The Technical View – The Lines in the Sand on World Indices that Determine Market Moves

This excerpt is for educational purposes only and is not to be interpreted as trading or investment advice.  See Terms Of Use here.

This week we look at the world indices Рthe All Ordinaries, S&P500, FTSE100, the Nifty 50 and the Shanghai Composite.  On all these indices we take things back to basics, looking at the dynamic support and resistance that reveals when markets are ready to make a move.

While the market is in between these support and resistance levels, it is in “agreement” that this is the right price. ¬†When they move outside these support and resistance levels, which they eventually do, it shows us that the market is ready for a different price to eventually be agreed upon, and these are our opportunities.

Check it out!

All Ordinaries2016_02_28_all ords

Shanghai Composite2016_02_28_shanghaicomposite

S&P 500

2016_02_28_SP500

I hope you have enjoyed this post.  Please leave a comment below!

Happy Trending,

– Dave McLachlan

More videos from the Technical View:

  1. The Technical View – Short Term Up Trends Confirmed, Where is Future Resistance?
  2. The Technical View – The Lines in the Sand on World Indices that Determine Market Moves
  3. The Technical View – “Short Squeeze”: How to Know When It’s A New Bull Move
  4. The Technical View – Current Markets Resemble 2008, But Where Are We In The Cycle?
  5. The Technical View – Current Support and Resistance Levels on World Markets

February 28, 2016  Tags: , , , , , , , , ,   Posted in: The Technical View  No Comments

The Trading System from “Reminiscences of a Stock Operator”, Tested Over 116 Years

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The book Reminiscences of a Stock operator was first published in 1923, and tells the rollicking story¬†of trader “Larry Livingston” – that most believe to be a pseudonym for one of the greatest traders of that time, Jesse Livermore.

As the story unfolds, Mr Livermore never outlines his trading system rules exactly, however people have picked up bits and pieces from the stories he tells.

One trading system that is fully disclosed, however, is the system of old Pat Hearne.  In the book, Pat is an old trader at a Brokerage that Mr Livermore frequents, and he has made a good living trading stocks for most of his life.  Traders tried to copy him because of his success, and they failed Рmostly because they were unable to stick to his tried and tested rules.  What were those rules?  Chapter 10 in Reminiscences of a Stock Operator holds the key.

  • He traded a system that bought on a 1% up move, and kept buying on each 1% move up from there.
  • He never wanted to give too much back to the markets, so he sold on the first 1% reaction, or move down.

Now, using the tools that are available to us today – namely the Amibroker trading system platform and 116 years of Dow Jones historical data – I was able to code this system and automate the results.

  • Did Pat Hearne’s method actually work, when the book was written, before 1923?
  • Does Pat Hearne’s method still work today?

Check out the video below!

If you’ve watched the video, you’ll know that I ask a specific question at the end. ¬†I would LOVE to know your thoughts on this. ¬†There are two different and clear lines of thought, and the trading system seemed to be giving some pretty clear signals.

Of course, these differing opinions are truly one of the great parts of being involved in the market.

Happy trending ūüôā

– Dave McLachlan

Beginners Course  |  Intermediate Course  |  Amibroker Course Home

More Market Research Videos:

  1. Stock Market Research: The REAL Effect of “Buy and Hold”
  2. This Simple Indicator SMASHES “Buy and Hold” Returns!
  3. More Stats on the Indicator that Beats Buy and Hold Returns
  4. New Mean Reversion Trading System (Stocks Over 50 day MA) Tested in Amibroker
  5. How This Random Entry Beat The Market (The Tom Basso Coin Flip Proven & Explained)
  6. Does the “Golden Cross” Outperform Buy and Hold? Market Timing, Real Results
  7. The Trading System from “Reminiscences of a Stock Operator”, Tested Over 116 Years
  8. The Three Billion Dollar Day Trading System Revealed and Tested

 

February 21, 2016  Tags: , , , , , , ,   Posted in: Stock Market Research  6 Comments

The Technical View – “Short Squeeze”: How to Know When It’s A New Bull Move

This excerpt is for educational purposes only and is not to be interpreted as trading or investment advice.  See Terms Of Use here.

This week world markets moved up from their lows in a nice “Short Squeeze” – the exact same thing that happened in 2008, as we were looking at last week. ¬†When markets move up, people start to talk about the next Bull Market. ¬†But how do you really know when it’s a new Bull move?

