Quote from sidinuk:
JimClark,
the rules that you are using are mechanical, have you backtested them yourself to see if it does indeed give you an edge. Or are you just believing it works because it says so in a book?
Quote from jimclark:
I did test them, and as I stated they worked 65% of the time but my "entry" and "exit" plans are not good I guess, because in some cases I stopped out early just to see it go back up.
To answer your quesiton, yes, I did testing and it works 65% of the time if you know your exit and entry target. I amfraide I was on the not-working 35% side...for now.
Quote from Golfman25:
Jim,
Question: What is your timeframe for each trade? You're using daily and weekly charts but apparently getting chopped up in daily "noise." Could you're trading time be too short for your system?
I don't think you need to "fine tune" your indicators. You need to determine profitalble entries and exits given your indicators. You say you tested you system. However, I think you might have not considered entry and exit points during testing. So you're only part of the way there.
One thing you can do is go back to your test results and look at how much "heat" you would take before the trade becomes profitable. This will give you some idea where you need to set stops. You might be setting them too tight for for your system. For example, on the GNSS trade the stock has an ATR around $0.60 and you stopped out after a $0.71 loss. This could be too tight and you got shaken out via noise.
Another thing I noticed is that on several examples, you didn't let the price movement take you into the trade. My inclination is after a setup forms, to let the price move in my favor prior to entry. So for example, I would buy $0.05 above the signal bar's high. An entry criteria like that may have kept you out of some trades.
You have to put these concept through your system to see what will work. Take some time using your test trades and actual trades to work with different entry and stop criteria to see if there is any improvement. Good luck.
Can you give me an example of backtest? how do back test?Quote from CharlesTrader:
You mentioned that you wanted to use SwingTrading techniques, but ended up daytrading. You need to stop mixing trading plans. STOP USING SWING TRADING SETUPS AND USE IT FOR DAYTRADING AND VICE VERSA!
As others have mentioned, you need to start over from scratch before you lose all of your trading capital:
1. Develop a Trading Plan that fits your personality and psychological profile.
2. Learn how to properly backtest and understand the strengths and weaknesses of backtesting.
3. Learn how to read charts (Support, Resistance, Price and Volume Relationships and so on).
4. If you really want to rely on indicators, which I don't, fully understand their good and bad points, and How and Why these indicators were developed in the first place.
5. Learn how to identify High Probability Trades.
If I were to read just one book, I would choose "High Probability Trading" by Marcel Link. It has good suggestions on how to develop a High Probability trading plan that works for you. But, once you develop your plan, religiouly stick to your rules. Refine your rules from time to time, but stick to the main plan. If you want to be a SwingTrader, then be a SwingTrader. If you want to be a DayTrader, then be a Daytrader. Stop mixing the two!
One of the most interesting things about trading markets is that it is a continuing learning process. No matter how much you think you know, the markets will always show you something new.
Charles
Quote from Golfman25:
Jim,
Question: What is your timeframe for each trade? You're using daily and weekly charts but apparently getting chopped up in daily "noise." Could you're trading time be too short for your system?
I don't think you need to "fine tune" your indicators. You need to determine profitalble entries and exits given your indicators. You say you tested you system. However, I think you might have not considered entry and exit points during testing. So you're only part of the way there.
One thing you can do is go back to your test results and look at how much "heat" you would take before the trade becomes profitable. This will give you some idea where you need to set stops. You might be setting them too tight for for your system. For example, on the GNSS trade the stock has an ATR around $0.60 and you stopped out after a $0.71 loss. This could be too tight and you got shaken out via noise.
Another thing I noticed is that on several examples, you didn't let the price movement take you into the trade. My inclination is after a setup forms, to let the price move in my favor prior to entry. So for example, I would buy $0.05 above the signal bar's high. An entry criteria like that may have kept you out of some trades.
You have to put these concept through your system to see what will work. Take some time using your test trades and actual trades to work with different entry and stop criteria to see if there is any improvement. Good luck.