was 215, & the median total market volume on entry was £126k
2. The winners median entry time was 199, & the median total market volume on entry was £154k

Is that then enough for a trader to say, "when the volume is higher, that predicts trend-based strategies will perform better?" - "I'm only going to trade this strategy when volume is at least £150k?"

A trader could keep on adding & adding variables (does race type influence this, does day of the week influence this), & eventually, something (by sheer luck) will look amazing - but still provides little real predictive value - & that's my issue

[ruthlessimon]

I think the answer is quite simple really.

When I first started trading I went for the one fits all approached and just tried a generic strategy across all markets. I then started cutting out errors, basically where my biggest losses were, and that led me to a selective approach for that strategy.

You didn't look at the "niggly losses"?

Here was a basic strategy I employed through May - I thought it was interesting that summing the "minor losses" came to -44 ticks nearly double the worst loser. Therefore cutting out trading the "50/50 markets" could boost that strategy just as much as the huge losers - possibly more. Or rather than improve the strategy, just reverse it?

[Greco]

Euler has spoken of the Pareto principle before and it is something that is illustrated by your point Simon. I use a price range filter for my trading. Yes I have profitable trades outside that range but I also have a lot of small losers as well. Therefore I have simply removed them and concentrate harder on the ones that make me the most money.