Keeping It Simple

Quote from passedout:

Hi Db, thanks for sharing your strategy with others.

With the risk of annoying some of the readers …..in your last post you’ve stated that today you’re up 16 points by following your strategy. Probably I’m seeing this nq late morning downtrend differently but …. There was a breakout at around 10:24 e.t. so going short at 1142.5. Then it pulled back just after 11:00 breaking the trendline at 1132.5 so I would’ve thought you covered at 1133.5 for a 9 points gain. What am I missing then ?
Thanks again for your willingness to share your thoughts
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I don't believe I ever said that I sold at a trendline break. If I did, tell me where and I'll look at it. The trendline break suggests only that momentum is slowing. In and of itself, it is not a reversal signal. Therefore, I'll only move the stop from BE to just above (if short) the last reaction high and give it some room. The only exception is if we're reaching the range limit, in which case I'll try to find a closer stop or even use an end-of-bar stop (3m).

Today there was no reaction high after the break you noted. The best I could do, particularly since we were close to the target, was to use that little four-bar consolidation from 1039 to 1048. When price continued its descent, I could then use an EOB stop since we were even closer to target (if price had reached the stop above the consolidation, I would not have attempted a re-entry since the target was so close).

Does that help?

--Db
 
Quote from dbphoenix:



Keep in mind that the key to success with this strategy - and the most difficult for many people - is to leave it alone. If you try to scalp with it or maintain tight stops or take every reversal without any discrimination as to probability, the success rate will plummet.

--Db
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I understand. I'm going to test it exactly how you described it to me. Not that I don't trust what you have said, I just need to see it for myself. I have access to 60 days of intraday $NDX data that I can scroll through bar by bar. It's not the same as NQ data, but it's good enough for me. Then after I determine the results for the past, and if they are favorable to me, I will paper execute the strategy on real time live data for the NQ. If that works out also, and I have no reason to believe that it won't, I will probably trade it with my account.

I plan on also testing variations of your strategy, applying some "tweaks" of my own. Basically forcing some of my own ideas to your strategy. If any of those offers improvement, I will go further with it. In the end, if I do end up finding a "tweak" which appears to make the strategy "better", I will share the tweak with you. I don't know if I will find a better way though.

Thanks again,

Banker
 
Quote from Bankedout:

I plan on also testing variations of your strategy, applying some "tweaks" of my own.
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And that's the point. Hope you have fun with it.

--Db
 
And speaking of finding the right strategy . . .

Today presents a good example of the kinds of questions one should ask himself when it comes to trying on a strategy.

For example, I know that the average range is an average, meaning that some days will come up short and some days will overshoot. When a day overshoots, it can do so by as much as 10 pts. However, one never knows whether the day will overshoot or not. More often, it will futz around at the limit, then begin a reverse.

Therefore, on a day like today, I get stopped out right at the target and I'm pleased with myself. I know there's a possibility that price might overshoot and that there may be as much as ten extra points to be had (today, 15). I also know that in trying to get those points that I can easily be chopped up, losing 5 or even 10 pts in an effort to get those extra points.

So, rather than get greedy, I decide that enough is enough. I'm happy with what I got and I couldn't care less whether anybody else did better or not.

A lot of people won't be satisfied with this. They'll want as many points as they can possibly get. But all I care about is making as many points as are reasonable. Every trader, however, has to decide for himself what's reasonable.

--Db
 
I came across a pretty good example of a "filling the gap day". On 9/16/02 the $NDX closed at 908.58 according to my data. On 9/17/02 it opened at 927.29 roughly 2% above it's prior close. If you have access to the intraday $NDX data in chart form, this day is a good illustration of the filling the gap strategy. Definitely a good reward possible for filling the gap. As it turned out, the gap was filled. Prices moved higher for the first maybe 5 minutes before the selling began in earnest. A beautiful down trend on the 3 minute chart followed, which actually went a bit further than the gap level itself early in the morning. A long intraday consolidation followed, and towards the end of the session a fresh push down was made. I can see how rewarding this type of day could be for someone trading this strategy.

Banker
 
Quote from passedout:

Hi Db, thanks for sharing your strategy with others.

With the risk of annoying some of the readers
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Sorry, I am not annoyed at all. Try harder or, even better, do not make assumptions that anyone really cares so much to get annoyed. Making assumptions like that is just a perfect example of what simplicity is not about. When you stop making extraneous assumptions, you will see the world in a completely new light. That's particularly important in trading.
 
Hi,
Is anyone using similar strategies (1/2 hour breakouts) for the MHI (Mini Hang Seng) or any other foreign market tradable with IB? If so could you share your initial price target, initial stop etc. Thanks!
 
Hi db, how’s your breakout strategy been performing in the last couple of days? I’m really interested in it my self so I’ve started to paper trade it. Yesterday I’ve got a five pts loss and a BE while today another loss but I’ve managed to grab two points off the afternoon short rally. Just was annoying taking two points when I had 12 only minutes earlier. Crystal ball didn’t somewhat work. :)
So … no much excitement so far but it’s a start.
 
Quote from passedout:

Hi db, how’s your breakout strategy been performing in the last couple of days?
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No trades either yesterday or today, though technically one could have taken that little breakout at 1430. I just didn't feel like sitting around all day waiting for it.

As I've said, this is not a strategy for those who require action, but based on what I've read of others' results over the past two days, I'm happy not to have traded at all.

--Db
 
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