Many moons ago… (see what I did there) when I was in my infancy as a trader, I was a regular in a chat room of what used to be pivotfarm where they had a free tool in beta testing that was basically an audio “tape reader.” It would make popcorn sounds when big selling pressure was hitting the tape, and crickets when big buying pressure was hitting the tape… Anyways there was quite the assortment of traders in the room, and I learned a great deal from many of them. Perhaps the greatest lesson that I learned in that room, that I can unequivocally say is one of the undeniable few truths of making a living via the markets, […]
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When it comes to legends in the trading world, the name Larry Williams comes up often. Larry is the creator of the ultimate oscillator and the Williams %R Indicator. Furthermore he has written many popular books. His claim to fame is taking a $10,000 account to $1,100,000 during the 12-month competition known as the World Cup Championship of Futures. Interestingly his daughter, Michelle Williams won the same contest at age 17. I bet a little help from Dad went a long way with that one! While Larry’s impressive story is well known to many there is another trader who has done equally as well when it comes to taking a small account to large sums. That trader is Sheldon Knight. […]Read more ›
Over the years I’ve looked at several very simple long strategies that were published in the book, “Short Term Trading Strategies That Work” by Larry Connors and Cesar Alvarez. Those articles include the following long strategies: Double Seven Strategy RSI(2) Strategy VIX Stretch Strategy RSI And VIX Strategy Buried within Connors and Alvarez’s book you will find one simple shorting strategy which can be used on the major market indices. In this article I will review this strategy and also combine it with the Double Shorting strategy we explored last week. Simple Shorting Strategy The rules of this system are very simple. The instrument must be below its 200 day moving average. If the instrument closes up for four or more days in […]Read more ›
It’s time to look at another simple trading system which can be found in the book, ”Short Term Trading Strategies That Work” by Larry Connors and Cesar Alvarez. In this article we are going to look at the Double 7 strategy. This is a simple strategy that can be applied to the major market indices such as DIA, DOW and QQQ. It can also be applied to the futures markets. The rules of this system are very simple. The instrument must be above its 200 day moving average. If the instrument closes at a 7-day low – buy. If a long position is open and the instrument closes at a 7-day high – sell. The trading system follows two basic concepts we have talked a lot about on this […]Read more ›
In this article I’m going to demonstrate a technique to help adapt your trading systems to the changing market conditions. In a previous article entitled, “Trend Testing Indicators“, I tested several indicators that could be used to divide the market into two modes: bullish and bearish. These two modes were then used to dictate how the trading system should execute its trades. For example, during a bull mode only open long trades. During a bear mode only open short trades. In essence, we made our system adapt to the given market conditions. However, we can take this concept further by looking at a different market characteristic: trend strength. A market may be in a bull regime, but how strong is […]Read more ›
You just spent a ton of time creating a trading system and being very careful not to over-optimize. You then tested it on the out-of-sample data segment and the performance looks good. What’s next? Jump right into the live market? Maybe. But instead, you would like to perform one more test called System Parameter Randomization. The article, System Parameter Permutation – a better alternative?, provided a unique way to estimate possible future returns of a trading system. This method is called System Parameter Randomization (SPR) but, there was no practical example within the article. I like practical examples and I know you probably do too. So, in this article I’m going to take an example trading model from System Trader Success, and follow the guidelines found in the SPR article and […]Read more ›
Here’s the system: At the end of every month, if the index is above its 10-month simple moving average: the portfolio is 100% in the market if the index is below its 10-month simple moving average: the portfolio is 100% in cash And that’s it. So, if we take the FTSE 100 Index as an example, if at the end of a month the FTSE 100 is above its 10-month simple moving average then either, the portfolio moves into the market by buying, say FTSE 100 ETFs, (these will be the easiest instrument for most investors, but equally futures, CFDs or spread bets could be used), or nothing needs to be done if the portfolio is ready in the market. Conversely, […]Read more ›