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Hi,
The Entry/Exit system I use is based on a proprietary algorithm.
Basically, a upward continuation signal is generated by a breakout or
a trend-change pullback turned breakout which started from the bottom
BB. A downward continuation signal is generated by a breakout or a
trend-change pullback turned breakout which started from the top BB.
Continuation signals are the continuation of the previous trend. The
price makes a pullback or a rally and then continues its previous
trend. To detect continuation signals you have to first identify the
breakout signal and make sure that it is still in effect (not
neutralized by an opposite trend-change pullback or breakout signal)
when the continuation signal occurs and also the trend (3/10 bar EMA)
should be still in effect.
I use the proprietary algorithm and generate a data-series by
manipulating the daily close price using moving averages. This data
series when it crosses zero and becomes negative, a sell continuation
signal is generated, provided the original move is generated by a
breakout signal from the top BB and the trend is still down. When it
crosses zero and becomes positive, a buy continuation signal is
generated, provided the original move is generated by a breakout
signal from the bottom BB and trend is still up.
I always find it more profitable to just add to existing positions
for the continuation signals instead of initiating new positions,
because the failure rate for this signal is horrendous. At the same
time, when this continuation signal does work and you hold your
position till you get stopped out, the profit is incredible...
When a trend-change or a breakout signal is generated, I am supposed
to hold my positions for a period of 5 1/2 weeks for a bull market
and 3 weeks for a bear market regardless of how many pullbacks and
rallys occur in the meantime....
You can also verify this in any standard grid chart where there are
33 1/2 squares from the bottom to the top in 5 1/2 weeks and the same
number of squares from the top to the bottom in 3 weeks....
In a sideways market, the top or bottom breakout occurs in multiples
of every 32 bars...
Regards,
Pal
--- In amibroker@xxxxxxxxxxxxxxx, "Dave Merrill" <dmerrill@xxxx>
wrote:
> The system I have developed seems to work well only in OB/OS
> conditions. It does not work sometimes for continuation signals,
> probably because the trend has come to an abrupt end. I have
given
> up on continuation signals because it is contrary to my trading
> philosophy and common economic sense (Buy low, Sell high).
> Continuation signals follow the rule: Buy high, sell higher and
Sell
> low, buy lower. Instead, I may add to positions when I encounter
a
> continuation signal...
> would you mind sharing what signals you use to distinguish a
continuation
> state? clearly there are different dynamics at work, so a solid
method for
> telling those times apart from others would be useful.
> A bull market in general goes for 5 1/2 weeks and a bear market
for 3
> weeks. It falls approximately twice faster than it goes up. My
> system trades well in both markets, though tolerances are much
higher
> in bear markets to detect signals...
>
> Pal
> just out of curiosity, what historical date range are you talking
about here
> that has these characteristics and trades well with your system?
>
> thanks,
>
> dave
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