appreciate all the work you do on mechanical systems – been an avid reader for about 2 yrs. I’m a 5 digit account piker who trades a simple breakout system and a simple pullback system. On any given day I obviously get more trading signals than I can take. For the breakout system, I take the volume that day, divide by the avg volume and rank from largest to smallest, taking the larget number trades. I borrowed this methodology from you, I hope I am applying it properly. However, for the pullback system, does it make sense to use the opposite rankings, ie the lowest number when volume is divided by avg volume.
Any thoughts, ideas on this would be greatly appreciated.
Beano, glad to here I’ve been some help to your trading!
The most important thing about ranking is that it eliminates some selection bias. For your pullback system, I would look at ranking based on volatility or ATR or something similar to those measures where the highest ranked picks are the most volatile or have the highest ATR. You probably want to use a short period to compute the measure, like probably 5 days – ATR(5).
Woodshedder, are you considering a buypoint above the highest close for the day (DYNT breakout around 1.85) or do intraday spikes count (DYNT above 2.07), or some other criteria?
derrr, at this point, I’m looking to buy a little above the highest close. I’m using a buy-stop-limit order. I have no idea if this is the best way to play these or not, but until I get some backtesting done, that’s what I’m using.
Mr. Woodshedder,
appreciate all the work you do on mechanical systems – been an avid reader for about 2 yrs. I’m a 5 digit account piker who trades a simple breakout system and a simple pullback system. On any given day I obviously get more trading signals than I can take. For the breakout system, I take the volume that day, divide by the avg volume and rank from largest to smallest, taking the larget number trades. I borrowed this methodology from you, I hope I am applying it properly. However, for the pullback system, does it make sense to use the opposite rankings, ie the lowest number when volume is divided by avg volume.
Any thoughts, ideas on this would be greatly appreciated.
best regards,
Beano, glad to here I’ve been some help to your trading!
The most important thing about ranking is that it eliminates some selection bias. For your pullback system, I would look at ranking based on volatility or ATR or something similar to those measures where the highest ranked picks are the most volatile or have the highest ATR. You probably want to use a short period to compute the measure, like probably 5 days – ATR(5).
Many Thanks,
let the programming begin.
best regards,
Woodshedder, are you considering a buypoint above the highest close for the day (DYNT breakout around 1.85) or do intraday spikes count (DYNT above 2.07), or some other criteria?
derrr, at this point, I’m looking to buy a little above the highest close. I’m using a buy-stop-limit order. I have no idea if this is the best way to play these or not, but until I get some backtesting done, that’s what I’m using.