[quote name='PositiveDeviant' timestamp='1321639427' post='232326']
There was another potential signal at 17:11 however it seemed marginal whether it was a valid signal or not, and it was quite similar to signals I took on my old strategy, and I'm deliberately avoiding those as they tended to result in 50/50 probability trades;
[/quote]
This is important since the trades using my previous strategy (double tops/bottoms on my indicator) were not as high a probability as those using my new stratgegy, so I need to properly differentiate between the two, when trading.
I went back through my trade data from when I was trading between 1st March and 8th August, but re-assessed it to check what impact would be had by;
Using a 10 point profit target and stop moved to breakeven after 5 points.
It turns out 52% of the signals would have resulted in a profit, not much different to the 50/50 using the 8 point trailing stop strategy. Previously, only 61% of the signals reached the 4 point mark, whereas with the new strategy 72% of the signals reached the 4 point mark (during the backtest).
Previously with ThinkorSwim the data was not good, so in order not to be confused by many false signals I had to set my indicator to a 5 minute timeframe, effectively meaning I was always several minutes late getting into the trades.
In order to properly define what constitutes a signal I'll need to go through the full data set for the back test with my new strategy.
So far it seems reasonable to state that the diverging higher high/lower low in the NASDAQ needs to be at least 1.5 points beyond the prior high/low, and the PositiveDeviance Indicator needs to display a divergence the opposite way by 0.040. Also for the backtest I was using a 3 minute delay following the production of the high/low before the trade was classed as having been taken. I may shorten that to 2 minutes since the data is of a much higher quality now. I may also annotate the charts more during trading, as part of the process leading up to getting into the market.
NASDAQ to HH/LL>1.5
PDI point to point >0.040
[up to MT DBDT DIVERGENCE 16/09/11]
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