Glenn
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I was thinking slightly differently
i.e. that initially all we need to do is test a variety of indicators using INDU data to see which gives the best result. i.e. the earliest Entry signals. At any turning point they will all give a signal at some stage, so the earliest would seem to be the winner.
Glenn,
Is this really the case or is it too simple? The ultimate test is profitability and an early signal may provide a worse outcome than a later one. If the mkt goes against you before turning in the direction you desire you might get stopped out. A later entry may have been "better". That will of course depend on your stop policy. If you shortlist your indicators on this basis and then move on to more realistic trading involving stops and targets (maybe I've missed this in the earlier posts but I can't remember seeing any discussion of exit strategies either) you may find you have eliminated the "best" indicator too early. So it depends on how it is planned to move on to the next stage. Measures of effectiveness are a bit of a minefield in system simulations. Sorry if that sounds a bit "Jonah-ish" - happy to be shown to be wrong.
Al
Al
This is how I see it.
Firstly I believe that we are only using the INDU as the Entry trigger. If I'm wrong, someone tell me.
The exits will be managed for each stock using a stop-loss and profit target, plus any scaling out mechanism. Once positions are open, the trade is not managed using INDU analysis.
On any chart you can see the turning points in hindsight.
So if the market turned at 10 am, what time did the Mtf indicator give an entry signal ?
To minimise the risk, the entry signal needs to be as near to the turn as possible.
The indicator giving the lowest risk entries on all the market turns in the tests wins.
i.e. which indicator consistently gives the earliest signal after (or at) the precise time of each turning point.
The market direction will come from the 10,30 and 60 min INDU signals.
The entry itself will come from the 1,3,5 min INDU.
The final arbiter of when to enter has to come from the lowest timeframe (1-min) in order to minise the risk. The fact that the 3 and/or 5 min have already signalled before this or at the exact same time, is the 'confirmation'.
Glenn