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Strategies & Market Trends : Technical Analysis - Beginners
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To: shasta23 who wrote (7818)1/16/1998 2:08:00 PM
From: David R. Evans  Read Replies (2) of 12039
 
Hello Stefan,

If you tried to trade a 5-9 EMA cross you would get killed over time because of the whipsaws. If you just try to trade S&R you are open to subjectivity and Emotion creeps into the picture.

When I run my testing on IBM, I'm looking at data from 1990 through today. Yes, IBM was around $50 when it started and is now around $100 BUT it was certainly not a smooth ride. Let's take a look at the first four years:

01/02/90 - $49.06 Open for the year
07/13/90 - $60.50 High for the year
08/22/90 - $49.50 Low for the year (except for first day)
12/27/90 - $56.81 Close for the year

01/03/91 - $56.25 Open for the year
02/19/91 - $69.75 High for the year
12/19/91 - $42.43 Low for the year
12/30/91 - $45.18 Close for the year

01/02/92 - $45.12 Open for the year
07/16/92 - $50.12 High for the year
12/30/92 - $25.06 Low for the year
12/31/92 - $25.18 Close for the year

01/04/93 - $25.06 Open for the year
12/17/93 - $29.87 High for the year
08/16/93 - $20.50 Low for the year
12/31/93 - $28.25 Close for the year

01/03/94 - $28.81 Open for the year
10/28/94 - $38.06 High for the year
02/04/94 - $26.00 Low for the year
12/29/94 - $37.18 Close for the year

Please note that all prices listed above are Closing Prices. Now when you look at this four year history of IBM you see that it was certainly NOT a Bull Run. I would hope that IBM would not have been in your database. Why? Well let's take a look at the numbers.

StochRSI (14) Results:

Trade # Trade Type Entry Date Close Date Profit
--- Out 1/2/90 7/10/90 0
1 Long 7/10/90 9/27/90 -6.8125
--- Out 9/27/90 10/19/90 0
2 Long 10/19/90 11/8/90 0.5625
--- Out 11/8/90 1/18/91 0
3 Long 1/18/91 2/25/91 8.75
--- Out 2/25/91 4/9/91 0
4 Long 4/9/91 6/10/91 -5.4375
--- Out 6/10/91 6/26/91 0
5 Long 6/26/91 8/8/91 -0.1875
--- Out 8/8/91 9/3/91 0
6 Long 9/3/91 9/30/91 2.3125
--- Out 9/30/91 10/16/91 0
7 Long 10/16/91 1/15/92 -4.875
--- Out 1/15/92 2/13/92 0
8 Long 2/13/92 4/30/92 -2.125
--- Out 4/30/92 6/11/92 0
9 Long 6/11/92 7/8/92 3.125
--- Out 7/8/92 8/27/92 0
10 Long 8/27/92 9/17/92 -1.75
--- Out 9/17/92 10/9/92 0
11 Long 10/9/92 12/11/92 -8.8125
--- Out 12/11/92 12/28/92 0
12 Long 12/28/92 1/22/93 -3.1875
--- Out 1/22/93 4/6/93 0
13 Long 4/6/93 6/14/93 -0.1875
--- Out 6/14/93 7/16/93 0
14 Long 7/16/93 9/13/93 -1.8125
--- Out 9/13/93 10/5/93 0
15 Long 10/5/93 11/15/93 3.625
--- Out 11/15/93 12/14/93 0
16 Long 12/14/93 3/28/94 -1.4375
--- Out 3/28/94 4/15/94 0
17 Long 4/15/94 6/6/94 3.6875
--- Out 6/6/94 7/19/94 0
18 Long 7/19/94 9/2/94 5.625
--- Out 9/2/94 10/11/94 0
19 Long 10/11/94 10/25/94 0.4375
--- Out 10/25/94 11/18/94 0
20 Long 11/18/94 1/23/95 0.75

Total -7.75

Dahl Results:

Trade # Trade Type Entry Date Close Date Profit
--- Out 1/2/90 11/1/90 0
1 Long 11/1/90 4/10/91 2.9375
--- Out 4/10/91 9/18/91 0
2 Long 9/18/91 10/18/91 -2.5
--- Out 10/18/91 10/30/91 0
3 Long 10/30/91 11/25/91 -2.0625
--- Out 11/25/91 3/3/92 0
4 Long 3/3/92 3/17/92 0.5625
--- Out 3/17/92 5/8/92 0
5 Long 5/8/92 8/19/92 -2.9375
--- Out 8/19/92 3/16/93 0
6 Long 3/16/93 4/23/93 -3.5
--- Out 4/23/93 10/21/93 0
7 Long 10/21/93 2/24/94 4.8125
--- Out 2/24/94 5/2/94 0
8 Long 5/2/94 7/22/94 2.375
--- Out 7/22/94 7/27/94 0
9 Long 7/27/94 9/22/95 15.8125

Total 15.5

Dahl had a profit but it would have been less if we cut off its last trade at year-end. Now you should see the importance of looking at the right type of stocks.

Now, how impressive are the following Dahl numbers when I still include those four DOG years in the results:

Trade # Trade Type Entry Date Close Date Profit
--- Out 1/2/90 11/1/90 0
1 Long 11/1/90 4/10/91 2.9375
--- Out 4/10/91 9/18/91 0
2 Long 9/18/91 10/18/91 -2.5
--- Out 10/18/91 10/30/91 0
3 Long 10/30/91 11/25/91 -2.0625
--- Out 11/25/91 3/3/92 0
4 Long 3/3/92 3/17/92 0.5625
--- Out 3/17/92 5/8/92 0
5 Long 5/8/92 8/19/92 -2.9375
--- Out 8/19/92 3/16/93 0
6 Long 3/16/93 4/23/93 -3.5
--- Out 4/23/93 10/21/93 0
7 Long 10/21/93 2/24/94 4.8125
--- Out 2/24/94 5/2/94 0
8 Long 5/2/94 7/22/94 2.375
--- Out 7/22/94 7/27/94 0
9 Long 7/27/94 9/22/95 15.8125
--- Out 9/22/95 12/7/95 0
10 Long 12/7/95 12/27/95 -1.75
--- Out 12/27/95 2/1/96 0
11 Long 2/1/96 4/30/96 0.625
--- Out 4/30/96 8/15/96 0
12 Long 8/15/96 2/14/97 17.375
--- Out 2/14/97 5/6/97 0
13 Long 5/6/97 10/16/97 19.4375
--- Out 10/16/97 11/26/97 0
14 Long 11/26/97 12/26/97 -8.125
--- Out 12/26/97 1/8/98 0
15 Open Long 1/8/98 1/15/98 -0.3125

Total
42.75

See the difference?

Dave Evans
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