High Probability Trend Strategy

[Turveyd]

Try Daytrading, Micro Futures maybe, before work ? lunch time? or evenings? depending on where you live time wise and if anything worth trading at those times?

I don't see much point in long term trading, really good traders only make 10-20% per year, I can and do do that in an hour or 3.

 

[viruscore1]

Learn about covered calls or selling premium. These have actual probability based on price.

Wrap that around ex-dividend dates. Selling OTM put options, harvesting put premium, collecting dividend on assignments. You'll have a system. Although, capital intensive, it provides stable return spending a couple hours a day.

 

[tommcginnis]

Whoops -- I just noticed that this thread (is/will be) planted in the Options forum -- not the simple 'trend-following' subject matter I'd first thought. So again, the OP wishes for:
• trend-exploiting
• 'religious' application
• consistent income generation
• end-of-day/NOT-nose-to-screen trading
• utilizing options...

If holding the underlying is 'allowed', then lylec305's OTM PUTS+dividends brings in stable dollars , however, it's not so workable for indexes.

I would work on iron condors, sold at the furthest distance in time where a 5-trading-day hold brings in satisfactory theta-burn, but where, if market conditions allow, a further hold may still be a fair use of capital. This is not explicitly trend-exploiting, however -- rather the opposite. (The choice of where/when to place an iron condor may or may not take into account market trends, geopolitical events, ranging expectations, etc.)

 

[drmark27]

I'm not implying anything about trend trading, but didn't Livermore end up committing suicide?

Yes there is. By definition, trend trading is to stick for a longer time to get most of the big moves.

Livermore once said it is not the thinking that made him money but the sitting

 

[nooby_mcnoob]

I would work on iron condors, sold at the furthest distance in time where a 5-trading-day hold brings in satisfactory theta-burn, but where, if market conditions allow, a further hold may still be a fair use of capital. This is not explicitly trend-exploiting, however -- rather the opposite. (The choice of where/when to place an iron condor may or may not take into account market trends, geopolitical events, ranging expectations, etc.)

+1

 

[guru]

I’ve been following a lot of YouTube and Twitter gurus to see if anyone has one.
Obviously you can’t trust any of these guys, but sometimes stuff does catch my attention. Those that seem to have a chance of working, seem to not be specific strategies but a guy doing research all night to come up with a possible idea(s) before the market opens. Sometimes for a single trade, which indeed could be setup before or during work. They do charge fees/subscriptions. I may provide some leads/tweets or screenshots when I’ll look for them, and if someone will want me to.

Then we have many traders who develop their own algos, and who are here on ET, as well as who are not here, and maybe not anywhere, or maybe they run hedge funds.

There is also a website that reviews various stock gurus and may provide a decent assessment of them, at tradingschools.org

I’ve also been developing strategies on my own, and can see that it’s impossible for any single strategy to achieve much, so you’d have to have many strategies that would find couple decent trades each day, and even then at small profit, so you’d kinda have to be able to close the trade at the right time.
You could also have trades that last longer and don’t need to be attended, but those are usually lower probability, say 60% chance of winning, and you’d get pissed off and lose faith when losing.
So really no holy grail, while if you’d want to really trade even occasionally, you’d have to put in as much work as when trading all day long professionally.

 

[panzerman]

I’ve been following a lot of YouTube and Twitter gurus to see if anyone has one.
Obviously you can’t trust any of these guys, but sometimes stuff does catch my attention. Those that seem to have a chance of working, seem to not be specific strategies but a guy doing research all night to come up with a possible idea(s) before the market opens. Sometimes for a single trade, which indeed could be setup before or during work. They do charge fees/subscriptions. I may provide some leads/tweets or screenshots when I’ll look for them, and if someone will want me to.

Then we have many traders who develop their own algos, and who are here on ET, as well as who are not here, and maybe not anywhere, or maybe they run hedge funds.

