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Video Blog: the Failure Test

This video blog is a follow up from this post, and digs into some of the details behind the Failure Test trade in a little more depth.

AdamHGrimes

Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 6 Comments

  1. Andre 07/24/2012

    Hi Adam, thanks for sharing this great post! I have some questions:

    . It seems that you do not take in consideration any kind of volume information when analyzing the price behaviour around the support/resistence level, is that correct? (like for example the volume on the second level test)

    . Should we consider support/resistence as a fixed price or more like a region? Sometimes it is not clear for me where a specific good support/resistance price is.

    Thanks again for putting time and effort on these high quality, practical information!

  2. CJ 07/24/2012

    Hi Adam –

    Thanks for the video. Very insightful. Great book as well.

    1. Adam 07/26/2012

      Thank you!

  3. Vipul 07/25/2012

    Hi,

    Nice insights on identifying potential trade setups. Most of the time though, most of my time is spent identifying areas to take profits. I mean, with reference to the failure test example of Gold at the highs, where would you have taken profits if a short was established somewhere near the highs?

    Some insight into taking profits would be really appreciated. Sometimes i wonder what if we could take profits based on the trade risk, like for eg. if i my stop loss is 3 points away from my entry trigger, how about taking profits at 9 points or 12 points? Given a huge sample size, would it result into outsized gains over a long enough period of time if we take profits at 4 times what we risk?

    1. Adam 07/27/2012

      Post coming on this topic very soon. (as in today.) Thanks for the great question.

  4. KS 07/27/2012

    Hi Adam
    Thanks for the video and the great book.
    I have a question on the risk management chapter – page 272 where your write:
    “On a technical note, this kind of reproducibility is important in Monte Carlo testing, and is a strong arguement against building these tests using Excel’s built in random number generator.”
    Could you explain what this means – is there something wrong with the Excel random number generator ?
    Thanks
    KS

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