What works, and what doesnt
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Thread: What works, and what doesnt

  1. #1
    I've done backtests of numerous systems trying to discover what works and what doesn't work. The 1 thing I found is market enjoys to be efficient and doesn't like quick moves that are highly inefficient. Market enjoys to range 75 percent of the time These quick inefficient moves frequently get faded right into range.
    This is what my research has shown. If you have other research comprising 1000 back tests in most market conditions please share! I am looking for statistical evidence of what works and what doesn't. Please post any research of 1000 backtests in most market conditions. . Flat, uptrending on daily and downtrending on daily.

    What dosn't work always:
    1. Trendlines - Many rookies begin with drawing trendlines. . They do not get the job done. Too many false signs.
    2. Multiple indiors... I haven't found one system with constant results yet. That works in all sorts of market Bull, bear, Flat.
    3. Over complied systems.
    4. Trading very good news or bad news. . If it were as easy as going long on good data... we would all be wealthy. .
    5. Chart patterns found in most publiions. They operate a few of the time. . But neglect a lot. . If they do fail. . Typically a fantastic clue.
    (If you challange me on this offer Data that reveal you do not take numerous Losses to receive one win on a highly consitant foundation )

    What exactly does work...
    1. Market construction...

    a. A FAST MOVE UP IS WEAK! ... Never pursue... Look to fade... when there's opportunity. 75 percent of these quick motions are short lived.


    b. A SLOW GRIND IS STRONG. . You do not want to be the first to go short against a slow grind . Reason: lots of bears stuck at the mill. That now need to buy to exit


    this isn't a holy grail... Usually if price moves quickly up. . It can retrace equally as fast. If it grinds up gradually its usually trapping a lot of people on the wrong side as it retains poking up higher and higher.... And price won't want to return and allow the trapped people out who are on the wrong side of the market...
    Somtimes you might get 2 or 3 legs up after a speedy movement before price decides to retrace.... A lot of its centered on studying the liquidity of the market. And the perfect method to read liquidity. . Is to be aware of the time of day and if major data is outside...

    2. Liquidty
    Reading liquidty...
    Time of day. . Liquidty could be super high in london open then perish into london lunch. . Then surge again in USA open.
    Time of week. . Liquidty may die down into a major event like a couple of days before Non-farm payroll may be slow.
    Time of year. . Summer and Christmas are usually reduced liquidty as traders are on holiday.
    This takes a lot of chart time to have the feel for if liquidty will change. .
    If liquidty does change Bulls may stop pushing... The bids begin drying up and price may reverse. .
    To acquire the feel begin indiing on your own charts and also taking note of liquidty changes at various times of day and at data releases.

    3. A major change in monetary policy will undo a currency. . (may take a while to kick in)
    If Aud is in major up trend along with the RBA states it's going to begin a rate cut cycle... Aud will fall.
    If USA stops printing money as starts to increase interest rates Dollar will grow on the weekly charts.
    I don't to over-complie this by analyzing every piece of data... Its a Broad view... That doesn't change on one or two data points.
    Most traders over Complie this. For me has to be a major change Announced by a central banker. 1 BAD NFP or one GOOD EUROZONE DATA POINT WONT CHANGE MY LONG TERM VIEW. Yellen saying Rate increase is off the table would change my long term perspective of the USD.

  2. #2
    Quote Originally Posted by ;
    What dosn't work: 1 ). Trendlines - Many rookies begin with drawing trendlines. . They don't work. Too many false signals. 2. Multiple indiors... I have not discovered one system with constant results yet. That works in all types of market Bull, bear, Flat. 3. Over complex systems. 4. Trading good news or bad news. . If it had been as simple as going long on great information... we would all be wealthy. . 5. Chart patterns found in most publiions. They work some of the time. . But neglect a lot. . If they do fail. . Typically a fantastic clue. What does work... 1 ). Market structure....
    What do you mean when you state that something'works'? Everything that'functions' or'does not work' is entirely subjective and based on your own beliefs about markets.

