Reality based coin-tosser method that beats 95% of traders in the world.

Whisky · Oct 20, 2009

Quote from jack hershey:

OP, do you think you can get off the probability for one day?

several people here have been making a small effort on a very simple level to give you an opportunity to see the markets. what seeing means is simply allowing your sensory vision and reading processing to get one small glimpse that may combine with something....anything.. inyour mind's "inference" that may allow one small PERCEPTION.

So far no go.

All of the OCD's have come out of the woodwork and are doing their Pavlovian routine at this point.

Try extremely hard to let your mind have a new small PERCEPTION.
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So... you can actually write in English if you choose to?. Nice.

I'm being as open minded as I can.

Whisky · Oct 20, 2009

Quote from MandelbrotSet:

How are you feeling about this post now, Whisky?

LOL
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I feel fine. I will learn something new, or he'll hang himself with his own rope, or both.

How are YOU feeling?.

Whisky · Oct 20, 2009

Quote from mag:

I created a one-trade-per-day strategy using candlestick indicators a long time ago.

The strategy played out like this:

1. Wait for a âmorning starâ or âevening starâ to occur on a daily chart of a group of stocks over $10 and with volume higher than a million.
2. Enter long for a morning star, short for an evening star right before the market close. (Before market close is important because then you capture over night price movement).
3. Close the position the following day right before close.

The strategy was profitable including slippage and commissions.

A couple of issues came up.

Interestingly, adding profit targets and stops made the system a loser.

Profit and loss swings of over 20% occurred.

Also, the strategy didn't put out too many trades per month and you had to be at your computer ready to place a trade at the end of every trading day (not too much screentime but still a commitment to a place and time every single day).

My mentor at the time told me you couldn't have a strategy that didn't have stops so I gave up on it. But it was a fun learning experience and very labor intensive considering I don't have backtesting software and instead had to learn and then program excel to backtest for me.

It showed me that all the indicators that you read about in books and on the internet aren't completely garbage. It's just that by themselves they aren't very strong (they're better than 50-50 when you put no constraints on them whatsoever). Since thatâs damn near impossible to trade, I moved on.

I bring this up because the coin-toss method doesnât involve any technical analysis.

Even a strategy of buying pullbacks to a 20 tic moving average is highly profitable under certain market conditions.

What are market conditions? Trends in price on a higher time frame than the one we are using to place trades.

Hereâs an example of a strategy where you buy dips to the 20 day moving average of the SP500 when the 20 day moving average is above the 50 day average and short pullbacks to the 20 day moving average when the 20 day moving average is below the 50 day average.
(Download excel worksheet â results on the far right)

As a few traders here pointed out, the market has had a bias to the upside since 2000. As a result the bullish strategy profited more than the bearish.

What is really interesting is that with the use of Bollinger band width (explained in the excel file), you can increase your average profit by nearly 100% with the bullish strategy.

What is even more impressive? Using the Bollinger band width with the bearish pullback strategy you go from losing an average of .75 points to a profit of 1.6 points per trade!

Market conditions (trends on a longer time frame) exist and technical analysis works.

EDIT

Saved the worksheet in the wrong format. Here's the results

Pullback Strategy (Bullish)
1. Enter long on pullback to 20 day
average (within 5 tics up or down)
when 20 day average is above
50 day average.
2. Entry is made at the close.
3. Exit is the following days close.

Results:
# of trades: 70
Profit in tics: 183.42
Average Result: 2.62
Highest Profit: 26.83
Highest Loss: -11.75

Pullback Strategy (Bearish)
1. Enter short on pullback to 20 day
average (within 5 tics up or down)
when 20 day average is below
50 day average.
2. Entry is made at the close.
3. Exit is the following days close.

Results:
# of trades: 25
Profit in tics: -19.37
Average Result: -.77
Highest Profit: 23.01
Highest Loss: -22.75

Pullback Strategy (Bullish)
Using Bollinger Band Width
1. Enter long on pullback to 20 day
average (within 5 tics up or down)
when 20 day average is above
50 day average and bollinger width
is between 10 and 20 or greater than
40.
2. Entry is made at the close.
3. Exit is the following days close.

Results:
# of trades: 45
Profit in tics: 217.93
Average Result: 4.84
Highest Profit: 35.55
Highest Loss: -19.63

Pullback Strategy (Bearish)
Using Bollinger Band Width
1. Enter short on pullback to 20 day
average (within 5 tics up or down)
when 20 day average is below
50 day average and bollinger width
is between 10 and 20 or greater than
40.
2. Entry is made at the close.
3. Exit is the following days close.

Results:
# of trades: 13
Profit in tics: 21.7
Average Result: 1.66
Highest Profit: 23.01
Highest Loss: -22.75
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Excellent contribution mag. I'll try to come back with some suggestions about it later on.

Whisky · Oct 20, 2009

Quote from Random.Capital:

Why are you people killing what was an interesting thread by responding to and talking about Hershey?

All you accomplish is looking as ridiculous as him.
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Aside of the fun component, there is a VOLUMEtric reason that I'm hoping to eventually develop.

Think where the money losing orders aggregate and toss your coin in there perhaps?.

Whisky · Oct 20, 2009

Quote from ehorn:

Sure... Be glad to...

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Thanks for the translations ehorn. Can we now further translate into objective rules in english that a computer or an 8 year old would understand?.

Can anyone (outside the coven) understand and/or translate this current translation by ehorn into computer code for back- or preferibly forward-testing or alternatively derive some clearer rules for placing orders?.

wee man · Oct 20, 2009

I still cant see how employing a 'tosser system' in a strong market uptrend can possibly be seen as 50/50 to start with.

To gain edge in this market is simply buying on pullbacks at various support levels, pivots and or fibs.

Educate me at will....

MandelbrotSet · Oct 20, 2009

Quote from Whisky:

I feel fine. I will learn something new, or he'll hang himself with his own rope, or both.

How are YOU feeling?.
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Like I enjoyed the original concept, speaking of which, I certainly learned something new from it.

The study and understanding of binominal distributions is the trader's own personal dragon, which, once conquered will yield a KINGDOM of wonderful riches ... speaking of Thorpe, he did a good job of slaying his.

Whisky note: edited for accuracy.

Whisky · Oct 20, 2009

Quote from wee man:

I still cant see how employing a 'tosser system' in a strong market uptrend can possibly be seen as 50/50 to start with.

To gain edge in this market is simply buying on pullbacks at various support levels, pivots and or fibs.

Educate me at will....
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Think EXITS wee man. That's what produces the returns vs. risk taken.

telience · Oct 20, 2009

I don't have time to read all the pages in this thread .. but has someone implemented the OP's strategy in MT4 that I can copy?

thx

Badoit · Oct 20, 2009

Quote from Whisky:

You will have to prove to yourself and others that your suggestions bring in at least 1 tic per day on average extra profit over the original method rules.
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[rolls eyes...I was being half facetious and half serious]

So far on this thread there has been mostly talking about Jack Hershey, who it seems to me must be some sort of pathalogical bullshitter or on acid.

I made my point because most (all?) of the ideas raised are technical analysis with no mention of trading fundamentals... if you are trading the ES then (IMHO, of course) you should be looking to position yourself according to the markets appetite for risk. The markets appetite for risk is more likely to be driven by intermarket themes and the major news events of the day rather than how the last bar closed (or whatever).

Sticking to strict entry criteria can be improved by upon by using your bonce (Engligh for Head).