Dow - Which Way?

Bid A-Tool · Apr 25, 2006

This is the story (if you are interested). The indicators I use are normal. What is "Quirky! is my interpretation of them. I would call it "my system" as others do their own who use readily available indicators. One of the indicators that is used was invented by a trader who went on to make about 16 million in the stock Market. His system was pure Logic. My system is too and I think, predicts a move much quicker than his. This is why I am testing the system. I need the pressure of people watching and the critics.

These trades are disciplined trades and without any influence of news stories. You can't trade on news because you would need to predict how much news was already factored in to the DOW by the traders. They work ahead of news if they can try to factor in possible news before it happens.

Each trade entry and exit has a strict criteria and is based on probability and logic.

The aim is to predict before anyone else's system and use a minimal "Stop Loss" order along with the trade entered. Only time will tell how good it is. Some signals do fail but the "Stop Loss" should take care of the signals that do fail.

Bid A-Tool

Chocolate · Apr 25, 2006

Good call BAT. I was out of my long when we crossed 11300. So I'm now a neutral observer again!

JillyB, you turned out to be spot on about today's high! I was expecting a really nice bounce off the open when I entered long last night, but we had the complete opposite. What sort of indicators do you use? Trick y Trin? (I only found out about these guys last week, and not even sure if they are useful on the intraday level).

JillyB · Apr 25, 2006

Chocolate said:
Good call BAT. I was out of my long when we crossed 11300. So I'm now a neutral observer again!

JillyB, you turned out to be spot on about today's high! I was expecting a really nice bounce off the open when I entered long last night, but we had the complete opposite. What sort of indicators do you use? Trick y Trin? (I only found out about these guys last week, and not even sure if they are useful on the intraday level).

No indicators at all!
I have 4 bits of information yesterday high, low, close and today's open.

Plus what I posted wasn't entirely correct as the open was at 11,351 (CMC) and not 11,343 - as it was when I posted. This meant it was closer to the high of yesterday and therefore there was only one trade and that was a SELL down all day.

Lightning McQueen · Apr 26, 2006

where are we

Hi all

To try and recap so far there has been one successful live trade long and what looks to be so far a good live entry short (well at least its not under water at the off

)past dates for five long trades and four short trades have been posted. I will upload a chart of the dow showing these
trades only one at present being a bit of a failure

I have cloned this system and it back tests ok to the end of 2003
I have now started forward testing the system on a demo spread betting platform with first trade entered with an auto stop loss (200 points

) all trades will be entered at £10 / point

all please be aware that this is a demo account so no real money is being won or lost
these trades may or may not run the same as Bids I am hoping they will be similar

I will post other charts with signals, indicators and other ideas on them (unless Bid you P.M. me not to on your thread)

good trading all

Don

Danger Field · Apr 26, 2006

Bid A-Tool said:
WRONG! Danger Field.........These Indicators and my interpretation of them are "Predictive" signals. They Signal what will likely happen before the event. I can also now see they are capable of predicting right on the nose. For me the signals can be a little late. I am working on the accuracy.

Bid A-Tool

What do you mean "WRONG!"? I was suggesting a different approach to interpreting market action. I thought you were looking for other inputs to support/challenge your 'guess my indicators' strategy?

Had you looked at the subsequent market action you would have seen the triangle broke downside which coincidentally supported your call. However, a true chartist would have waited for the underside of the triangle to retested, which it was, before shorting.

Going in when you said would have called for some nerves to hold, even with a stop placed where you suggest.

Going in on the failed retest would have got you in at exactly the same level, but without having to sit and watch your pos go against you.

Plus your stop strat (?) looks like a problem unless you're going to mention what your potential target is. The risk-reward could be anything. Perhaps you could mention how you're calculating potential profit?

Bigbusiness · Apr 26, 2006

I have attached a chart of the recent trades. Looks interesting but I am concerned that there are not enough trades. How does this work when the market isn't in a choppy phase? I would like to know what happened to these signals during the up move I have highlighted.

Bid A-Tool · Apr 26, 2006

Danger Field said:
Plus your stop strat (?) looks like a problem unless you're going to mention what your potential target is. The risk-reward could be anything. Perhaps you could mention how you're calculating potential profit?

The trades are designed to get in at the bottom or top of a DOW move as accurately as possible. You then use a minimal "Sop Loss". You enter the signal generated trades with no idea of what profit is to come. If you did a sell order or went short like the other day then you would wait until the next buy signal to take maximum profits.

I think I might call my system the Bid A-Tool theory instead of the DOW theory. An invisible mathematical conundrum. Where news doesn't matter because the DOW moves only within mathematical boundaries. A trading system that excludes emotion, fear and greed.

If the DOW moves within mathematical boundaries then the moves are predictable. If the moves are predictable then maybe the "Holy Grail" trading system does exist. May be it's just that no one has found it yet...........or maybe I am just idiot.

Bid A-Tool

Lightning McQueen · Apr 26, 2006

Bigbusiness said:
I have attached a chart of the recent trades. Looks interesting but I am concerned that there are not enough trades. How does this work when the market isn't in a choppy phase? I would like to know what happened to these signals during the up move I have highlighted.

Hi Bigbusiness
1. I can post charts with trades for 04 and 05 that would be very close to Bid A-Tools trades. Further back it has to be yahoo data with its known problems
please also keep in mind that this is a live forward test

2. when the market is going sideways so will the indicator so no trade will be entered the trade can only be signalled when the dow is on the move up or down

3. I have not traded these signals live so cant really answer that.

I am looking forward to Bid's answers to your questions

Don

Bigbusiness · Apr 26, 2006

Here's some data going back to 2000, if you want to have a look at more volatile times

Sometimes I have to check the charts I have saved, as I can't believe how much the Dow used to move in the early 2000's.

millsy500 · Apr 26, 2006

Bid A-Tool said:
The trades are designed to get in at the bottom or top of a DOW move as accurately as possible. You then use a minimal "Sop Loss". You enter the signal generated trades with no idea of what profit is to come. If you did a sell order or went short like the other day then you would wait until the next buy signal to take maximum profits.

