08 Mar Turning Discretionary Trading Into a Robot
Turning Discretionary Trading Into a Robot
Mar. 8, 2023
This week we’re looking at 3 free strategies.
The first one traded Futures at the end of the month. That went quite well.
But what if we want a daytrading strategy?
When we think about daytrading, we mostly think of discretionary trading. And when we think of discretionary trading, the most common methodology out there involves multiple moving averages (MAs).
If all three are stacked on top of each other, go Long. If all three are under each other, go Short. It’s surprising how many traders do this. Astounding, actually.
So, if it’s such a good idea, wouldn’t a robot work if it did the same thing?
First, the most repeated question is: what moving averages? Everyone seems to love Fibonacci MAs. That means the MAs are a Fib number like 8, 21, 34, 55, or 89.
A ton of traders allegedly use these.
But I hate to follow the crowd, so I slightly modified them.
Here are the details:
3 MA Cross 5-Minute Daytrading Fake Fib Strategy
MAs: 22, 50, 80 simple moving averages
Long Entry: When all 3 MAs are literally above each other (22 above 50 above 80), a trade is taken. The opposite is true for Shorts.
Target: 2x the current ATR when the trade is taken
Stoploss: 4x the current ATR when the trade is taken
Max Trades Per Day: 5
Trading Window: Only take trades between 10:00 and 15:00. Trades can be taken exactly at 10:00 but no earlier and exactly at 15:00 but no later.
For this robot, I used the ES.D Futures contract.
Here are some recent trades:
Here’s the 10-year Equity Curve:
This Curve is a lot more bumpy but it sure does create a lot of hypothetical profit and has a 67% win percentage.
There seems to be something to the discretionary method.
And this could be used in conjunction with other strategies if it were traded in robot form.
In our next Newsletter, we’ll look at one more.
Talk to you soon.
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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.