A change of plan

I’ve made some large changes this week to my strategy after spending 2-3 months backtesting different rules over historical data and i’ve settled with using a simple 6/21 day moving average crossover along with the donchian channel breakout system. Very similar to the famous turtle traders strategies but a little more short term trend following.

The reason behind this is my small amount of available capital. After spending some time backtesting and using my capital to create predicted forecasts (as best I can without knowing what the markets are going to do) I quickly realised that long term trend following might well increase my chances of successfully following trends but it will result in much lower profits due to needing much wider stops to cope with the price fluctuations.

With a small cap to work with (£1600) I decided to go with something that is more likely to bring in quicker profits, with tighter stops, and higher £ per point positions.

I’ve culled my losing trades and started fresh. You can check out my trade positions here on MY TRADES page.

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Comments

  1. glad to see you’re long TJX! How does ZIP look to you?

    • Yeah, although TJX retracted back to my entry point today, but stop is hugging the 20 day donchian channel so plenty of room for the price to move around some. As for ZIP, i’m not in the habit of predicting directions, i just react to price moves myself, but from a personal point of view it doesn’t fit my strategy that im running. If I was open on it i’d prob hope I was SHORT on it, but it could go either way at the moment. I’d personally close it simply because it doesnt fit my rules. The long term trend is SHORT though as you can see, so if I had to, i’d bet it to continue. Had a big drop recently too. Are you SHORT on that?

      • i am short zip. ive done a fair bit of work on the fundamentals and it looks bad – as the share price is suggesting! my fear with these though is that a takeover is suddenly announced.
        tjx got hit in the crossfire today. nothing to be concerned about im sure.

        have you considered a more holistic approach rather than just your MA and channels?

      • Are you referring to using fundamentals? Personally no. Mainly because I know very little about the markets. I’ve never been confident about my ability on understanding them and so I researched into successful traders who were in the same boat as me such as Nick Darvas and also the Turtle Traders. My system isn’t too dissimilar from theirs and I think if I tried to use a more fundamental approach rather than technical I perhaps wouldn’t be playing to my own strengths. I might be wrong, but that’s my thinking behind my decision making when it came to developing the strategy I’m using at the moment.

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