Tomorrow I will be closing out 2 trades on the open. These trades were based on a RSI(2) strategy that I’m testing.
The above chart details the trade in [[FXP]]. I opened the position on April 24th, buying 50 shares at $62.56 The trade gets closed out tomorrow as today the RSI(2) traded above 80. If FXP opens tomorrow where it closed today, the trade will gross 7.3%
I opened the trade in [[DXD]] on Monday, May 5th. Again, the trigger was the RSI(2) crossing below 10. I will exit this position on the open tomorrow as the RSI(2) has risen above 80. I bought 200 shares at $50.00. If DXD opens tomorrow where it closed today, the trade will gross 2.7%
I have transferred half my capital, 50K, from my bullshit Scottrade account over to Tradestation. My intent is to automate the strategy on Tradestation’s platform. I will update iBC on the testing and results, but if things continue to go as well as I think they will, I will eventually have to go into stealth mode on this strategy to prevent internets leeches from sucking away any edge.
you know if you sell FXP on the open you will be going directly against the Fly’s wishes who just bought FXP!
Don’t worry about losing your edge. Most people can’t stick to trading such a system because it is too easy, and nothing that easy can be truly profitable. Even if it is profitable, it is too boring for most traders. So, they go off in search of the Holy Grail and your system keeps on working.
Good luck on the automation. Let me know how it turns out. I’m currently experimenting with Ninja Trader trying to get an automated system programmed and functioning. I have a long way to go before it is ready for primetime, but at least I’m working on it!
speaking of systems, anyone here ever try $SPXA50R and $SPX200R (S&P500) — or ——$NYA50R and $NYA200R (NYSE) ? if the 50R or 200R gets up into the 70-80 range you raise cash and when it goes down to 20-10 level you buy equities. Basically a indicator signaling a turn of the market, I hear sometimes you may be a little early, but you catch the fat part of the move.
Buylo, believe me, it is hard to sell strength, and buy weakness, but that is EXACTLY how this system works.
Dog, I know you’re right. Its just that I’ve finally come across a system that fits with my work situation and my psychology and should more than beat my goal of 20%/year. It feels like discovering the grail, which is exactly what many expert traders say…that the grail is finding a style, system, method, whatever, that is profitable and is congruent with psychology, risk aversion, etc. It will be too boring for most traders, yet still, I worry about the edge.
I’ve never heard of ninja trader. I’ll keep you updated on my progress with automation.
Buylo, check out this post, re: $SPXA50
http://www.ibankcoin.com/woodshedderblog/index.php/2008/01/24/breadth-suggesting-a-tradeable-low/
Why close the trade next day as opposed to today at close?
Sia, initial testing of this system used a buy(sell) on the open to open(close).
Furthermore, I do not trade at work anymore. Best case scenario, my wife or Dad will place trades for me. Worst case, I use stop losses.
Anyway, I may automate a strategy that will sell/buy intraday. I can certainly do that with TS. However, until the automation is all figured out and tested, the trades are executed through Scottrade, at the open.
good luck with your system.
i once was working on finding a system that consistently worked too, but then i realized that if such a system existed, we’d all be rich… or average due to dilution.
it’s like trying to find the “perfect investment.” the paradox of the perfect investment is that once it exists, it will be bidded up by so many people that eventually it will no longer be the perfect investment.
maybe you’ll find that your system will maximize your style and potential, but as to the holy grail autobot trader, man… we’d all like to have one of those. until then, time machine works best, haha.
ideal, I understand what you are getting at, but in all honesty, there are many profitable systems, very simple ones, that have been profitable for decades. These systems could very very easily be automated.
As Dog hinted at, most people can’t stick with the system long enough to remove the edge for those that do.
Dude get over yourself and get some perspective…..anyone here couldnt put a dent in any edge or cause any market swing. Be proud of your strategy and show off your moves for better or worse or join the Peanut Gallery. Keep up the good work though, check your comments every day!
Wood,
He’s running you, is your mate A+.
Shocking turn of bad manners….
Apply some discipline!
jog
Duc, huh?
Why sell on the open? This trade is just beginning to work. Don’t be so jittery to declare victory too soon. Let her run, for the roses.
You now have the all powerful stochastic & macd crosses at your back.
I realize your initial methodology for the trades. Just saying, methods are made to be refined. Have to improvise now & then. Flexibility, my son.
Juice’s comment simply confirms my original comment. Everyone wants to tweak the system rather than follow it religiously. It is the desire to tweak and squeeze out every last possible cent of gain that ensures trading systems never lose their edge. By endlessly tweaking, they move further and further away from the basic rules that work, until one day it no longer works, then off they go in search of another Holy Grail! Edge preserved.
Good luck.
Juice, see Dog’s comments.
I can’t tell you how much I want to let the trades run longer. Alas, my orders are already entered.
I can tell you that selling on the open gives one a 74% win rate and a return of 43% since Aug. 06
If I can get the system automated, it will probably no longer sell on the open, but rather it will take profits at a certain level of RSI(2) or at a moving avg. cross.
Good on ya, Wood.
May you achieve financial independence from it!
Wood,
Looks like all that research and backtesting is paying off. Hope this works for ya. I’ve been working on it further myself. I look forward to your posts on this as you put it into action. I haven’t gotten to an automated point on this yet, but I’ll get there when I build up capital.
Later,
Ed
Nice, simple and appealing. Do you set a stoploss in your system or just keep the trade until de RIS goes up?
cheers
Nice trades Wood. How do you shortlist which stocks/ETFs to target from the universe? Because, everyday there’s at least 100’s of stocks that satisfy the 80 criteria.
Thanks!
Hey, does this RSI trade work with all stocks, or just indexes?
Good questions… I’ll answer in order.
Viri, I’ve been testing with a 15% stoploss. It needs to be larger than the standard 8% as often the positions will stay oversold for sometime before reversing. I believe there were only 4 trades since Aug. 06 that stopped out at 15%.
Sunil, my intuition tells me that individual names can stay overbought or oversold for longer periods of times than the indexes. Because of that, this strategy buys QLD, DDM, and SSO (ultralongs for the Qs, Dow, and S&P) and QID, DXD, and SDS (ultrashorts for the same indexes). In a volatile market, the system will have you exit your ultralongs and the reverse the same day, or within a day or so into the ultrashorts. However, in a strongly trending market, one might be trading mainly one direction. For example, in an upward trending market, most trades will be the ultrashorts.
Roadrally- I plan to expand testing to individual stocks. Right now, I’m just working on indexes. AGain, the purpose of this strategy is to have something simple, with low commissions, that can be automated. With indexes, one does not need to worry as much about the risk of large gaps, bankruptcies, secondary offerings, etc. Plus, if one buys the leveraged etfs, and then leverages again with margin, the returns can be fantastic.
I’ll keep everyone updated. Tradestation is awesome, but it is taking me a while to figure out their “Easy Language.”
Could be hard to find advised persons on this issue, however you be understood as you know exactly what you are speaking about! Appreciate it