03 ts open strategy
TRANSCRIPT
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Why is Open Strategy (“Os” element) investable?
• “Os” is a what-if analysis on the relative performance of alternative entries
• What would have happened if trades had been opened earlier? (- 50% earlier than the actual trade, - 40%, etc.)
• What if trades had been opened later? (+10% than actual trade +20%, etc.)
• Os (Performance vs. alternative opening) is a valuable indicator, particularly in combination with Pf (strategy performance):
• Strategies with good Os and good performance are solid• Be careful with strategies with good Pf but a Os below magenta
level… this could be an indication of LUCK (or a close strategy so good that the trader can afford to not pay attention to openings; checking that strategy’s Cs is recommended!)
• Worsening Os is a good early indicator that a strategy is in trouble – so stay tuned for trends in Os, as well as overall level
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INDEX
1. UNDERSTANDING OS
2. IMPROVING ON OS
3. QUESTIONS?
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Understanding Os – Os Badge
Your Os level is displayed under Trader -> Challenge
• Color indicates achievement level in TS Elements
• Colors increase in difficulty from left to right• Yellow -> worst Os grade• Magenta -> best Os grade
• Indicates progression within Os• Across all colors• You can also check the percentile of
all traders
• Click on to see a detailed description of the level you are in
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Os – Diagnoses trade opening strategy
What if a strategy opened trades a bit earlier, or later?Would performance change?
Trade iTime
Trade duration (T)
+ 20%T Close time-20%TOpen time
P&L
Actual Trade P&L
Time
Return (+20%T) Return (-20%T)
+ 10%T -10%T
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How does Os work?
• Os runs a competition by your chosen entries against 10 virtual “Challengers”
• What would your return have been if you had opened every trade 10% , 20%, etc. earlier?
• Similarly, what if you’d opened your trade 50%, 40% etc. later?
• The Os Chart tracks the cumulative profit gap achieved by your strategy against each of the alternatives:
• If your open strategy comes out on top = you time your openings well!
• If your open strategy comes out at the bottom = time to review…
• The chart tracks both the rank and the gap – where the horizontal line tracks average results for traders with your same trade duration.
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Os – Understanding the Os Chart
Click to view all stratregies
Bad zone!
Good Zone!
Bad
Strategy better off than in case of opening trades earlier / later!
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Good Os – Cumulative lead through good openings
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Bad Os – Cumulative lag through bad openings
Strategy worse off than in case of opening trades earlier / later!
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INDEX
1. UNDERSTANDING Os
2. IMPROVING ON Os
3. QUESTIONS?
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Os – What’s the point?
Os can diagnose strategies as working, fading, and random (i.e. non strategies)NB: Os works for independent trading decisions – it doesn’t for trades hedging other trades
If a strategy works, actual Openings outperform alternative openings1
3 When strategies stop working, Os can anticipate performance breakdowns before they happen
If a strategy is on to a pattern, Os helps to maximize performance by fine-tuning entries
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Os when a STRATEGY works
High Os is powerful indication that a strategy worksWhen a system works, traders pick the best opening (because they can)
• If a strategy is on to a pattern• Good entries anticipate a
winning close over a target horizon
• Winning openings outperform most alternative openings over that horizon
• In this case, life is good!• Good entries• Low stress trades• Systematic profits
Haven’t watched “The Incredibles”? Do it now! http://www.imdb.com/title/tt0317705/
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Os decays once a STRATEGY stops working
Worsening Os is the first sign of trouble when patterns break downBecause NO strategy works for ever
• When you’re first to discover a pattern• It’s great - for a while• But if your pattern really is a
pattern, others WILL notice it
• Once others notice more liquidity crowds your strategy
• Closings are less obvious• Noisy signals appear• The choice of opening isn’t as
clear cut• Actual openings lag
alternative closings
• Time to move on? Your Os and your Cs badge will be of help!
Haven’t watched “The Incredibles”? Do it now! http://www.imdb.com/title/tt0317705/
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INDEX
1. UNDERSTANDING Os
2. IMPROVING ON Os
3. QUESTIONS?
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Questions?
Trading is hard – no wonder there are unanswered questions!(Why not, together, build a Knowledge Base that answers them all?)
• The Knowledge Base contains TS Mentors’ answers to all your questions!
• Mentors are Traders like you who enjoy helping out, and are voted very good at it, AND
• Trading educators hand-picked for quality and broker independence, who pitch their materials
• Want to contribute? Great!• Post an article / Post• Ask or answer questions• Rate fellow traders’
contributions
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Can you do better?
• This article is a “stub” (an unfinished entry that MUST be improved)• We need your questions & feedback to improve it!• Feel free to post your questions to the TS Knowledge Base
• Have suggestions?• [email protected] can’t wait to hear them• We’d love to credit you for improving our content
• Contributing to this section will boost your mentor score if others like what you post – helping out will reflect on your community standing, which means
• More traders will visit the URL on your profile• When they visit, they’ll request your mentoring!