Perhaps, I am assuming I am a genius and this is a great thread..... or set me straight....this idea sucks and shut up electric. Michael B.
They say a trading method should suit the trader's personality. Using a failed trade as an entry signal for the reverse trade makes me feel like i'm chasing. In my own trading, sometimes i'll get a short signal right after a long one (or vice versa). I take these (when I see them) and they are usually great trades. So I have no problem reversing for the "right reasons". I put "right reasons" in quotes because it is a matter of opinion.
Point taken....perhaps range would not be enough of a "right reason" but remember adjustment can be made to the bracket range....this is a price action methodology......not really indicator based, but I remain open-minded to suggestions. Michael B.
Also, remember the acceleration of the incremental bracket adjustment when reversing could be discussed. this is all very time consuming and I apologize for asking others to do the time. I am not asking for a free ride...so if you want to share go ahead...ok? Michael B.
For you indicator traders.....try using this methodology to enter at oscillator extremes....theoretically you might find a pleasant surprise. Just share if you will. Michael B.
Since this trades the open a couple of indicators or helpers come to mind: (1) classic pivot points. yesterday's high, low, close may be good enough. Funky started a thread about this. They seem to work nicely around the open. (2) Advancing/declining issues. Many times you'll get a pop in the price but you look and decliners are really outpacing advancing issues. Then the market heads the "right" way.
It does not necessarily need to trade the open...... I just used an example. The methodology here is the "bracketing in" or "channeling in" of the velocity of the move or mini-trend. This is trend following by taking profits and adjusting brackets. This also is reversing hopefully on big enough pullbacks to take some profit or even better catch the reversals of trend. Perhaps major trends or overnight holds could be examined with wider brackets. Michael B.
...here's how the opening gambit tests out: Issue: ES Entry time: 9:30 EST Entry rule: short if the previous day was up, long if the previous day was down Maximum time allowed for trade: 30 minutes Profit exit rule: take 1 ES point Stop loss rule: allow trade to breathe 4.75 ES points Test period: 7/7-9/26/03 Number of trades: 59 Average profit per trace: -$28.10 Net profit: -$1658 Maximum drawdown: -$2080 % trades profitable: 61% Average winner: $51.45 Average loser: $152.62 Superficially it appears that the profit target needs to be increased and the stop loss decreased. It takes 8 minutes per run with my abacus and slide rule, so I don't have time at the moment to optimize it. If I misunderstood, please advise.
Take away 30 min......and trade till MOC.....use a 6.75 stop...this should yield over 90% Win Rate in the last 12 months....This system would require bet sizing for marked performance as the loss wipes it out with one fatal swoop. Who would trade like this? But it works. anyways back to the thread....thanks for your efforts. Michael B.