They wish that they held a trade for longer than they did, or went out right before the market lost 5% in two bearish days. Many traders spend their time looking at what they could have done. Well, not looking at trades with hindsight is one of those trading hacks that could give you this very advantage! If there was a trading hack that could make you mentally stronger and more focused than your competitors, then you probably would be very interested! In our experience, trading systems based on daily bars are more robust, and tend to be harder to curvefit than those built on lower timeframes! 3. In other words, more decisions are made based on where the daily price goes, which in itself also helps with limiting the randomness in those timeframes. Representing one trading day, daily bars are used to a much greater extent by market players, than for example five minute bars. This is why we actually recommend that you go with daily bars. Higher timeframes include more market action, and average out some of the market noise so that it doesn’t distort the image as much.
This means that much more of the price action in five-minute bars is random, than that of daily bars for example. The random noise, which is always present, increases in intensity with lower timeframes. The fact is that the lower the timeframe you use, the harder it gets to find an edge. The fast-paced market action gives the impression that money can be made quickly if you just manage to time those reversals that are so apparent with hindsight! Many beginners are really keen on trading on low timeframes, such as 5 or 10 minute bars. The next trading hack is all about the time frame. Designing your own trading strategies could easily lead to curve fitting, which means that the strategy seems to work, but just is the result of fitting your rules to random market noise! 2. Still, this trading hack isn’t foolproof. It will give you a great advantage over your competitors, and you’ll be able to quickly separate the wheat from the chaff! The competition is increasing, and you have to step up your game if you want to make money!Ĭonsidering that most traders don’t use backtesting, starting to backtest your ideas could very well be classified as a trading hack. In today’s markets, edges are becoming ever harder to find. And as with any behavior, there is bad and good behavior. The truth is that very little of the technical analysis that’s out there works! Technical analysis in itself is merely a tool to quantify and describe market behavior. They use their trading indicators and technical analysis setups to find profitable trading entries, and believe that the market will behave in a certain way since this or that indicator showed some good readings. One of the biggest mistakes traders make, is that they don’t know the odds of success for a trade before they enter it. Backtesting is when you look at historical data to simulate how an edge has fared historically.
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