profiting from paint

Discussion in 'Technical Analysis' started by aus_SPIder, Nov 21, 2006.

  1. who here profits completely from lines drawn on a chart? i.e no indicators, nothing but the price, volume, trendlines, S/R, moving averages and keltner/bollinger channels. in short anything that can be drawn on a chart with the price.

    How many of you honestly could make money utilizing only microsoft paint and a jpeg of the market chart?
  2. I do not use indicators. I do not trade with trend lines.
  3. what do u use?
  4. I might use different trend following systems depending on what tests best.

    Here is an example of a system that trades using price information. These are the rules:

    1) Buy when yesterday's closing price price becomes greater than the price 750 sessions earlier.

    2) Sell when yesterday's closing price price becomes less than the price 750 sessions earlier.

    3) Position size is US $ 9000 / ( 0.1 x closing price).

    This simulation uses 16.95 years of Allergan Corp. symbol AGN price data from 22 June 1989 to 16 June 2006.


    Number of trades 9
    Total profit $ 483145
    Profit after subtracting $ 100 commission & slippage per trade: $ 482245
    Heat is $ 9000 per trade
    Drawdown is 0.0772
    Initial capital is $ 100000
    Long trades only

    Growth rate is 28.45 % per year, greatest draw down is 7.72 %.


    What I find interesting is all values from 100 days to 800 days show profit. None of the simulations show a loss.

    This simulation shows trading rules do not have to be complex to show profitable outcomes.
  5. Nine trades seems like a terribly small number. I am more accustomed to seeing >8,000 trades in a test of a mechanical system, for example this one.
  6. Shorter term simulations show more trades. The big money appears at the long term simulations. Simulations do not always show this pattern (long term = greater profit) but this example does.

    Might be interesting to write code to use heat as a percent of equity. My example sets heat as a fixed $ 9000. If I use percent of equity then there is the possibility of compounding.
  7. Nice presentation of trading simulation results!

    I do not remember seeing such a complete presentation before. I am studying this. Thank You.
  8. price only based systems, interesting.

    anyone else here profit from using only s/r, ma, trendline and bollingers?
  9. i use nothin' but bid/ask/size/last, peer sometimes at charts but entry/exit decision are mainly taken based on tape. indicators [includin' volume] are laggin' too much and yeah i cannot read em well enough.
  10. just out of curiosity were u ever a pit trader?

    many of the good tape readers ive met were all pit traders. guess all that time in the pit develops an intuition
    #10     Nov 22, 2006