Sitting straight 'bad for backs'

When they looked at all test results, the researchers said the 135-degree position was the best for backs, and say this is how people should sit.

I thought this was interesting for anyone who sits at a desk all day. And for all our Grandmothers who tell us to sit up straight :-)

Came across the title of a book today called "A Mechanical Trading System..."

Cool!

"...Using Simplified Elliot Wave Analysis"

DELETE! DELETE! DELETE!

Elliot Wave Analysis is hardly mechanical. Or maybe I'm just judgemental.

Here's my test for mechanical-ness:

#1. Will the today me, in this mood, think that a rule is met, and will the tomorrow me, in another mood, agree that the same rule is met?

#2. Will I think that a rule is met, and every other person in the world agree that the same rule is met?

I say "Bah!" to Elliot Waves fitting either of those 2 rules.

I've greatly expanded the Useful Free Stuff page, and somewhat expanded the Useful Blogs & Websites page.

Enjoy.

I mentioned I started off with stocks, then moved to options, then to currency. Here's why.

First I should point out that nobody taught me anything about investing. I had to learn everything myself. In the end, I think it was better that way - at least nobody taught me their limiting beliefs. On the other hand, I don't think any of my family believes this trading stuff can work. My Aunt giggles each time I bring it up. "Have you made your millions yet? *giggle*" she says.

I'm not sure what triggered me buying the books, I think maybe a friend lent me one at first, but I bought the early Daryl Guppy books on trading using technical analysis.

Daryl lived in the middle of nowhere, and at the time he was starting, that meant receiving the Sydney newspaper a week after it was printed. Or something like that. No trading announcements for him.

Anyhoo, from his books I came up with a 'trading system', but that trading system is now what I think of as just Entry Rules, Initial Stop Loss Value, plus Money Management.

If you've read through my Systems Trading Theory articles, you know that there is a *whole lot* more to it. But I was just starting out. At least I had a stop loss in there, even back then.

But other than a cursory look at a chart of Coles-Myer, there was no backtesting.

So as I wrote in a previous post, the Excel macro that I wrote gave me 2 hours of work each night, and I stopped after the first loss.

Remember I was just starting out. I was doing something which no one else in the family had done, and there was a loss. A loss! Too much trouble for not enough reward, I decided at the time.

The problem too, with stocks, is that you can't short them in Australia like you can in the U.S. Sure, I should have just opened an account in the U.S., but remember I was just starting out, and that idea never crossed my mind. I had limiting beliefs back then.

But on the To Do list was to learn about Options. I'm not sure how that got there, but there it stayed for a long time. And then I saw an ad for a free 2-hour seminar on trading options.

Not only could you make money while the underlying stock was going down, you could also leverage! Wow, perfect. Perfect except for the fact that I had to pick up the phone to exit a trade.

That's right - to exit at a loss, I had to pick up a phone, dial a number, and say to the person on the other end "I made a mistake!"

In options trade #11, I wanted to do this less and less as the stock went further and further in the wrong direction. The broker actually called me.

At least I had what looked more like a complete trading system. Only the exits were a little fuzzy - "get out at about a 20% loss, or about a 30% profit."

"About"??? Well what if it jumps up to a 50% profit? Do I take that, or do I let it run? Stoopid il-defined rules.

So then I go to the free 2-hour currency trading seminar. Not only could you make money while the currency was going down, and not only could you leverage, and not only is the FX market so big that there is zero problem with liquidity, there are automatic stops! I don't have to call anybody to exit - the stop loss is put in at the same time as entering the trade. And it's all through the Internet!

You better believe I signed up fot the 5-day seminar.

And, as mentioned in the previous post, I'm a choker. Finally I had a complete trading system, but I was very bad at implementing it. It was almost like the market knew what I was doing, and plotted against me in the most perfect way.

We've all had that experience, right? Who's for a the-market-knows-what-I'm-doing-and-wants-to-destroy-me high-five?

And so enter Thinking Stuff. Ok, sure, I can't trade to save my life, but I can make some software to do it for me.

No writing my feelings into a trading journal for me, suckers :-)

So now the plan couldn't be simpler:

1. Come up with 10 (or so) trading systems that seem profitable through backtesting.
2. Start those systems off in demo accounts for a while.
3. If all is well, let them loose with real money.
4. Feed the winners, starve the losers.

The human elements of fear (both of failure and success), greed, anger, persecution complex, hangover, feeling rushed, etc, have all been removed.

I have the knowledge. I'm not just starting out anymore. My limiting beliefs are gone. (Well, except for the one that tells me I'm a crap trader. But I circumvented that one).

Onwards.

This is actually a question for someone out there to answer. I've seen a few jobs for an Algorithmic Trading Developer.

For my resume purposes, does TS do algorithmic trading? Is this a buzzword that I can legitimately put on my resume?

Help me out here.

