i hope you are right
not fooled by random market and by technical analysis
- Thread starter padutrader
- Start date
I will try to be useful to you now that you seem to have stumbled upon a morsel of reasoning about what you're proposing.
You have a hypothesis - "here is where the market is likely to break lower". Can you quantify it? Is this two bars closing lower than your first marked bar?
I have ran a study of a similar kind as a baseline for channel trading. I have found in small time frames this type of breakout is tradeable but over a number of years fails to produce positive results. Running the results through a monte carlo ruin simulation shows the drawdowns are impressively high for any given return realization. You might expect this since the general markets have been trending up for the last 10 years. Simply buying and holding (minus roll risk) actually produced significant profit. Is this indicative of a working strategy? I don't think so.
In fact, the sharpe ratio of a very famous moving average strategy from the 60s was an impressive -1.86 over the last 10 years. These simple strategies alone do not produce profit. There is too much noise. Gone are the days of simple trend profits with simple systems.
If you are trading this, this is not the only way you are looking at it. Perhaps you are using the order book, news feeds, etc (subconsciously or consciously) to augment your strategy. I can tell you with near certainty basic n-day breakout strategies do not work on anything I have tested (ES, NQ, M6E). The beauty of systematic backtesting and ruin analysis is it takes you out of the equation - it tells you the absolute potential of a strategy alone.
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yes it is vague.......... subjective.....
but i aim to manage it with my experience......and i am an equivalent of a terrorist......i do not go to war against the big boys......
i just hit and disappear for a long time...come back next day
i make a small amount of money daily and then i do other things...
i think i already covered it earlier.
that is called context and can context ever be quantified?
my trading is just that...simple trend following but with 5 min......and i believe that will never be gone.
is this not investing?
trading by definition is buying and selling or so i thought
this may show that trading is not for the intelligent or the logical mind.
that is why 95% fail at it.
but it may be for the enlightened one
Thank you padutrader for the explaination.
I agree with you. And we love "more than likely" trading in our favor.
I think you meant once that is reached, EXIT position. Go countertrend if context provides an edge to take countertrend trade