With the markets in limbo, I’ll just continue to look at simple trading systems. This one will again use the Russell 2000 Small Cap Index, for no other reason than I already had the symbol up on my platform after running last night’s study, The Golden Cross: A Simple System for Trading the Russell 2000.
Entry Rules:
If the 20dma average crosses above the 50dma from below, buy the next open.
10,000 starting equity and 10,000 per trade.
Exit Rules:
If the close is less than the 60dma, sell the next open.
Results:
It should be noted that one of the losses occurred because the 20/50 cross was only in effect for a few days. Because it was a very weak cross, the price was not above the 60dma when the trade was entered. This made the exit difficult as price had to eventually trade above, and then back below the 60dma before a sell signal was issued.
This system is good at catching long trends, as the “avg. bars in winning trades” and “largest winning trade” show. It is also very good at keeping losers small, with most losers equaling around 2% of initial equity.
The system just closed a losing trade in September, but caught the bulk of the uptrend from April through June.
As always, these simple systems should be easy to improve.
Equity Curve:
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Wood … not related to your above post … lets talk music/guitar : You familiar with this kid? Best of his age I’ve ever heard.
http://www.youtube.com/watch?v=h-wdwpeK4ug
http://www.youtube.com/watch?v=ggUrTEcllXM