How did you arrive at making a better algo, was it from years of retail training in the school of hard knocks or do you happen to have trading pro background?
school of hard knocks + a succesful trader kinda "guided" me in the right direction. No pro backround. Just lots of lost money and screen time and a realization what is possible and what is not.
As you already included algorithms that assess probabilities of direction I would probably also add an additional class, those that attempt to predict magnitude, volatility algorithms. Then there is another class, those algos that base logic on news sentiment. In fact there are many more classes of algorithms, each one based on distinctly different features.
%% Good points, ES context, even if it was not clear, if you liked the idea of ''chase breakouts'' LOL?? Sometimes when all the technical+ fundy+ funds work is getting done, math can help. ES front mo DEC= 16% sell/84% buy; SPY, liquidity leader=8% sell/92% buy. For those that are not good with math, look up liquidity leader. Another clue, for the many that dont make money in Es, keep seeking..... I used barchart.com for that, sure not limited to that website.
A 100k investment turns to 3.83 million in 20 years. Someone serious would, however, invest at least 500k. 20% annual compound grows to almost 20 million dollars. That's getting rich in my book, sufficiently funded to live a life that affords most ordinary conveniences and many additional enjoyments. Those investments are meant to be saved and reinvested, not consumed within the operating period.
So IMO...the longer the trend, and the more times price has bounced from S&R, the more important it is. People have made good money simply buying support and selling resistance. As long as your size is appropriate and you accept they are zones and not specific prices then its possible to do well. If for nothing else, they give you a directional bias...get positioned and if its wrong, get out or reverse. I find long term S&R to be the most useful...tendlines are meh, patterns like cup & handle and head & shoulders to be even less reliable. I've finally joined the PA bros and since have seen my trading do a 180...I look primarily for intraday liquidity and obviously try to be on the right side of it. My research gives me an idea on how for a move typically lasts in one single direction, look to exit as soon as price approaches that level and stops acting right. also, something i call "volume popping" has been very useful as well comparing intraday volume to MA of volume...little things to give directional bias...enter in areas of indecision/exit/enter/exit/enter/exit until market direction is decided (my position is good and green) then sit tight until exit warning -> then triggers take place.
Agree, Support and Resistance, Volume and Al Brooks (even though Al doesn't use Volume) are under rated around here. I don't know what goes through @Laissez Faire s head sometimes.
As I've said in my earlier post, they are all "largely a variant (and subvariant) of one of these (four) classes." Pattern recognition algos? Depending on what pattern you're talking about, it can be neatly fit into either trend or mean-reversion algo (or a variant of those two). Probabilities of direction? Magnitude, volatility? Ditto.