When I entered digital computers DEC, to my surprise I noticed that had I traded as suggested by the charts I would have lost $35,000. Am I reading the chart wrong, if not what companies are not suitable to this type of trading.
Apparently, DEC wasn't the right company for that trading method...
Here's what happened: with the basic trading method being tested right now, all trades occur at the open the day after a new bar is formed on the TLB chart. That price can be far away from the trigger price which caused the bar to be drawn, as it was for DEC in late October using the high-sensitivity two-line break chart you were looking at. I also noticed that the two-line-break chart had lots of alternating black and white bars; this indicates that the sensitivity is too high, because you're getting new bars during a trendless market. An optimal TLB chart will not have single alternating bars, just alternating trends.
Another problem with the chart you were looking at was that it only covered the past 90 sessions, which isn't really enough to give a fair test of a trading method, especially if you can't use the two-line break and have to go to a lower sensitivity setting.
Check out the 260 session (1 yr) 10-line break chart for DEC. Total Gain after a full year is $11875, with the deepest loss at -$2875 in Feb. With these settings, you would have played the two major trends in DEC's price last year, and profited on both. (Although the reaction time was slow on the reversal, and lots of money was given back.)
webbindustries.com
I'm working on trading rules which will allow trading on the day the bar is formed, instead of the day after. This should improve the reaction time quite a bit, so less money is given back on the reversals.
Doug. |
