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Momentum Trading
posted on NQoosYahooGroup
the availability of this indicator for Tradestation.
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I had
cautioned my members about purchasing it because I had not received
a timely response to my inquiry. The matter was cleared up when Momentum
sent me the indicator per my request so I could investigate it.
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Below it 1/31/03 3min chart with the indicator using globex data. I
used random settings and did not try to tweak it.
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Results are shown: 12 signals 8 winners(+42
points) 4 losers(-5 points), for a total of +37 points based on 1 contract,
if you took all signals. Entry was based on price action, 1st price bar to
break after signal. I used an initial 2 point stop. Reversal was on opposite
signal. Profit was calculated on maximum potential, meaning if held and
exited at what I consider top/bottom of swing.
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I added to the chart all arrows and marked where I see divergence
entries. Better entries and more entries. Perhaps with tweaking the tool
would find some of these.
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I used the indicator to determine divergences with CCI. I understand
the indicator can be used with Stochastic, RSI, MACD and others.
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I neither recommend or discourage others from investigating the use of
this tool. I have not had enough time to form a recommendation. From what I
see, since I used random settings, it appears viable. The effectiveness of
any indicator depends on the traders ability to read it and the market
concurrently which is accomplished from screen time as well as execution of
entries and money management. I only looked at one day. This could have been
a good day to evaluate. I would think that if I spent time tweaking I could
get better results.
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updated comments 04/15/06 --- There has been some recent
questions about this indicator in the NQoos Yahoo Group. Since my first
writing on the indicator. Subsequently, I tracked results on a larger sample
of days. I did not keep those results. The indicator continued to be
profitable overall on those cumulative days. The results were far less
effective than the example above. That day was an exceptional good day and
some subsequent days showed loses. I have never used this indicator for
trading decisions. If you do purchase it I suggest it be used as just one
part of your reason for entry. Likewise, divergence can be an effective area
to take profits. Finding other confluent conditions should add to the
effectiveness of divergence. Since only 1% of new traders are consistently
profitable (ref.
The 21 Irrefutable Truths of Trading: A Traders' Guide to Developing a Mind
to Win by John Hayden), I
suggest they do not place emphasis on this indicator or divergence until
other skills are mastered.
miracles,
they are everywhere.............. 