I think I might call my system the Bid A-Tool theory instead of the DOW theory. An invisible mathematical conundrum. Where news doesn't matter because the DOW moves only within mathematical boundaries. A trading system that excludes emotion, fear and greed.

If the DOW moves within mathematical boundaries then the moves are predictable. If the moves are predictable then maybe the "Holy Grail" trading system does exist. May be it's just that no one has found it yet...........or maybe I am just idiot.

Bid A-Tool

The holy grail? in a mechanical trading system. I'm sure this must have been discussed somewhere. Can there be the perfect trading system mechanically? Nah
Its a myth.
Bigger and brighter peope have tried and failed.
The holy grail lies elswhere.
time for another stella!

Lightning McQueen · Apr 26, 2006

Bigbusiness said:
Here's some data going back to 2000, if you want to have a look at more volatile times Sometimes I have to check the charts I have saved, as I can't believe how much the Dow used to move in the early 2000's.

Thanks Bigbusiness I will get to work on those charts

cheers

Don

Bid A-Tool · Apr 26, 2006

millsy500 said:
The holy grail? in a mechanical trading system. I'm sure this must have been discussed somewhere. Can there be the perfect trading system mechanically? Nah
Its a myth.
Bigger and brighter peope have tried and failed.
The holy grail lies elswhere.
time for another stella!

Can anyone remember a Horizon programme or a programme like it on television many years ago about a trading system that someone or some company created that predicted the moves in stock prices or the DOW itself. I can just remember. It's vague. I can just remember watching it.

Bid A-Tool

trendie · Apr 26, 2006

Bid A-Tool said:
Can anyone remember a Horizon programme or a programme like it on television many years ago about a trading system that someone or some company created that predicted the moves in stock prices or the DOW itself. I can just remember. It's vague. I can just remember watching it.

Bid A-Tool

Are you sure it wasnt about those two Nobel prize-winners who used their mathematical knowledge to trade the markets. ( Black and Scholes ? )

I think the company was called Long Term Capital Management. LTCM.
There system worked by calculating the true price of stocks, etc, and traded whenever they saw a discrepancy between the offered price and their calculated true-price.

I believe a series of unforeseen political and economic events ( the Russian rouble ? ) resulted in one of the biggest corporate failures of its time.

Bigbusiness · Apr 26, 2006

trendie said:
Are you sure it wasnt about those two Nobel prize-winners who used their mathematical knowledge to trade the markets. ( Black and Scholes ? )

I think the company was called Long Term Capital Management. LTCM.
There system worked by calculating the true price of stocks, etc, and traded whenever they saw a discrepancy between the offered price and their calculated true-price.

I believe a series of unforeseen political and economic events ( the Russian rouble ? ) resulted in one of the biggest corporate failures of its time.

I remember that one. Looked good, until it lost 4.6 billion

http://en.wikipedia.org/wiki/Long_Term_Capital_Management

Bid A-Tool · Apr 26, 2006

trendie said:
Are you sure it wasnt about those two Nobel prize-winners who used their mathematical knowledge to trade the markets. ( Black and Scholes ? )

I think the company was called Long Term Capital Management. LTCM.
There system worked by calculating the true price of stocks, etc, and traded whenever they saw a discrepancy between the offered price and their calculated true-price.

I believe a series of unforeseen political and economic events ( the Russian rouble ? ) resulted in one of the biggest corporate failures of its time.

YES that was it, the "Black Swan" scenario. The system worked brilliantly apparently but they forgot to incorporate the "Russian rouble" scenario.

They should have incorporated some kind of "Stop Loss" system in to it but I don't think they didn't. What idiots!

Bid A-Tool

Bid A-Tool · Apr 26, 2006

Bigbusiness said:
I remember that one. Looked good, until it lost 4.6 billion

http://en.wikipedia.org/wiki/Long_Term_Capital_Management

............I am glad my system is not the same as that one then. It was too risky if you ask me.

trendie · Apr 26, 2006

Bid A-Tool said:
YES that was it, the "Black Swan" scenario. The system worked brilliantly apparently but they forgot to incorporate the "Russian rouble" scenario.

They should have incorporated some kind of "Stop Loss" system in to it but I don't think they didn't. What idiots!

Bid A-Tool

Hey! Show a bit of respect.
These were world-class prize-winning idiots.

Later nominated for the Doh!-bel Prize for Home Economics.

meanwhile, back to the topic.......

Bid A-Tool · Apr 26, 2006

trendie said:
Hey! Show a bit of respect.
These were world-class prize-winning idiots.

Later nominated for the Doh!-bel Prize for Home Economics.

meanwhile, back to the topic.......

Oh great.........you loose 4.6 billion and you get respect.........Right......I have decided now I will trade all the opposite moves my system is generating and loose 4.6 billion and everyone will give me a kiss!

Bid A-Tool

P.S. What are hammers?

millsy500 · Apr 26, 2006

are you or will you be operating wih a guaranteed stop loss ?

Bid A-Tool · Apr 26, 2006

millsy500 said:
are you or will you be operating wih a guaranteed stop loss ?

The answer is YES. It's just that I was worried about it working against the trade. I have worked it out now.

Bid A-Tool

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