To continue, Acronym, what strategies am I currently forward-testing? Some really exotic new stuff I recently invented: Retraces counter to the trend - this looks promising on any time scale from seconds to months, depending on your execution costs and stomach for stops Breakouts from trading ranges Fades of breakouts Fades of fades of breakouts Any sustained directional movement which makes you mutter to yourself "How can it possibly go any higher (or lower)?" I have high hopes for these new approaches and will keep you advised of their efficacy.
Now back to the humor. Attached are the results for last year if you bought NQ on a gap up and held all day. Before you look, what do you think the result is? After you look, would you attempt to optimize it with stops and profit targets? No complaints, please, this tutorial is worth every penny you are paying for it. How many of you think "Hmmm. I'll just apply elementary TA to the equity curve, trade it when it works, and quit when it stops working."?
OK, so THAT didn't work. Suppose we buy a gap up on a Monday? Good news sometimes happens over the weekend, or people rethink a bad Friday close, right? I'll quit now. I think I made my point. What was it again? If it's too simple, it won't work? If it's too complicated, you can't reliably optimize it? Backtesting is a complete crock of shit, and you should trade your understanding of the current market mechanics?
I saw somewhere (damn, can't remember where), that if you bought the open every day and sold the close every day and compared it to buying the close and selling the next morning's open, they would have similar equity curves. That was true until July 07. Then it started showing where the close to open had a profitable equity curve, but the open to close had a losing equity curve. I was wondering if it might have something to do with the elimination of the uptick rule. Think you'd like to take a look at something like that?
Joe: So you are saying - look for the one minute price move that triggers most TA indicators and fade it? I like it. I think you should call it the "eructation trigger." I'll waive any rights to the name. Jack
JackR, what I really meant is go with that big bar. Sometimes. The rest of the time you do fade it. Knowing the threshold is the trick. Which I do, haha!
Funny, Infolode. You could get all balled up in it like Steve McQueen in "The Great Escape"! These backtests are just fun for me. I'll stick to my one-minute or shorter trades in real life.