Testing, Testing, Testing... RSI vs. MA Crossover on Hold

I was testing my theory on whether or not RSI could beat a Moving Average (MA) Crossover in terms of early entry and less false signals, when I got sidetracked by working out the most suitable MA Crossover settings for EUR/USD exchange. I made it so that for every signal I would enter a trade and close my previous trade (signal-to-signal). The results I came up with rather poor. My favorite MA combo's were 5/8 and 5/13, and both did not perform well on the 15 minute timeframe or the daily timeframe (I chose these two timefames because I would use them the most).

The both 5/8 MA and the 5/13 MA Crossover's did produce a profit on the daily timeframe, and this profit does include spread and swap price. The 15 minute timeframe, however, did not produce profit if the spread and swap price were include. So one could make a cautious assumption that a MA Crossover does not fair too well in intraday charts, but rather in daily, weekly, and monthly charts. 

Now, this does not mean that MA Crossover could not work for intraday charts. For my purposes I hoping to find a indicator that doesn't require any or very little filtration. Currently I'm reading the book Millioniare Traders by Kathy Lien and Boris Schlossberg, and they talk with a man who has made good use of the 5/13 MA Crossover on 30 minute charts. So unless the man was lying it would seem that it is possible to work with MA Crossover's in intraday charts. No doubt the man applied other methods than just a MA Crossover, but unfortunately it was not mentioned in any sort of detail.        

RSI vs. MA crossover

I was looking at an old post of mine that talks about the 5/8 Moving Average (MA) Crossover. It looked pretty good on my picture the position of each arrow the MA Crossover displayed, so I took another look at and compared it to some of the indicators I've been creating. I tried the Advanced RSI indicator, which displays arrows on the chart at given trigger level, and it seem the RSI out performed the 5/8 MA Crossover.

I do not have stats to back my conclusion, that's why I`m writing this in the general news section of my blog. But I did do a visual backtest for the comparison of the two indicators, and Advanced RSI won the day with fast entry/exit points and fewer false signals. At some point I`ll be posting the Advanced RSI indicator, but I need to make a few more adjustments before I`m satisfied with it.

So, for now if you are using MA Crossovers, you might want to compare it with RSI level triggers. You might get better results....

Mix in Volume, Bollinger Bands, and CCI

I've just recently figured out how to program an indicator into another indicator, like CCI with a Moving Average, or RSI with Momentum. In MQL4 they made pre-assigned arrays that can be attached to other indicators, which makes it really easy to mix and match a number of indicators together. I haven't figured out how to make my own array from some Custom indicator, but that will be for another day.

Right now I placed Bollinger Bands on Volume, mixed in the CCI formula, and came up with some pretty good results. Not great, but pretty good. It can estimate the potential tops and bottoms of a ranging currency, but it can give false signals in a trending currency.

Right now I'm just looking for a way to filter the signals some more. As soon as I figure that out I'll post a picture of say indicator.

Hedging EA: A Work In Progress

So, the part time job I had did not work out, unfortunately. The hours were terrible, and the pay did not even cover my rent. So I'm back to handing out resumes and such, while I try to make a better Day Trading System.

Right now I'm trying to create a Hedging EA from a Hedging method I came up with (or so I know). I just finished the worst part of this Hedging EA, which is creating new pending orders according to the multiple pending orders or open orders that are already present. This took quite awhile to pull off because I had to no way of testing my programming quickly. I had to do it the hard way by opening pending orders, and waiting until the live price hit them, which always takes forever. So if I got the programming wrong I would have to try and fix it, then wait all over again.

So, yeah, the worst part is over. Now comes the fun part of playing with the details of it, and prettying the code up a little.

Time to Go to Work

My success rate in Day Trading is relatively high, but my capital is fairly low for this kind of career. I believe that in order to be successful at Day Trading, or even for general Investing, one should have about $100,000 to start. It`s a lot of money, I know, but the sad fact is that with low capital you would have to leverage your money, and the more you leverage the greater the potential to lose your capital.

 It's true when they say never to wager more than 3% of you total capital. If you wagered more than that your account could go from 'big money' to 'scraping for change' in no time. Because even the best systems out there you still manage to lose some money. I can remember a system I designed that would make me 10 points almost every time entered a trade, but if lost even one trade I would either lose all my winnings and come out with a loss, or I would just breakeven. I found that a lot systems are like that: lots of wins, but bigger losses.

The ideal system would be one where your stoploss's would be smaller than your takeprofits, and the chance of winning is still greater than 50%. I have yet to discover a system such as this (at least one that caters to my personality), but I am always looking.

Sadly, given my capital, I can't carry on doing the Day Trading for a living. The money it takes to pay the bills AND build on my capital is not possible with the capital I got. So, I decided to get back into the Labour Force again. Just recently got excepted at a part time position, so I can still do some Day Trading and possibly some more School.

Unfortunately, the part time position I just got doesn't pay that well, and the amount I'd get comes just short of paying my bills. Hopefully over time my hours and/or pay will increase (from what I know, this will happen in coming months). In the mean time I'd be still looking for a better position.

Now, I've read in many books, articles and forums that having a part time job while Day Trading is a bad idea because your focus is not 100% on trading. There is some true to that statement, but if you trade on weekly, Daily, or even 4 or 1 Hour charts then having a job shouldn't interfere with your trading. For me the majority of trading I do is at 5AM, so if I want a job I can still wake up early for my trading and take off to work at 8or9 when my trading usually ends.Or better yet, work the Day charts and make only one trade a day.

So, to sum up what I'm saying here:
if you do not have some consistency in your income flow when you are Day Trading, then you should consider getting a part time job, or put Day Trading on pause till you can figure out a better system.

Also, I can't stress enough that if you decide to jump into Day Trading on whim, then you are going to fail! Study for months and months with either a demo account or a very, very small live account, and see how you fare. There is nothing worse then putting your hard earned cash into it only to see disappear.

Fractal System on Pause - RSI Divergence and CCI Back In PLay

The Fractal System I had going is going on pause for now, because I'm having too much trouble with my large losses and my small, but many, profits. If I could find a way make my stoplosses smaller and takeprofits larger then I could pull this system off, but for now I'm just going to go back to RSI Divergence and CCI.

There was some bonus to all this work on my Fractal System though. I found/created new indicators, new money management techniques, and other money saving, risk averting methods. I even found a profitable new system based on the 2 Bar High/Low method. I won`t go into detail on that one just yet, but I will post it on the Technical Analysis section at some point.

But for now I`m just focusing on RSI and CCI. So, I`m going to be posting potential trades based on these two and price action for the time being.

TTM Breakout Strategy: Update

Made a couple changes to my TTM strategy, and posted them in the Technical Analysis section. So far it is going pretty good. I'm almost to the point where I'll test the demo account to see if it actually produces a profit, rather than more back-testing.