I don't claim to understand everything he says (such as fractals and harmonics, wally
) but I grasped the basic concept of the strategy: entry long/short on overbought/oversold stochastics, and exit when they are no longer overbought/oversold. It's supposed to work only in fast paced markets; use the MACD for confirmation etc. Settings and details at:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=14129&perpage=6&pagenumber=4
by dawg.
I backtested it in NQ over one year (four contracts back), on the long side only. Entry on the 5 min chart, at the midpoint (avg OC) of the bar when fast stoch crosses above the 80 line, and exit when it crosses below, on the close of the bar. Stop loss at 2 NQ points. I used an entry at the midpoint of the bar because these are 5 min bars, so you have plenty of time to get in if the mkt takes off.
It made an average of $1000/month/contract (IB commisions included), or 5NQ points/day, with an avg of 3 trades/day, about 80 winners vs. 100 losers and max drawdown of $500 if I recall correctly.
I didn't do any optimization, no short side - will do it soon.
I have sim traded it for the past few days and it worked fine - today it made 7.5 NQ points in the morning, in two shorts.
Hope this helps.
Personally, I think what Jack is doing, sharing his strategy and trying to teach people how to use it, is really commendable. Yes there is ego to it but then again, isn't there always when someone is teaching others? Why do people always think that if someone is sharing their ideas they either have a hidden agenda or they're deranged? Geez.
