DAX 4+ years 500 points grid The long term trend is up Breaking the 7,000 would only stop a long position. Breaking 6,500 would reverse trend. In that context any trade from the short side would be unjustified. If that rule is taken on all lower timeframes the odds are greater for a success. That's my first assessment. I hope some fellow traders will confirm...
you're probably right but do you have the stomach to endure a 500 points loss in the dax and calmly wait for the eventual come back? this goes back to curve fitting problem. the fact that our current trend line projection points towards that particular level doesn't have statistical significance once it has proven its success for a extended period of time. as you know, that never happens, as these lines are constantly being adapted to fit the latest price developments. i would call these lines, pseudo-comfort lines, merely because they create a false sense of security and back the trader's decisions to enter or exit the market accordingly. the longer term trend lines are very risky, often creating a prolonged and relaxed sense of accurateness, that inevitably end violently and at the expense of a major blow in the trader's long term expectancy. that's not because they are good or have a fundamental statistical edge, but rather, because they cover 1 or 2 SD's of price changes in wider time frames. it is like saying that during the next month, the dax wont move more than 500 points either way. that's a hi prob call, yet it doesn't tell us anything about the direction or real magnitude of price change. not trying to crash the party here, in fact, i also use and advocate the use of trend lines, but, have no doubt they dont offer more than a biased advise to enter or exit the market. re your dax projection, i would also be on a long-only mode until the dax keeps this pace, but i would be cautious to reverse my bias to short side if the dax would break the 6700 barrier. i would have to see fundamental data to back up the new descending trend whether the dax was at 6700 or any other level, for that matter. other than that and i am in long-only mode. i agree with you concerning the risks of entering shorts in this market. it is probably the most risky business in trading - calling the top business. i wouldn't dare to pick a top or bottom. just manage my trading inventory on a daily basis.
asap Thank you for your comments. Agree 100% with you. I also wouldn't accept 500 points loss from the reached level. But the analysis shows: No short trades for the next time! Calling tops can be a very costly and emotional attempt. I went back to a lower time frame. On the one week time frame and 10 points resolution the DAX is pointing strongly up. UP nothing but UP. What do I need to say?
Next FDAX signal is Long 7780 at close of a 15 min candle with TS 7770 trailing on grid at a close of a 15 min candle. Only long signals are taken.
DAX 20 point grid, 60 min candles Only long signals are taken. Actual signal is long from ca. 7720 with TS on ca. 7760 on a 60 min closing.
DAX 20 point grid, 60 min candles Only long signals are taken. Actual signal is long from ca. 7720 with TS on ca. 7760 on a 60 min closing.
FDAX 25 point grid, 60 min closings Long from 7725 TS 7750 on 60 min closing Apply money management stops, because a 60 min candles can be very long!
FDAX 20 point grid, 13 days data ======================= Next signals Up Stop 7800 (TS 7780) or Up Limit 7740 (SL 7670; PT 7760 trailing down on grid) TS = Trailing Stop SL = Stop Loss PT = Profit Target Systems based on 13 days historical data (hindsight) and results before commission and slippage are ------------------------------------------ US1x1 with profit of 23*20 points D_371 with profit of 4*20 points ------------------------------------------ {U,D} trades only Up or Down {S,_} enters with Stop or Limit {1,...} entry level {x,7,...} PT or SL level {1,...} grid units to trail ALL LEVEL HAVE TO BE SURPASSED BY AT LEAST ONE TICK. More backtested is needed to confirm systems and individual money management has to applied if they are traded. Some good systems in hindsight turn into loosers, because of structure changes of the market. A pure buy an hold strategy over 13 days would have gained 23*20 points. A "buy every dip" in an uptrend market would have generated 82*20 points (with 66*20 point risk). A "sell every rally" would have lost 165(!)*20 points. GETTING ON THE RIGHT SIDE OF THE TREND IS CRITICAL. NEVER FIGHT A MAJOR TREND. My next task is to make a wave structure analysis. I have detected 87 moves (waves) which lifted the FDAX ca. 580 (29*20) points in only 13 days. The waves surpassed 193 grid-blocks on their way up and down.
The best wave combinations for the last 13 days have been System US1x1 Up 2*20 followed by down 1*20. My syntax for that is 2-1 5 with a gain of 5*50 points 4-1 5 1-2 3 Big waves should be avoided (see attached graphics). Down waves of lenth 1*20 provided the best opportunities to go long at the next wave stop 1*20 points. That filter reduces the number of trades and results in a gain of 11*20 points. My syntax for that is 1 11 2 3 3 5 4+ -4 The best result comes from trading the 1-3 waves and to avoid the waves with a length of 4 or more units (4*20 points). Apprechiate your comments.