The software is just 2 releases away from v1.0. You can see in the Road Map what's to be done. Not much. Maybe a couple of weeks' worth.

It got me reminiscing about my trading history up to now, and the trading software I had made.

The first was an Excel macro. There was some website which made available a text file containing the end-of-day data for the 1300-or-so stocks listed on the Australian Stock Exchange (ASX).

My Excel macro converted that one file containing the daily data for 1300 stocks into 1300 separate files - one for each stock. Over time that built up a daily history for each of the stocks.

Another macro then went through each file, ran one check, and spat out a list of about 30 stocks to look at. I would then go through each stock manually, load the data into an Excel spreadsheet, run another macro to make some charts, and then decide what to do.

The technical analysis I was using was all based on some books I had read. Mostly by Daryl Guppy. I still enjoy his writing. And I should probably have another look at those books.

Looking at the 30 stocks each night took about 2 hours after work. It was unsustainable. The problem was that I had set the 'alert', if you will, to be based on just one thing. And actually I can't even remember what that was. I then had to manually do everything else, and it just took too long.

The end result from all that, was 2 trades. The first, in James Hardie, gave me about $150. The other, in an obscure chemicals company, lost me about $100. I gave up. Gave up at the first loss, I guess because for the time I was spending, it didn't seem worth it.

Since that time, probably before, it had been on my To Do list to learn about trading options. I don't remember why. A year or two later, I saw in the newspaper an ad for a free 2-hour seminar on trading options. I decided to go along. What could it hurt?

So I go to that seminar, and it sounded pretty cool. I signed up for the 3-day course, cost of about $3000.

The 3-day course was pretty cool, too. I left it feeling a great sense of "this is it!"

They said I should paper-trade for 90 days at least. "Get all the accounts set up so you're ready to go, but just paper trade for the 90 days," they said.

So I set up my accounts and set about paper trading.

I think I did one paper trade, which was a winner, and I dove in. My first options trade was in Qantas, and was a winner. I went on to do 9 more options trades, not doing great, but not bad. Then there was options trade #11. Broke *all* the rules. Held on. Said "it'll come back!" It never did. Ouch. I decided to go back to paper trading, but never did. That was my last options trade. The end result was about break even.

Since that time, probably before, it had been on my To Do list to learn about trading currency. I don't remember why. A year or two later, I saw in the newspaper an ad for a free 2-hour seminar on trading currency. I decided to go along. What could it hurt?

So I go to that seminar, and it sounded pretty cool. I signed up for the 5-day course, cost of about $6000.

The 5-day course was pretty cool, too. I left it feeling a great sense of "this is it!"

They said I should paper-trade for a while. "Get all the accounts set up so you're ready to go, but just paper trade for a while until you get a good feel," they said.

So I set up my accounts and set about paper trading.

I think I did one paper trade, which was a winner, and I dove in. I did about 100 currency trades, ending up with a total loss of about $5000.

In a way, that's not too bad. If as believed, currency trading being so risky and all, then to lose "only" $5K over 100 trades seems pretty good. The money management I was using had kept me from destroying my account.

So, I decided it would be better to backtest the rules that I had learnt at the 5-day seminar. Then I could work out who was at fault - was it me, or was it the rules?

That's when Thinking Stuff started. It was originally to backtest some trading rules I had bought at a seminar.

The things in common that those 2 seminars had:

• They both employed trend lines in their techniques;
• They both employed subjective aspects in their techniques;
• They both said paper-trade for a while before jumping in;
• They both said keep a trading journal of your thoughts.

I firmly believe the guys that gave those seminars were honest, and that those rules worked for them, and that those rules work for other people.

Although I'm still in loss territory, those seminars gave me knowledge that I would have had to pay for through mistakes in the market anyway. And if I had made the mistakes in the market, I'd have to overcome the emotional scarring that comes with that kind of experience.

And what the second seminar gave me especially, was the belief that computers can trade profitably. Before the guy said he had a computer doing it for him, I believed some human judgement would always be necessary. How much is removing a limiting belief worth?

Through all this, I have come to the rude awakening that I have the choker gene. I'm a choker! I should have seen it earlier, but it's not something you like to admit to yourself. I remember when I was younger. During practice for sports, any sport, I was fantastic - perfect technique and form. Come game time I'd freak out.

Here's some examples. In Aussie Rules football practice, I could do perfect drop punts. Come game time any drop punt I tried went about 10 metres along the ground. I would have to revert to torpedo punts instead. I knew it back then - I remember telling people that I couldn't do drop punts during a game.

In golf, I would go out and shank it every which way on the course. And then with the pro afterwards I would do these lovely draw shots, which the pro would say were lovely draw shots. "You hit the ball like this all the time?" he asks. "No, normally it slices."

In basketball, I was a great shot. While practicing by myself. Or even playing with friends. But come game time in the stadium, with proper referees, with parents watching, I couldn't shoot to save my life. I became the assist man. I was pretty good at defence too.