  3. #3


    This chart shows the liquidty spike throughout London... Bulls keep pressing for some time as London can be strong. Moving into Usa you find the bid drying up. . And price falling back into Asian range... When Liquidty picks up again and USA open its the bears turn to push. . But even that doesn't last long. . The move down was too quick and inefficient and needed to retrace. .

  4. #4
    A trade I took on Thursday... Based on a weak run up in N/U

    Notice the Market arrangement... Thin run up becoming faded...
    Can you see other quick conducts with this chart? How did they hold up over time?

  5. #5

    Entered this trade after 2nd leg retrace... it had been up close highs on daily chart. . We had been going into ending of quarter and Non-farm payrolls were coming in a couple of days. . I found that Liquidity was drying up into the big NFP event in two or three days. . So I figured 1st leg wouldn't retrace based on dying liquidity. When leg retraced, entered. I exited when I saw the Third Leg run really thin and fast. . I figured it would retrace so that I exited. And it did retrace as I expected.
    QUICK PIP RULE. USUSALLY IF YOU GET a Fast SPIKE START LOCKING IN THE PROFITS.

  6. #6


    Market structure is significant... If you do not utilize MARKET STURCTURE, it ought to maintain your vocabulary.
    Chart revealing that quick inefficient moves do not hold and are good opportunities!
    The grey boxes are London available to close rather than that important to this chart. It is possible to ignore them.

  7. #7
    Quote Originally Posted by ;
    What dosn't work: 1. Trendlines - Many rookies start with drawing trendlines. . They do not work. Too many signs. 2. Multiple indiors... I have not discovered one system with constant results yet. That works in all sorts of market Bull, bear, Flat. 3. Over systems. 4. Trading very good news or bad news. . If it had been as easy as going long on great information... we'd all be rich. . 5. Chart patterns found in most books. They work some of the time. . But neglect a lot. . When they do fail. . Typically a clue. What exactly does work... 1. Market structure... a. A FAST MOVE UP IS WEAK! ... Never chase... Look to fade... when there's opportunity. 75 percent of the time these quick motions are short lived. picture
    Long term trendlines are like one of few items which actually works...

  8. #8
    Quote Originally Posted by ;
    I have done backtests of multiple systems trying to discover what works and what does not work.
    Please excuse my earning what could come across as a somewhat pedantic point, but strictly speaking it isn't possible to tell from backtesting what works and what does not: just what worked and what did not. The tense is rather significant.


    Quote Originally Posted by ;
    I'm searching for statistical evidence of exactly what works and what does not.
    That can, by definition, come just from ahead testing.


    Quote Originally Posted by ;
    Most rookies begin with drawing trendlines. . They do not work.
    If, by job, you mean consistently produce profit by themselves without taking a range of different trading-skills into account, then no: they do not (nor, probably, does any other individual egy or parameter you could cite ). Personally, I still find some trendlines enormously valuable in my trading, regardless of this.


    Quote Originally Posted by ;
    Multiple indiors... I haven't found one system with consistent results yet.
    Well, I'm not an indior trader, myself, but obviously many individuals have. There are tons of novices' textbooks (such as Van Tharp's Trade Your Way to Financial Freedom and Tushar Chande's Beyond Technical Analysis) which record and illue and explore some multiple indior systems, together in certain instances with decades of backtesting results and a year or two's forward analyzing outcomes, all examined and explained in fantastic detail. They not my choice, though.


    Quote Originally Posted by ;
    Chart patterns found in most publiions. They operate some of their time. . But fail a lot. .
    Not my expertise, I have to say. I've learned many from publiions which work a significantly large proportion of the time. I'm Considering the novels of Joe Ross, Bob Volman, Al Brooks and Lance Beggs, in particular, but there are many others, too. I wouldn't assume to generalise about most books, but the price action/chart pattern textbooks I've read have been hugely valuable to me, so much so I do not pretend that I would be making a living at all without having researched them so assiduously.

  9. #9
    Whutevuh dude... Go trade your trendlines
    Price can move in one direction for a very long time... But price will proceed at different speeds according to liquidty. . Thus never respecting the trendline sufficient to be consistant.


  10. #10
    At lease nobody saying I'm wrong about what does work...

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