I have been trying to make a decent model on intraday trending stocks for quite a loing time now. I have coded more than 1000 setups and backtested them. In my opinion mean reverting models are easy to make on intraday but I just could not get any decent trend models in intraday. I have backtested setups such as ORB, ROC, used all the technical indicators, price action too. Not even getting a profitable model after brokerage. I would like to hear your views on this. Thanks
Honestly no, I have only tried breakouts. Actually I know a couple of guys having a systematic intraday trend model on stocks which is quite robust. I am sure they trade on breakouts. But just not getting the results that they get in live enviornment.
try pullbacks. Thing is not all breakouts/reversals/pullbacks work. You have to backtest and see which ones work and which ones don't
1. If such model existed then everyone would use it, but then some people would want to exit/sell to take profit, then some people would change their rules to exit before other people, then other people would want to exit even earlier to take profit before even more people, and so on. So the rules would be continually adjusted until they stop working. And the market is self-balancing in such way. 2. Many people buy on pullbacks, while others who buy trends/breakouts set their stops when the stock price drops. So when you buy on breakout but use stops, then you lose while everyone else makes money when you hit your stop. 3. I’m sure that you can find some days or weeks or months or specific stocks or groups of stocks when any bullish rules will work, because there are periods of euphoria and pumping “hot stocks”. When a popular trader (on Twitter, chat rooms, or even Warren Buffet) has lots of followers and announces that he is buying or bought a stock, then everyone else follows by buying it too, sometimes within minutes. So there may be some ways to make such models work, but they may need to include more information. 4. You need to allow for losses and just have more or larger winners. Good models may not be visibly identifiable if you’re setting your expectations too high.
In 21 years experience daytrading USA stocks I find mean reversion setups are ok, but the best are minor gap continuations, above prior day's highs.