Are there pullback systems that backtest well?

[OddTrader]

Quote from lindq:

So I still look to buy pullbacks, but they need to exhibit an even stronger and sharper pullback, and a rising CCI 2-4 days before the trade. This seriously cuts the number of trades that signal on my system, but those that do are of a much higher quality and I feel more confident jumping in. For example, a trade I entered two days ago was BBY. Severly oversold daily and intraday, but with a near term divergent (rising) CCI. I also cut back a bit on my profit expectations, as in any long trade you are obviously fighting an uphill battle in a downtrend.

Besides (S/M)MA, you also use other indicatos like CCI now.

 

[TheStudent]

Quote from lindq:


So I still look to buy pullbacks, but they need to exhibit an even stronger and sharper pullback, and a rising CCI 2-4 days before the trade.

...

There is always a temptation to stand aside during downtrends - there's that FEAR thing again - but often this is the worst thing to do. Sometimes the best profits are made when others are screaming in the streets and peeing their pants.

Lindq,

I am not familar with CCI - what does that refer to?

Buying on extreme fear is an acquired taste - I enjoy it myself but standing up against a speeding train has often proved to be very painful.

 

[mind]

Quote from OddTrader:

Apparently Magee's TA books have a lot to say about both pullbacks and throwbacks.

Practically I when trading currencies wouldn't worry much about the difference.

currencies are a very different game. not biased by greed and fear in the long run towards one direction. ES is very different IMO.

 

[lindq]

Quote from TheStudent:

Lindq,

I am not familar with CCI - what does that refer to?

Buying on extreme fear is an acquired taste - I enjoy it myself but standing up against a speeding train has often proved to be very painful.

CCI is commodity Channel Index, an indicator that is available with most trading software. It can often be useful as a divergent signal. For example, when it diverges from Stochastic. As I said, I don't use it for my primary system in normal market conditions, but when the market gets very weak, I will often use it as an additional indicator to help me select the best possible trades. If for example you have a pullback system, try adding the requirement for a rising CCI for a couple days leading up to two days prior to the trade. You may find that it enhances results, although it will seriously cut back on the number of trade signals. However, in an extreme market pullback that isn't a bad thing, and that's how I put it to use.

I also use a divergent CCI in a short swing system I trade that's quite successful, but of course in the opposite direction as a pullback. There I am looking for CCI to diverge downward while price is still rising.

 

[TheStudent]

Thanks!

Quote from lindq:

CCI is commodity Channel Index, an indicator that is available with most trading software. It can often be useful as a divergent signal. For example, when it diverges from Stochastic. As I said, I don't use it for my primary system in normal market conditions, but when the market gets very weak, I will often use it as an additional indicator to help me select the best possible trades. If for example you have a pullback system, try adding the requirement for a rising CCI for a couple days leading up to two days prior to the trade. You may find that it enhances results, although it will seriously cut back on the number of trade signals. However, in an extreme market pullback that isn't a bad thing, and that's how I put it to use.

I also use a divergent CCI in a short swing system I trade that's quite successful, but of course in the opposite direction as a pullback. There I am looking for CCI to diverge downward while price is still rising.