Update..... and it's about time!
Well....... let's just say it's really good to have recently become aware of other traders on this forum that have been trading a method for ages that I only discovered in May.
Until this discovery, I had originally looked at a counter-trend trading method which I backtested on the S&P500. I was never really comfortable with this method
In the summer, I backtested the trend based method and found promising results across a sample on the FTSE100. The problem with the results was that I had barely scratched the surface on the factors which contribute to winning, scratch and losing trades. So, in effect I was looking at "pretty patterns" and not really understanding why some trades were successful and others weren't.
I also made a decision to use the 30min chart as the default intraday timeframe as I couldn't see the wood for the trees on the 15min charts.
Since the late summer, I have spent time researching the factors which can support a signal which many (successful) traders call "confluence". I also tested a range of indicators, discovered that the Stochastic Momentum Index (SMI) to be better than Slow Stochastics in terms of its movement and I decided on the settings for the indicators I would test.
It was my original intention to have multiple methods but have decided to formulate two inter-linked trend based methods which are:
1. Re-entry into an existing trend; and
2. Entry into the early stages of a new trend.
using a specific repeatable pattern in the Stochastic Momentum Index (SMI) indicator for each method.
Method 2 is as a result of discovering that Method 1 has a weakness in not always giving re-entry signals in the early stages of a trend.
The following supporting factors including S/R (incl S/R pivots), chart patterns, candlestick analysis, momentum, volatility, Fib retrace/expansion, Daily/Weekly Calculated Pivots/Fibs, ADR, very basic elliott wave and triple time frame analysis etc are currently being tested. It is now much easier to see which signals are successful and unsuccessful. I'm also testing exit criteria and optimum stop size.
The aim will be to identify the common factors which lead to successful and unsuccessful trades. I will then incorporate this empirical evidence into trading rules like a checklist. I will also try to code a screener and an indicator.
Thank you to one and all for helping me learn so much by observing during my first year of learning TA.
I know the journey of learning doesn't end!
