sorry if there's a double post, my replies aren't showing up...here is backtest results.
Best way to make money off a trading system?
- Thread starter raintreeasset
- Start date
This looks to me like a 11-17 MACD system. Fairly fitted stuff.
About 20 years ago I was trading using the same methods you do (programmed in MetaStock at the time). Those weekly systems led me to the swing and intraday trading I do today. They can teach you many of the basic lessons of trading.
But there is one area you should think about when trading your system - time. Your system has an average trade length of 23 weeks making you an intermediate term trader. What you are going to quickly figure out is trading this kind of weekly trading system ties up your capital up for extended periods if you use full size position entries.
One way to overcome this time element is to scale into you winning trades or pyramid. Pyramiding works because a trader will only ever add to positions that are turning a profit and showing signals of continued strength. For example these signals could be continued as the stock breaks to new highs, or the price fails to retreat to bounce off previous lows. Basically, you are taking advantage of trends by adding to your position size with each wave of that trend over many weeks.
Pyramiding is also beneficial in that risk (in terms of maximum loss) because it does not have to increase by adding to a profitable existing position. Original and previous additions will all show profit before a new addition is made, which means that any potential losses on newer additions are offset by earlier entries. By using pyramiding with your system you can trade more stocks and tie up less capital per initial trade.
But there is one area you should think about when trading your system - time. Your system has an average trade length of 23 weeks making you an intermediate term trader. What you are going to quickly figure out is trading this kind of weekly trading system ties up your capital up for extended periods if you use full size position entries.
One way to overcome this time element is to scale into you winning trades or pyramid. Pyramiding works because a trader will only ever add to positions that are turning a profit and showing signals of continued strength. For example these signals could be continued as the stock breaks to new highs, or the price fails to retreat to bounce off previous lows. Basically, you are taking advantage of trends by adding to your position size with each wave of that trend over many weeks.
Pyramiding is also beneficial in that risk (in terms of maximum loss) because it does not have to increase by adding to a profitable existing position. Original and previous additions will all show profit before a new addition is made, which means that any potential losses on newer additions are offset by earlier entries. By using pyramiding with your system you can trade more stocks and tie up less capital per initial trade.
Is there any reason you only trade to the long side?
It sounds like your system is basically a trend follower.
The period you covered has two of the largest bull markets in US history, but also some of the wickedest bear markets.
Unless you are trading in a 401k with only a limited selection of mutual funds, I can't think of any reason not to work the short side as well.
It sounds like your system is basically a trend follower.
The period you covered has two of the largest bull markets in US history, but also some of the wickedest bear markets.
Unless you are trading in a 401k with only a limited selection of mutual funds, I can't think of any reason not to work the short side as well.
Hey all thanks for the replies. To the one poster, no this system has absolutely nothing to do with MACD indicator. With all respect and props to Dr. Elder, I haven't found the MACD to be a profitable indicator in daily or weekly timeframes.
In fact, I somewhat have an issue with the term "curve-fitting". That defeats the whole purpose of optimizing a trading system doesn't it? I can show that my system is profitable using several different optimization variables, however 11 17 seems to be the best.
I've only been trading it long only because in my retirement I can only choose from about 20 mutual funds, and none of them are short or inverse market type funds. I have also added trading short in my tests and it has added to profitability but not by much. With the amount of trades it adds the extra profit isn't really worth it. This is mostly supposed to be a sign of when to be in the market and when to be out of the market, and the user would choose how they want to generate alpha (level of aggressiveness, etc).
Pyramiding is another dimension I'm studying as well as one of you said. Metastock makes it kind of a pain to add pyramiding under what kind of conditions etc, so it's just a simple in or out type system.
I appreciate all the insight,
Tony
In fact, I somewhat have an issue with the term "curve-fitting". That defeats the whole purpose of optimizing a trading system doesn't it? I can show that my system is profitable using several different optimization variables, however 11 17 seems to be the best.
I've only been trading it long only because in my retirement I can only choose from about 20 mutual funds, and none of them are short or inverse market type funds. I have also added trading short in my tests and it has added to profitability but not by much. With the amount of trades it adds the extra profit isn't really worth it. This is mostly supposed to be a sign of when to be in the market and when to be out of the market, and the user would choose how they want to generate alpha (level of aggressiveness, etc).
Pyramiding is another dimension I'm studying as well as one of you said. Metastock makes it kind of a pain to add pyramiding under what kind of conditions etc, so it's just a simple in or out type system.
I appreciate all the insight,
Tony
Interesting...
From your website and blog it is clear that you managing client money and all your charts have MACD on them. Maybe that is where the other poster picked up the MACD.
You have also posted the same results on your website to sell the system to clients.
From your website and blog it is clear that you managing client money and all your charts have MACD on them. Maybe that is where the other poster picked up the MACD.
You have also posted the same results on your website to sell the system to clients.
Yes I have created a website, no I am not managing client money for pay. Those are the co-workers I talked about in the first post. I am trying to market this for extra income. I have been very careful not to mention anything about that because you guys are my peers and I'm not trying to sell anybody here anything. I am asking for help and advice to try to make an extra buck. Not trying to sell you guys anything, like I said most of you know way more than I do.
The MACD and RSI seem to be standard technical indicators that stockcharts.com throws onto every chart. It is a real pain to transfer charts from metastock over to a webpage, so I just use stockcharts.
Well thanks for all the info so far,
The MACD and RSI seem to be standard technical indicators that stockcharts.com throws onto every chart. It is a real pain to transfer charts from metastock over to a webpage, so I just use stockcharts.
Well thanks for all the info so far,
Send the buy/sell trades to Collective2 in Real-Time.
If it is profitable and beats the other trading systems out there, then people will pay you for the buy/sell alerts.
If it is profitable and beats the other trading systems out there, then people will pay you for the buy/sell alerts.