We look at the signs to watch out for:

  • ¬†Lowered volatility (not yet),
  • breakout above resistance (not yet), and;
  • a zig zag up (not yet).

We also look at the current and future support and resistance in world markets from Shanghai, India, Europe, US and of course Australia.

Check it out!

I hope you have enjoyed this post.  Please leave a comment below!

Happy Trending,

– Dave McLachlan

More videos from the Technical View:

  1. The Technical View – Short Term Up Trends Confirmed, Where is Future Resistance?
  2. The Technical View – The Lines in the Sand on World Indices that Determine Market Moves
  3. The Technical View – “Short Squeeze”: How to Know When It’s A New Bull Move
  4. The Technical View – Current Markets Resemble 2008, But Where Are We In The Cycle?
  5. The Technical View – Current Support and Resistance Levels on World Markets

February 21, 2016  Tags: , , , , , , , , ,   Posted in: The Technical View  No Comments

Three Trading Systems (Wk 10) – Leap of Faith System Index Filter Switches On

This excerpt is for educational purposes only and is not to be interpreted as trading or investment advice.  See Terms Of Use here.

Welcome to another week of the Three Trading Systems experiment! ¬†This series has been really great for my learning so far, personally. ¬†I’ll share some of those learnings below.

Probably the biggest lesson¬†this week was looking at the trades and equity of the Moving Average Channel trading system, which initially looked quite promising. ¬†The draw-down is inching ever higher, and to be fair I don’t think I could trade this in real life. ¬†Sure – I’ve had worse draw-downs myself, but the key word is “confidence” that it will recover and out-perform in the future.

There are a few ways I’m learning about currently to gain confidence in your trading system (or to figure out if you should throw it away).

Here are a few I’m looking into – please let me know if you can think of any more:

  • Keeping a larger window for Out of Sample testing – three years minimum to ensure the system is not over-fit to the in-sample test period.
  • Monte Carlo testing, during the in-sample period, to check the range of returns and draw-downs. ¬†Too large a range from worst to best, and we can’t be sure if our system will give good or bad results in the future.
  • Monte Carlo testing during the out-of-sample period, for the same reasons.
  • Choosing a trading system that, during¬†optimization, has a good result surrounded by many “slightly less” good results – a smooth-topped hill in our distribution, if you will. ¬†Choosing a system with a single good result surrounded by terrible results means there is a higher likely-hood the system will fall over as our data changes and shifts in the future.
  • Reducing or removing the greatest winners from back-test results, to ensure it doesn’t rely on only a few winning trades in the future.

While it started out as an experiment and used very basic, example-only trading systems, as this series evolves I’d like to focus on creating seriously robust trading systems that we can all use, with a high confidence they will out-perform in the future ūüôā

Golden Cross Index Timer

2016_02_21_Golden Cross Timer

 

ROC and Moving Average Index Timer

2016_02_21_ROC Index

Three Trading Systems Comparative Returns

The Index – All Ordinaries – is the Yellow line.

2016_02_21_Comparative

The Leap of Faith’s Index Filter is a shorter term filter, to catch shorter term moves. ¬†It is a 25 day moving average on the All Ordinaries, and was turned on this week. ¬†The trades in grey are closed trades. ¬†Lots of losses, starting in a Bear Market, and yet dividing each trade into equal percentages of the portfolio has helped reduce the overall impact. ¬†I’ll remove them next week, but this week we get to see what they were ūüôā

Leap of Faith Trading System

Starting Value: $50k,  Current Portfolio Value (since November 2015): $48,144.54

2016_02_21_LOF

Dow/Gann Trading System

Starting Value: $50k,  Current Portfolio Value (since November 2015): $48,720.03

2016_02_21_DG

Moving Average Channel Trading System

Starting Value: $50k,  Current Portfolio Value (since November 2015): $47,123.40

2016_02_21_MAC

I hope you’ve enjoyed this post. ¬†Have a great week ūüôā

Happy trending,

– Dave McLachlan

More¬†Posts and Videos in the “Three Trading System” series:

