Stage 1, day 30:
Trading markets are maddening. Any small bumps in the price was making the moving averages 2 short crossovers. Just enough to make my system exit its position before continuing the same trend once I exited the positions.
The solution to that was to increase the moving average period to require more than a small bump to trigger a signal. The trade off to that solution is that the system has become slower to respond.
The price just dropped by more than $100 in about 4 minutes. When my system gave the signal to sell, the price was already at the bottom...
It is not that my moving averages new values aren't good. Simply that market conditions have changed and currently trend following strategy isn't appropriate... I'm going to crack the code eventually...
Every assumptions that I have made so far are getting discredited by current observations. I was calculating some technical Sentiment attempting to quantify the market mood. Whether it is more bearish or bullish... So right now, it doesn't work at all... When my technical sentiment measurement says that the market is bearish, the price goes up.... and vice-versa...
On the bright side, when I observe some patterns in my graph, I start to grasp the psychology behind what I am observing... I guess this insight is critical to success as I'm not observing a natural phenomenon such as planets moving in the solar system following rigorous physical equations... I'm looking at market participants having feelings and taking moves that are influenced by the herd mentality.
I quickly learned about a small tool called graphviz. It draws graphs from a small spec file. I wanted to visualize the interconnection of all the markets available on my exchange. It has 39 supported currencies with close to 140 supported pairs (ie: market)... Without any visualization help, it is close to impossible to have mental picture of what the interconnection looks like. I'm far from having become a graphviz expert, but my first result is interesting enough to be worthwhile for sharing...
![[Image: AssetPairs.png]](http://trillion01.com/AssetPairs.png)
Trading markets are maddening. Any small bumps in the price was making the moving averages 2 short crossovers. Just enough to make my system exit its position before continuing the same trend once I exited the positions.
The solution to that was to increase the moving average period to require more than a small bump to trigger a signal. The trade off to that solution is that the system has become slower to respond.
The price just dropped by more than $100 in about 4 minutes. When my system gave the signal to sell, the price was already at the bottom...
It is not that my moving averages new values aren't good. Simply that market conditions have changed and currently trend following strategy isn't appropriate... I'm going to crack the code eventually...
Every assumptions that I have made so far are getting discredited by current observations. I was calculating some technical Sentiment attempting to quantify the market mood. Whether it is more bearish or bullish... So right now, it doesn't work at all... When my technical sentiment measurement says that the market is bearish, the price goes up.... and vice-versa...
On the bright side, when I observe some patterns in my graph, I start to grasp the psychology behind what I am observing... I guess this insight is critical to success as I'm not observing a natural phenomenon such as planets moving in the solar system following rigorous physical equations... I'm looking at market participants having feelings and taking moves that are influenced by the herd mentality.
I quickly learned about a small tool called graphviz. It draws graphs from a small spec file. I wanted to visualize the interconnection of all the markets available on my exchange. It has 39 supported currencies with close to 140 supported pairs (ie: market)... Without any visualization help, it is close to impossible to have mental picture of what the interconnection looks like. I'm far from having become a graphviz expert, but my first result is interesting enough to be worthwhile for sharing...
