Ok... so this record dropping day keeps skewing my backtesting. What was the cause/trigger for this day? What were the clues NOT to trade this day? How many times did you have to get hit before you stopped trying to go long this day? I have one Emini system that only goes long, and does very well, but got absolutely destroyed on this day. Trying to find some rules to follow to get it to stop trading that day. Ideas? Post or PM me. Thanks. peace axeman
It was a combination of early options expiry and earnings. Shortened week. Players didn't know what to do with opts. till earnings came in, so opts. weren't rolled, sold or expired early in the week. Happens once a year or so. Earnings were in control.
Dunno, that was three years ago, I wasn't even born then. ooops, I guess my registered date, is proof that I'm not telling the truth. If would guess that if the system only goes long and the market is in full crash mode, then pulling the plug on the system would'nt be a bad idea.
Well, that IS the question. At what point do you decide the market is in crash mode? How do you determine this, and can you catch it early enough to minimize the damage? peace axeman
The idea is that you don't. You take into account two or such days like that into your analysis and that's all you can do. You cannot forecast such things, either cut it loose or deal with it.
"At what point do you decide that the market is in crash mode" Sometimes I figure it out early and sometimes I take a few nocks around my noggin. (stopped out on longs, since I sometimes do play some rather risky reversal plays) I dunno what you watch axeman. I watch several different indicators and TICK, TRIN and Advance/Decline. When advance/decline is 2 to 1 or more on the decline side, then it's a pretty good indication that there is heavy selling. My hard head sometimes starts looking for a reversal (thinking that extreme values can reverse in extreme) I usually get killed when I do this against the trend stuff. (hard headed I suppose - not near as bad about it as I used to be) I watch a stochastic also on a 120 minute chart of Nas E-minies and if it's falling hard from top to bottom I don't usually go long. If I do go long, I use tighter stops and smaller upside targets. I also watch a 5 period, 20 period and 200 period simple moving averages on my charts and if all of them are sloping down, then it's a sell day (or sell time at least) until they start moving up or leveling off. If I can't bring myself to enter the obvious trend for fear of chasing and that it might snap back on me. Then I at least try to either be very selective on seeking a reversal or I just stand aside. Personally, I have more problems with buying and holding like today, than shorting and holding. Being too one sided (short biased) has cost me much opportunity. I suppose that if your system is mechanical, then at some point you use discretionary over-ride. I have never used a mechanical system. I use certain setups that could be considered mechanical ( I mean if x and y do so and so, I pull the trigger) but I always allow myself the right to decline the trade if there is something else that I see, that I don't like. That could be anything from a politician yapping on tv to whatever. If it doesn't feel right I will often decline the entry that my signal gives. (sometimes I sit there cussing at myself for not taking the entry - other times I sit there thinking something like, " I knew that didn't look/feel right and I'm glad I sat still. Also, there have been way too many times that I let yesterday get in the way of today. (as in: I can't believe that these *fools* can't buy back fast enough - the very same thing they couldn't get rid of fast enough yesterday...lol..) So I sit there and don't get in to the upside because each time I went long the day before I got stopped out...etc...etc...etc..who's the fool then - me of course. As I gain more experience (as slow as that seems sometimes) I begin to get the idea that there just aint nothing more bullish than everything going up and nothing more bearish than eveything going down. With this thought in mind, I'm getting a little better at buying high and selling higher and selling low and buying lower. (which for some reason just goes against my very soul...lol..) peace and good trading to you axeman, plumlazy