And so in trading, paper trading or demo trading I am a trading god. But come real trading, there's nothing noticeably different, there's nothing that feels different, but yet I can't help but lose money.

I decided it was the subjective rules that I had learnt in the seminars that were at fault. If there's a right and wrong way to place a trend line, then obviously I was going to place it right during practice, and place it wrong when trading live.

And trading journals? If the rules are there, why should your emotions affect them? Bah.

So I decided that trading systems, for me at least, had to be purely objective. So objective that a computer could trade it. And if a computer could trade it, I thought, a computer *should* trade it. There's no need for me to be at the screen all day.

Implementing this plan would mean I would be at the screen all day for the next couple of years.

So now I've come full circle. My original share trading was done with an Excel macro that could not be easily modified. Now I have at my disposal (and so do you) software that can backtest the rules to see if they work; can trade the rules; and can be modified extremely easily. Thinking Stuff is software that will make trading easier, not just keep me occupied for 2 hours each night like the Excel macro did.

It gets over the problems associated with the choker gene, because all I have to do is analyse (which I'm good at) trading systems and decide which to use. No heat of the moment decisions to make. No fear nor greed. No problem with pulling the trigger after a loss.

If I can't become profitable trading currency with this tool at my fingertips, seriously, I should just give away the trading dream. But I think everything's going to be alllll right.

And now, all I need is some money to trade with :-)

Unless someone out there in Internet land wants to go in a partnership with me, (where you provide the money, and I provide everything else, and we split the winnings 50-50), then I'll be going back to paid employment.

The good part is that while I'm at work trading hours for dollars, Thinking Stuff is making my money work for me.

And in a few years from now I will have both the money and the knowledge, not just the money as I had before, and not just the knowledge as I have now. That's a rosy future. (Oh, and also the beautiful and intelligent wife and the 5 quiet and obedient children :-)

The "Trading Systems For Free" page became "Real-life Examples".

I've just added a new system to that page which I have not tested one little bit!

Here's what I wrote:

I haven't tested this system out at all, I just wanted to give an example using the Chandelier stop. As you will see, I'm about to mix my 5-Minute %b System #1 with a stop loss technique which is supposed to be used on Hourly bars. Therefore please backtest and modify before use! (Should go without saying).

I've heard of the Chandelier stop before somewhere, but I'm not sure where (if there's an originating source I should reference, please let me know). I came across it again in the Oanda forums, specifically this post.

Here's what a fella (?) called EZCurrency said:

For a trailing stop for a long, I use HHV(H,24)-3.5*ATR(24) on an hourly chart. This is the highest high value of the past 24 hrs, then subtract 3.5 times the average range of the past 24 hrs. This accounts for the volatility. Plot it and you will see it is an excellent trailing stop for most pairs!

Another person, Gouranga, then came up with a possible improvement:

One can combine this with a LLV(n) (eg. Long Trade) and take the higher trailer of the two. LLV(n) trailer locks in profit when market consolidates. While (HHV - ATR) locks in profit when market trends. So, you get the best of both mkt conditions.

The basic theory of using a number of ATRs in order to calculate the stop loss, is that it's adaptive to the current market conditions - during volatile periods the stop will be placed further away, and during less volatile periods the stop will be brought closer to the current price.

All Bollinger settings used a period of 720, with 2 standard deviations above and below. The period for the ATR is 24.

I'm not going to use the Highest High minus the ATRs. Instead, I'm just going to use the High of the current bar minus the ATRs.

Rule Type	Description
Long - Entry Rules	Value of %b Is Below X (0.1)
Long - Entry Values	Price Where %b Would Equal X (0.1)
Long - Init. S/L Values	[OHLC] (using the High) Minus X (3.5) Average True Range(s)
Long S/L Mgmt Rules	Every Bar
Long S/L Mgmt Values	[OHLC] (using the High) Minus X (3.5) Average True Range(s)
Long S/L Mgmt Rules #2	Every Bar
Long S/L Mgmt Values #2	Low Of Previous X (24) Bars

And for shorts:

Rule Type	Description
Short - Entry Rules	Value of %b Is Above X (0.8)
Short - Entry Values	Price Where %b Would Equal X (0.8)
Short - Init. S/L Values	[OHLC] (using the Low) Plus X (3.5) Average True Range(s)
Short S/L Mgmt Rules	Every Bar
Short S/L Mgmt Values	[OHLC] (using the Low) Plus X (3.5) Average True Range(s)
Short S/L Mgmt Rules #2	Every Bar
Short S/L Mgmt Values #2	High Of Previous X (24) Bars

Note that TS automatically works out which is, in the case of the Long trades, the higher of the two Long S/L Mgmt Values (and the lower of the two Short S/L Mgmt Values). Also note that stop losses never move to a position of increased risk.