18 Oct Three Signals Are Better Than One
Three Signals Are Better Than One
Oct. 18, 2023
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This week we’re looking at taking more signals from more indicators.
Because in interesting 2023, taking multiple signals has hypothetically done quite well (when price breakouts have not).
In our last Newsletter, we looked at a 1-hour Master Trend system on the GJPY only that took a signal from either Bollinger Bands™ (taking breakouts above and below the Bands), RSI (taking Long trades in Overbought and Short trades in Oversold), and Stochastics (Long trades in Overbought, Short trades in Oversold).
If any of those trigger, a trade is taken.
Here is a recent trade example:
The trade with an arrow was on May 16, 2023. Now take a look at all the indicators.
We take Long trades when price closes above the Bollinger Bands™. But on May 16, it wasn’t above the upper Band. So, if we’re just trading a Bollinger Band™ system, we don’t have a trade.
We also take Long trades when price closes into Overbought on Stochastics. But Stochastics isn’t Overbought on May 16. Again, a system based on Stochastics doesn’t get a trade.
It is Overbought on RSI, however. Thus, a Long trade is entered.
The target is 350 pips. The stop is 225 pips. There is a dangerous move to break-even at 150 pips and there is a time exit of around 430 bars. Bands are 100 length, 3 st dev, RSI is 5 length, 70/30, and Stochastics is 9 length, 84/24. Last, it only takes trades in a window before 12 pm ET.
And, again, this strategy has done well in 2023:
But is it just this year that hypothetically does well?
Here’s the Curve if we go back to 2020:
From the pandemic to the bull market to weird 2023, having more signals has hypothetically held up.
In our next Newsletter, we’ll see if the apparent synergy of all 3 indicators is real, and we’ll go back farther to see how it’s done over decades.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.