" I have had trades which called for me to go long at, e.g. 1250 ES with a stop at 1200 and the market went down to 1200.25 and then reversed and made the trade profitable. The scalability is practically infinite, whereas my capital is not." 50 points DD... I think you'll exceed the reportable amount with your "strategy"!It is not even a strategy per se.
Coming from a Jack Hershey supporter, don't pay any attention to this. 4% drawdown is reasonable up until 5-10% depending on leverage factor.
I think you may have misread the trading frequency. The trading frequency is actually closer to 150 trades per year. And, yes, the strategy has evolved somewhat so that the actual data I have is for just under a year, but the strategy could easily be backtested going back as far as there was 1-minute data for any market you'd like to test. Since it is an algorithm and not discretionary, there would be no barriers to backtesting it via computer code. As for scaling into positions, you could definitely do that. As I mentioned, a trade trigger also triggers an initial stop and one could buy or sell at any price between the trade trigger and that initial stop. If your trade trigger is long and your trade experiences "heat", that just means you can buy more.
It's the infrequent trading, isn't it, ES? Up in an up market, less than 30 trades in the past few months, suspicious? Spurious? I think both. Data to 2009, though, but without live results better off for subscriptions than trying to get in front of insititutions expecting scalability.
When you've done enough trading to see 5-10% drawdowns are likely, come back to us with your swing trades that aren't dependent on a Jack Hershey mythical backtest. The mysticism goes only so far, and I've watched swing systems tolerate that level of drawdown before turning a profit. It's not pleasant and until there's more history most investor's do get turned off by that level of drawdown but many more miss the multithousand percent profits that come to those traders afterward.
I'm not sure what you mean, although I sense that you are trying to say something negative. Look, if the market says "Your initial stop needs to be 50 points away from your entry price", who am I to argue? If the market says "Your stop needs to be 5 points away from your entry price", that's fine too. The market is the final, and only, arbiter of what is and isn't necessary. Funnily enough, I looked at the statistics of whether or not trades which required initial stops which were "far away" or trades which required initial stops which were "close by" were more profitable. Turns out that the trades with the initial stops that were further away were actually more profitable. Just another example of the market being its perverse self. The thing is, judging the market by what seems subjectively "rational" is a HUGE mistake.
Just a friendly advise to the OP.Don't tell anyone you want to rise money for BACKTESTED strategy-you WON'T see a dime!!!
Hmm. Well frequency is fine then, but that's not the kind of scalability most institutions would look for. It's still based on initial entry, and should be based on scaled position size.