I've done it all and that's what anyone else needs to do, too. You need to put down the work yourself in order to believe in what you do. If not, you won't be able to trust it. Don't trust anyone. Test and verify for yourself. Maybe the result is opposite of what somebody claims. Maybe it's random. That's information, too. That said, I personally found the best results from a more coarse classification as the more detail you add the more complex it will become with more possibillities and edge cases. One hint I've dropped a few times is that the Inside Day is fairly rare in SPX. Long term, it's around 10 % of all market days and it's a fairly stable property of the stock market. For 2024 it's 12 % so far. So, if the Inside Day amounts for only 10 % of the entire sample - what could the other days be? And if the Inside Day is so rare - how can that information be exploited? I think that's some pretty good clues already. Good luck and keep us posted.
@Laissez Faire, I tried backtesting a number of algos looking at using prior day's, prior days' outcomes, to predict up, down and inside, using them as "context" of general trend prediction for entry. Didn't work that well for me and I gave up on the idea. The devil is in the details. Question for you, no need to disclose your method, just the results: Are you happy with the outcome of this approach? Thanks.
You’re right it’s tough (if not impossible) to find significant combinations but … As per my example on the QQQ given earlier: The median daily (close - open) is +5.9% of the daily range. Could give some little clues. Could mean that half the time … Buying above +5.9% x Daily ATR, or selling below +5.9% x Daily ATR, from the open is a sucker bet. Especially if we plan to hold the trade until the close. Now it’s only half the time and we might have an edge case where price plummets straight from the open. In this case it would be stupid to wait for the price to be above the level (+5.9%) to short. Or another edge case where price just keeps pushing higher without falling back below the level. That’s not how we’re going to grow rich, though … Buying below, or Selling above, does not guarrentee a profit. Or only half the time ?
Day trading, no matter your secret source, or method, or approach, is really really really.... hard to do. But we keep on trying, wasting our time.
Ironchef. Just focus on trading wedges on 1m charts or MTR reversal on 5m or even 1m charts. Do this on SIM. You just might be surprised. Learn them well.
Curious. What specifically do you mean with 'a number of algos'? What parameters did you consider? And how many weeks/months did you spend on this? Yes.
I'm re-reading Reminiscenses of a Stock Operator this weekend and taking notes. It's incredible how relevant and on point this book is today. The sucker: How true this is even today. I know many successful businessmen here in Norway who went on to lose their fortune (all or a great part of it) in the markets. One of them actually became a day trader and lost it all day trading. Less than two weeks ago there was an article about a successful real estate player who had lost huge amounts in his stock market investments. Speculator's Weaknesses:
Learning to sit on your hands. I honestly believe that one of the most important skills a trader needs to learn is the discipline to only play when you have a reasonable expectation to win. In practice, this means you need to watch the markets gyrate up and down - tempted to play all the time, but learning to wait. And accepting the fact that you might just have missed the prime entry and not chase the market for a sucker play.