There is also a website that reviews various stock gurus and may provide a decent assessment of them, at tradingschools.org

I’ve also been developing strategies on my own, and can see that it’s impossible for any single strategy to achieve much, so you’d have to have many strategies that would find couple decent trades each day, and even then at small profit, so you’d kinda have to be able to close the trade at the right time.
You could also have trades that last longer and don’t need to be attended, but those are usually lower probability, say 60% chance of winning, and you’d get pissed off and lose faith when losing.
So really no holy grail, while if you’d want to really trade even occasionally, you’d have to put in as much work as when trading all day long professionally.

It sounds like you are having an existential conversation with yourself. Good. Here are a few observations that I think can help you:

1) Nobody has any economic reason to provide you with a proven positive expectancy trading system. Do not expect one.
2) People are, however, genuinely glad to give you broad foundational guidance to help you on your journey to profitability.
3) Trends can be defined in almost any way under the sun. Choose which definition suits your personality and trading philosophy and do not spend years trying to develop them all.
4) One broad class of trend trading that has been proven again and again not to work is moving average crossovers. Does not matter the type of MA or the lookback period. They don't work, don't waste your time.
5) No matter the method you find, the payoff profile of trend following is lots of small losses, and a few large gains, so low probability of a win on any single trade.

Your welcome, and no I do not have a definition for you. I trade cycles/reversion-to-mean strategies because I like the payoff profile of frequent small gains and the occasional large loss.

 

[Jarym]

I follow a guy on twitter (and who has a service) that has a really simple strategy: buy when market in uptrends (he defines this as 2 closes above daily 10d SMA with the 2nd close being higher than the first). He also likes a secondary signal as confirmation (MACD or break above a basic downtrend trend line).

He gets leveraged long when the daily SMAs are stacked (10 SMA > 50 SMA > 200 SMA). Buys bull-flags and scales his positions aggressively.

There's a few other things he does (like where to scale, etc.) but all really straight forward.

In my opinion he does very very well for such a simple strategy.

 

[varaamo]

@panzerman I'd like to get your inputs. Do you think this is the right implementation of Jurik MA? if so, what you think is the right value for phase and power in the implementations? or is it something that can be discovered only through backtesting/optimization?
https://www.tradingview.com/script/nZuBWW9j-Jurik-Moving-Average/

It sounds like you are having an existential conversation with yourself. Good. Here are a few observations that I think can help you:

1) Nobody has any economic reason to provide you with a proven positive expectancy trading system. Do not expect one.
2) People are, however, genuinely glad to give you broad foundational guidance to help you on your journey to profitability.
3) Trends can be defined in almost any way under the sun. Choose which definition suits your personality and trading philosophy and do not spend years trying to develop them all.
4) One broad class of trend trading that has been proven again and again not to work is moving average crossovers. Does not matter the type of MA or the lookback period. They don't work, don't waste your time.
5) No matter the method you find, the payoff profile of trend following is lots of small losses, and a few large gains, so low probability of a win on any single trade.

Your welcome, and no I do not have a definition for you. I trade cycles/reversion-to-mean strategies because I like the payoff profile of frequent small gains and the occasional large loss.

 

[tomorton]

I am running a scatter-gun approach in forex trend-following using only daily charts. This would be very suitable for someone working 9-5, there is no involvement required between consecutive closes. But trend-following has inherent stresses that are unacceptable to many traders.

I'm happy entering any trade with the underlying trend as long as I can get in at a discount as indicated by a daily high/low.
e.g. for a long -
* uptrend is indicated by price being above the 50EMA and the 50EMA sloping upwards
* entry follows a succession of "blue" bar days (daily bars with higher highs and higher lows) as the set-up
* if the following day is a "red" day (lower high and lower low) or an inside bar, set a buy order at its high, stop at the low of the previous blue day or 1ATR20, whichever is further away, size position to 0.5% of account capital
* exit at the close of any subsequent day which is not a blue day or an outside bar or at the close of the 5th consecutive blue/outside bar day

Its very quick and objective. The usual trend-following problems are here - you need to target a large number of markets simultaneously, you need to take every trade that the charts signal, there will be a large percentage (but not a majority) of small losses.