Algos watch Patterns, Trendlines, Channels, Support and Resistance

[ironchef]

I think this is a really bad question to understand if a strategy is profitable.

Let me give you an example:

Say i have 100k. That's about 20x the accont size an avg retailer has.

Now, say i make 20% return on that capital every year consistantly. Also, let's say my trailing drawdown is 1:5 doing it meaning that for a 20% return i don't have an open loss bigger than 4% at any given time from the highs of my PnL.

Now, that strategy would put me on top of every hedge fund out there. I'd literally be amongst the best in the world.

And now let's see if i'm getting rich with these numbers. 20% of 100k is 20k per year. That's about 1600 usd / month. Gross.

Would you consider that "rich"?

20% a month, not a year. He is rich.

 

[tsfx]

As I've said in my earlier post, they are all "largely a variant (and subvariant) of one of these (four) classes."

Pattern recognition algos? Depending on what pattern you're talking about, it can be neatly fit into either trend or mean-reversion algo

Really? All the breakout strategies too? Inside day breakouts, opening range breakouts, engulfing candle reversals? Where they fit?

What about overbought/sold signals from stochastic or rsi? Divergence patterns? Are those classified as mean reverting? Where's the mean here i'm reverting back to?

trendline breaks, MA crossovers against trend? What are those?

I'm not trying to be a d*ck, i just want to understand where i'm wrong.

I'd say there are TA algos with all the subvariants, one of which is trend following.

 

[mikeriley]

Just my opinion, but I think if any of the uber successful
hedge funds were using any of those garden variety
setups, they would have never made money.

Think outside the box.

 

[getthatintoya]

Easy don’t trade markets that are algo’d within an inch of their life. (Hint look in your own backyard @Darc

 

[Darc]

Easy don’t trade markets that are algo’d within an inch of their life. (Hint look in your own backyard @Darc

ASX200 is a Dividend Index. IVV (ASX) and NDQ (ASX) are the go - Growth.

 

[getthatintoya]

Growth v Dividend would probably only be considered by an investor. Why I like our market.
Repeatable seasonal, time of the month patterns over a long period of time.
Whales leave big footprints when they play our market.
Occasionally foretells what will happen in the overnight markets.
In my timezone.
Futures and options can be traded over the index.
As @MrMuppet once said find your niche market and milk that baby till its dry.

 

[Darc]

Growth v Dividend would probably only be considered by an investor. Why I like our market.
Repeatable seasonal, time of the month patterns over a long period of time.
Whales leave big footprints when they play our market.
Occasionally foretells what will happen in the overnight markets.
In my timezone.
Futures and options can be traded over the index.
As @MrMuppet once said find your niche market and milk that baby till its dry.

The Nasdaq's swings are much larger than the XJO.

Traders trade the Nasdaq for the swings. Investors invest in the XJO for the Dividends.

 

[qlai]

With Volume Profile nowadays, pretty easy to program them to watch Volume at Price

I watched a few videos by Vinny e-mini and my understanding is that he traded exactly this kind of algo. Don’t know much about him, maybe someone could chime in.

 

[Sprout]

I watched a few videos by Vinny e-mini and my understanding is that he traded exactly this kind of algo. Don’t know much about him, maybe someone could chime in.

Vinny E-emini got most of his following by trolling ICT.

 

[Sprout]

If this is true, why does everyone argue about watching them (Patterns, TLs, Channels, S and R)?

Even if Price cuts through them like a hot knife through Butter at times, it still makes sense to be aware of them?

Maybe some of the smaller one’s do. The major SLP algos don't view the market via retail time-series price charts. The charts on Nanex show their view closer than anything publically available.