Trading via the SLA/AMT is largely an intellectual exercise when looking at daily bars. For one thing, the term "trading" is stretched to the limit. For another, the risk tolerance required is way outside that of the typical retail trader. And of course there is the problem of the lack of "action" (for most retail traders, even the 15m bar is like watching one's nails grow). All this is why I chose the hourly bar to illustrate the pdf.
So I go back to the default: locate the extremes on the weekly chart and go from there. Whether this means incorporating the SLA and trading daily or hourly bars is up to the trader. One who finds a nice entry on the weekly at one extreme and does nothing until it reaches the opposite extreme can feel like a complete fool if it reverses off the median and goes right back to the upper limit, which is of course by then higher. It doesn't take extensive backtesting -- more than five minutes -- to see that one is better off working with a smaller interval than the daily. Or abandon the idea of trading countertrends entirely and take only those bounces off the lower limit. The problem with that, of course, is that we haven't touched the lower limit since last October. So, again, ultimately, what are one's goals? What does one want out of this? If one bought seven years ago, great. Otherwise, a more nimble approach is called for.
So I go back to the default: locate the extremes on the weekly chart and go from there. Whether this means incorporating the SLA and trading daily or hourly bars is up to the trader. One who finds a nice entry on the weekly at one extreme and does nothing until it reaches the opposite extreme can feel like a complete fool if it reverses off the median and goes right back to the upper limit, which is of course by then higher. It doesn't take extensive backtesting -- more than five minutes -- to see that one is better off working with a smaller interval than the daily. Or abandon the idea of trading countertrends entirely and take only those bounces off the lower limit. The problem with that, of course, is that we haven't touched the lower limit since last October. So, again, ultimately, what are one's goals? What does one want out of this? If one bought seven years ago, great. Otherwise, a more nimble approach is called for.