  1. Three Trading Systems (Wk 11) – All Filters On, New Buys
  2. Three Trading Systems (Wk 10) – Leap of Faith System Index Filter Switches On
  3. Three Trading Systems (Wk 9) – When There’s Nothing Doing, Do Nothing
  4. Three Trading Systems (Wk8) – Two Additions, Dry Powder and “No Psychics”
  5. Three Trading Systems (Wk7) – Lessons, Ideas, Tests, Drawdowns
  6. Three Trading Systems (Wk 6) – Thank you, Drawdowns, and Trading System Talk
  7. Three Trading Systems Series Week 5 – Can I Ask You a Question?
  8. Three Trading Systems Week 4 – Buys, Sells and YTD Returns
  9. Three Trading Systems Week 3 – Current Trades and YTD Returns
  10. Three Trading Systems Week 2 – Current Trades and YTD Returns
  11. Three Current Trading Systems – Buys and Sells and YTD Returns

February 21, 2016  Tags: , , , , , , , ,   Posted in: Trading Diary  2 Comments

Amibroker: How to Use “Cross”, When One Thing Crosses Another

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Have you ever wanted your trading system to buy when the RSI indicator crosses below 30, or above 70 for example?

This video will show you how that is done.

We look at a very basic trading system example – a trend following system that buys when RSI crosses above 70, and sells when RSI crosses below 30.

Then we look at a simple moving average cross, so we get the idea completely.

Check it out!

The simple detail is: Cross( Array1, Array2);

Where Array1 crosses ABOVE Array2.

Hope you enjoyed, and happy trending ūüôā

– Dave McLachlan

Beginners Course  |  Intermediate Course  |  Amibroker Course Home

Videos in the FREE Amibroker Course:

  1. Amibroker: How To Import A Watchlist With A CSV File
  2. Amibroker: How To Backtest A Single Stock Or Index
  3. Amibroker: How To Backtest a Portfolio or Group of Stocks
  4. Amibroker: How To Optimize A Trading System
  5. Amibroker: How To Scan The Market For Buy And Sell Signals
  6. Amibroker: How To Use Explore To Find And Filter Stocks
  7. Amibroker: How To Add Position Sizing Using AFL
  8. Amibroker: How to Add An Index Filter To Your Trading System Using AFL
  9. Amibroker: How To Plot Your Trading System On A Chart (incl. Buy/Sell Arrows)
  10. Amibroker: How to Use the If, Then Else Function (IIF)
  11. Amibroker: How to Code the ATR Trailing Stop (Chandelier) using ApplyStop
  12. Amibroker: How to Plot ApplyStop on a Chart
  13. Amibroker: How to Code Van Tharp Position Sizing (Fixed Fractional)
  14. Amibroker: How to “Scale In” to Positions (1) – Buying Once a Month
  15. Amibroker: How to “Scale In” to Positions (2) – Pyramiding Three Times
  16. Amibroker: How to Use “Cross”, When One Thing Crosses Another
  17. Amibroker Advanced: How to Compare Equity Curves

FREE Trading System Video Lessons:

  1. 7 Free Trading Systems and Their Returns From The Last 13 Years
  2. Seven Full Trading Systems Revisited, With Completely New Data
  3. Trading System: How to Create A Buy and Hold Trading System
  4. Trading System: How to Code ‚ÄúSell In May And Go Away‚ÄĚ
  5. Trading System: How to Code a Moving Average Channel That Made 23% p.a
  6. Trading System: How to Code Highest Highs As Used In 52 Week Highs Or Turtle Trading System
  7. Trading System: How to Code a Bollinger Band Breakout Trading System
  8. Trading System: How to Code a Moving Average Crossover That Returned 28% per annum
  9. Trading System: How to Refer to Previous Signals For MAup Trading System
  10. Trading System: How to Code the Leap Of Faith (Gaps) Trading System That Returned 24% p.a.
  11. Trading System: How to Code a Short Selling System (Plus Results)
  12. Trading System: Meb Faber Trading System Using Different Timeframes
  13. Trading System: How to Code the Three Billion Dollar Trading System

FREE Amibroker Q & A Videos:

  1. Amibroker Q & A: How To Do A Monte Carlo Test? (on ALL versions)
  2. Amibroker Q & A: Visualising Monte Carlo Data with Histograms and Scatter Plots
  3. Amibroker Q & A: How to Create the 52 Week High/Low Index with AddToComposite
  4. Amibroker Q & A: How to Code Trend Pilot: Five Consecutive Days Above or Below a Moving Average
  5. Amibroker Q & A: Three “Hacks” To Improve Your Coding Skills
  6. Amibroker Q & A: How to Remove Excess Signals

February 21, 2016  Tags: , , , , , , , ,   Posted in: Amibroker Course  No Comments