In addition to that, they give you 5 free strategies for the S&P to get ideas started. Here's a report: http://www.quantumcharts.com/trading-strategies-reports/backtest-stock-trading-strategies.html
Success rate means nothing. I can show you 9 trades with close greater than the open and the tenth wipes out all the gains. 90% success rate, so what? What was the profit factor? Real traders talk in terms of profit factor.
Bill- Set your ego aside. You will not ask me for an answer and then condescend to state that "real" traders speak in terms of profit factors. Real traders also speak of average profit per trade, largest drawdowns, average drawdowns, equity curve, etc. I will give you the profit factors, but if you would like to know the rest you will politely ask like a gentlemen trader rather than expect me to post every financial aspect of the benefits of these strategies rather than backtesting them yourself (assuming you know how). rofit Factors: First Calendar Day = 2.32 Pre-Option Expiration = 4.276 Option Expiration = Anywhere from 2-3.5 depending on the Pre-Option Expiration trade performance. The more profitable the Pre-Option trade is, the more profitable this trade is. Last Trading day = 2.397
Tradeplayer, heh, I'm just a lil ole forex trader here.. God forbid, I build up my $350 account to trading futures contracts in the s&p. Might be a while before I can afford to risk 2.5k a contract in the e-mini. I really do like what I am seeing from that link you put up. Stocks are too long term for me, but the s&p sounds exciting. Something to work toward I suppose. Anyway, tradeplayer, you seem like you might have an angle on some back-testing software. I know my dumb-A can't program either, so if I can work some numbers that check out with my forex trading. Heck, I'm in for more. here's a laugh-er for ya, my favorite stocks are Walmart and Caterpillar. I wouldn't buy them though right now, great long term safe stocks, but don't make you any money as a day trader with limited money. cheers, fi ps - I know this is a noob post, but you guys can find me all over babypips and sometimes trade2win.. ooof.. trade2win guys careful how you talk there. Doesn't take them long to call you an idiot.
Thank you for the good contributions, TradePlayer! Here is the chart from today with a few observations on today`s price action. A double bottom with higher lows and a refusal to fill the gap below was today`s clear buy signal. The thin blue lines are 50% retraces and are plotted before the day is finished. The purple thin lines is the pivot point and are plotted after the trading day as reference for the next day. Enjoy fellas. I hope some of you (I know Volente did) bought the open
LF, great observations, thanks for posting them. How do you deal with impulsive trades? You've mentioned before that it is an issue for you sometimes. How do you work on it? just time and practice? Are you trading live or sim? thanks.
You`re welcome. I`m glad if you find them helpful. What is the underlying cause of your impulsive trades? Think hard about it and let me know what you think. It could be several reasons for it. I believe the biggest reason people enter impulsive trades is because they don`t have a clue about where price is going and get easily excited when they see some action on the chart. In the ES market there are fake breakouts (tails on the bars) all day long trapping early traders. Fuel for the fire. Another reason is that the desire for profits interrupts your clarity of observation. You may be tired of not making money or maybe you are making money, but not at the pace you`d like. Thus, you jump aboard without a clear target, "hoping" that the market will somehow give you a profit. Another obvious cause is revenge trading which is completely irrational. It was a defining moment for me when I lost 50% of my daily profits near the close on a normal trade and was able to walk away, not entering a frenzy of over trading and losing it all and then some. This has happened too many times, but I was tired of it. I knew I would get a second chance tomorrow and a much higher probability one at that. The short answer to how I stopped my impulsive trades is that I simply did not have a choice. My equity was at such critical levels that I knew it was my last chance. Another thing that may help you is a rule about not entering any trades until 30 minutes after you`ve seated. In advance, you should have calculated levels, 50%, highs and lows, PPs, anticipated several scenarios (where is price likely to go, what are the fulcrum points, etc) and have a road map for the trading day. When you have this and wait for a set-up to materialize, it will be much easier to avoid impulsive trades. When we tested the 58 area for the last time today, I knew that a lot of shorts potentially were getting trapped. Re-read my entry in the ES-journal. I wrote about it as it happened. I knew early shorts were entering, because I would have done it myself in the past. It looked pretty bearish at a point, right? Very easy to get emotional and EXCITED. Having done my homework, I also knew that the 58 area was significant support and a confluence point of yesterday`s high, today`s 50%, opening range high and the neckline of Volente`s IHS. Knowing this, I wanted to see what price did first, pretty much anticipating that it would be a fake breakout. Waiting paid off well as I entered a long @ 58 instead, when I saw that price were finding support there. Obviously, greed is also a big reason for being impulsive. That`s the reason you enter trades, right? To make money? Well, the secret is that you really need to forget about the money and trade the market. Making money is about trading well. When you trade well, you make money. If the money is your concern, you will lose focus on what matters. The market. Use weekly modest profit targets, not daily profit targets. Too much pressure. Did that give you some ideas?
LF, thanks for the great post, a lot to think about. I hope that you don't mind if I repost it in my journal and will reply in my journal. I don't want to pollute and hijack your thread. thanks again.
The task is quite complicated as the backtest results are very much dependent on many factors, for instance time frames. On top of that market conditions play a tremendous role here, patterns don't work the same in the different market environments and the different instruments available. Sure some patterns work better than others, absolutely, but let's not fool ourselves, randomness kicks in at the highest level after pattern completion. Once formed anything can happen. In my opinion the edge is not in the patterns that completed but in the probability of pattern completion prediction before realization or manifestation. In other words, much easier to predict with good accuracy what pattern will complete rather than how price will react after the pattern has been completed. You need to think outside the box, don't fall into the trap be part of the team that actually forms the trap. Crazy A