ER2 trading with simple MP strategy

[TinGull 10]

I just wanted to share a little insight I've gleaned into the markets as of late. It's something I'm a little excited about.

 

Trading with a simple strategy on the ER based solely on MP and nothing else (no internals or anything) is producing a profitable outcome. I'm attaching a spreadsheet of my backtesting, done all manually as I can't get a computer to take into consideration the nuances that would be the exits. Entries are strict, exits aren't always as strict.

 

This spreadsheet only goes back to Sept 11, 2006, which was when I started trading. yea yea...I'm still considered a newbie in some respects, so get the laughing and joke telling out of the way.......still going....ok.

 

Noticing that October was a draw down month and the November wasn't quite the good recovery, but all other months kicked butt, I wanted to find out why. What I noticed was interesting. Someone said that the majority of the time the markets spend their days ranging. Well, this strategy is meant for those markets. If you notice on a 10 period ATR daily chart of the ER, the ATR during October and into November was showing 11-12 point range days (as outlined in the first green box). Nevermind the 16pt ATR...thats just where the chart starts so its kinda fudged up. Looking at the chart, too, you can see we had a very healthy move up. This kind of massive trending wreaked havoc with this kind of system. But when the ATR started to come back into its own 9-11pt range, the system performed well. That was December. January starts with the 2nd green box, and Feb the 3rd blue box. As the range dies down, this system performs amazingly well.

 

Knowing that...when big trending, expanding markets start to come into fashion, this strategy should be left alone. But when we are in a range, be it a small trend channel or sideways channel, this strategy can perform very well.

 

A note about the spreadsheet...the days highlighted in red are days where my stop was taken out by 5 ticks or less, and then reversed. I'm trying to see what I can find out about those days.

2ERValueTrades.xls

[makhan 10]

Hi TinGul,

I found your this post of 2007 and am curious to know if you are still trading the same system or you gave up on that. I have been recently introduced to MP and VP and am interested to know more about it.

Thanks

M.Khan