Pullback Entry Strategy

Quote from Volker Knapp:

I guess I misinterpreted your definition. In fact I believe it does not matter where the pullback happened or how far it goes? This pullback goes below some kind of MA, but it could easily be changed to just touch the SMA. So why do you see a difference?
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Volker,

Perhaps if the exits were taken out of the Glitch system, it could be looked at for entries. When I looked at your system results, like average # of bars held, it looked liked it was swing trading or scalping. This is not in my interest right now. Personally I wouldn't feel comfortable using the Glitch system for entries either. This is a personal thing, as I don't think I even understand it at all. In addition to that, I do not own any software (at least that I'm aware of) that would be able to "tell" me when to enter based on this method. In addition to that, I don't use moving averages, and would not feel comfortable coming up with the proper moving average for each stock I want to trade. If that is required. If it is not, I don't feel comfortable using the same moving average value for each stock.

Good luck to you,

Banker
 
Quote from Bankedout:

Volker,

Perhaps if the exits were taken out of the Glitch system, it could be looked at for entries. When I looked at your system results, like average # of bars held, it looked liked it was swing trading or scalping. This is not in my interest right now. Personally I wouldn't feel comfortable using the Glitch system for entries either. This is a personal thing, as I don't think I even understand it at all. In addition to that, I do not own any software (at least that I'm aware of) that would be able to "tell" me when to enter based on this method. In addition to that, I don't use moving averages, and would not feel comfortable coming up with the proper moving average for each stock I want to trade. If that is required. If it is not, I don't feel comfortable using the same moving average value for each stock.

Good luck to you,

Banker
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So now your reply came quicker then my work that I have done for you. I thought you said that a price is pulling back from a certain level above an SMA. At least that is what your chart was showing. I went throu the effort to change the original system and tried to define the following:

If the price moves away from a SMA by a certain value and then comes close back to this SMA (pullback) then I will buy if this SMA is still moving upwards. At least this is how your chart picture looks like. See my attached screenshot for comparison. I have used a profit target of 7% and a stopploss of 5%. The results on many stocks were not very good so I am not posting them here. I think both charts look similar?

Please don't take it as if I wish to sell you something, just take it as I am trying to see if I can program your idea and see if you have something valuable (means objectively tradable and profitable). BTW, you could test and do all this for free anyhow. So I am not selling. But then again as the strategy looks like for me now, it is better to wait until the price moves below whatever mean you take. .. . and afterall we all might learn something. :)
 

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Volker,

Thanks for going to the trouble of running this methodology and sharing the results. I only wish you and wealthlab had been around when I was starting out.

I wonder if you have results for LBR's so-called Grail system, which as I understand it, requires an ADR>30 and a pullback to below the 20 MA? Thanks.
 
Quote from Volker Knapp:

So now your reply came quicker then my work that I have done for you. I thought you said that a price is pulling back from a certain level above an SMA. At least that is what your chart was showing. I went throu the effort to change the original system and tried to define the following:

If the price moves away from a SMA by a certain value and then comes close back to this SMA (pullback) then I will buy if this SMA is still moving upwards. At least this is how your chart picture looks like. See my attached screenshot for comparison. I have used a profit target of 7% and a stopploss of 5%. The results on many stocks were not very good so I am not posting them here. I think both charts look similar?

Please don't take it as if I wish to sell you something, just take it as I am trying to see if I can program your idea and see if you have something valuable (means objectively tradable and profitable). BTW, you could test and do all this for free anyhow. So I am not selling. But then again as the strategy looks like for me now, it is better to wait until the price moves below whatever mean you take. .. . and afterall we all might learn something. :)
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Volker,

Since I started this thread, and am very interested in it, I get any replies sent to my inbox. I have nothing better to do, so I reply to the posts here. Sorry that I am so fast. You should not be doing any work for my benefit. Do the work for your own benefit. I don't expect anyone to struggle to try and help me.

I had the moving average in my sample chart because someone else had suggested pullbacks can be defined as moves to or towards a moving average. I just thought it would be easier for other people to see the pullbacks and the trend in my example with the moving average plotted on the chart. Not to say there is anything wrong with using moving averages, I just don't personally use them.

With your revised system, you are still thinking like a scalper or swing trader on the exit. Which probably isn't the worst idea considering your universe of stocks. But, perhaps if you killed the 7% profit idea and held until the SMA value stopped rising. Would that help your system results? That might be closer to a trend following exit. Of course you need to use that type of strategy in trending environments...

I didn't think you were trying to sell me anything. I'm willing to work with you on this project if you have an interest. Perhaps pullbacks to moving averages are a viable entry signal. I would think there needs to be a method to select which moving average to use for each trade. That might be tougher, but who knows.

Banker
 
No problem, I did not struggle and I will stop posting after this. Was fun to do and may be I refered to that other guy who talked about SMA? In any way, I tried several options to improve the results with the SMA, none were really good. BTW, you could ofcourse optimize each symbol for a certain SMA or whatever, very easy to do and ofcourse the results would improve dramatically. From a system traders point of view I dont think it is advisable.

Good luck.

Volker
 
Quote from Volker Knapp:

No problem, I did not struggle and I will stop posting after this. Was fun to do and may be I refered to that other guy who talked about SMA? In any way, I tried several options to improve the results with the SMA, none were really good. BTW, you could ofcourse optimize each symbol for a certain SMA or whatever, very easy to do and ofcourse the results would improve dramatically. From a system traders point of view I dont think it is advisable.

Good luck.

Volker
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Volker,

It was Jayford who brought up the idea of pullback to moving average. I think everyone besides myself in this thread has referred to them. I don't know why you would stop posting if you are having fun doing this.

Why would it be not advisable from a system trader's point of view to use an optimized moving average. If the 55 period WMA is marking the trend on GE's weekly chart, and you switch to trading AMZN on the daily chart, wouldn't you want to use whatever moving average is marking AMZN's trend on the daily chart? If not, why not? If the 32 period SMA is doing a wonderful job marking AMZN's trend, why wouldn't you want to use it to trade AMZN?

Banker
 
The foregoing pages are worth a read. What may be consistantly seen is how people trap themselves. As you see, they fail to see what the market is doing by somehow getting to a state where an assortment of the so many existing myths are engrained in their thinking. What a fog they create.

All change in the market flow is an opportunity offered to extract capital.

Beliefs provide the basis for decisions to take action. There's almost nothing new out there to consider. Why must people persist in being so mediocre.
 
Hi,

I read some where that a volatility system might work in trading pullbacks. Does anyone have any experience in this type of system?

Thanks
tonkicat
 
I think that might work. If one can identify a strong trend -- that's always the question -- then I think that the odds are stacked in favor of a volatility contraction resolving itself in the direction of the overall move.
 
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