i've experimented with many strategies over the years.
my 1st real success, after about 3-4 years in the industry, came with market profile...which had 2 basic strategies
1) wait for a normal distribution to appear, and then fading a move to the symmetrical outside edge, for a return to the center. 2) look for supply imbalances indicated by a "P" or "b" shaped profile, followed by a rejection of a reversal attempt....which would then indicate a "go with the original impulse" for a momentum breakout play.
These strategies worked well for a while, but less often these days (i still watch for them, but don't see them often enough to make a full strategy)
Then i discovered Hurst (an expression of chaos theory math) and cycles/rhythms in the market, combined with volatility bands. The result was similar to market profile in some respects (as it should...its the same market afterall) but Hurst allows for trading both mean reversion and momentum breakouts on a moving scale...whereas market profile required the market range to remain static and linear to see patterns play out.
It goes without saying that overlaying news events on top of pattern recognition is necessary, to avoid large swings that are outside the realm of standard patterns...which means that this past year has been more stressful than avg with the Trump twitter feed dominating the news cycle.
Market profile patterns are still the most successful on a % basis...but they don't appear often enough to use on a daily basis...and i don't have the $$ to be able to only have a good trade 1-3 times a month....i need to be active in the markets almost daily.
my win/loss ratio is about 70/30, and my gains are, on avg, slightly larger than my losses.
Whats your edge?
My edge is that I know I don't have an edge.
I assume any idea I have is not original. Therefore, I do not bother looking for alpha. Through understanding the macro drivers of multiple unoriginal half-decent return streams, I can create a portfolio greater than the sum of its parts.
The edge I want to create is a structural edge where clients won't pull their money because allowing me to focus on the long term. Examples of this are through reputation like Warren Buffett or terms like a PE fund.
my primary edge is not discussing my edge
Yes Hurst bands are god like and extremely good for mean reversion trading. You can also do momentum trading with them. Keep working on it, and you will be a machine in no time. Good luck buddy!
Voluptas ut temporibus sit qui dolorem ratione quisquam. Quibusdam et nobis in quo laudantium.
Hic sint sed ut expedita voluptatum molestias. Velit molestias nobis ab sed rerum cupiditate earum autem. Quis harum aliquam dolore illum animi.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...