My Trading Plan

Here's a 'detailed' explanation of my trading plan. Please tell me what you guys think of it.

Foreword: The whole thing is based off of the theory that if something is profitable beyond a reasonable area of slippage and errors (such as computer problems) then it will likely be profitable for at least the near future. It's also based off the theory that the market will likely move at least 2 points in either direction from the open in any day before making any huge moves. (The exception to this is a trend day.)

Background: I back-tested this system starting January 1st 2010 and found that it is profitable by 72 points as of this writing.

How it works:

I look at the open price compared to the close of the previous day and decide whether to trade towards the close or away from it. I make this decision minutes before market opens at 9:30 and take a position at as close to open price as possible (usually slippage means one or two tick difference). I then set a 2 point target and 10 point stop and I don't do ANYTHING until either one is hit, at which point my day is done.

Please leave ANY questions of feedback. I've live traded this for almost all of May now and it has been profitable. I am looking for validation, especially from the people with years of experience because I don't know if I'm on the right track or not.

Well I was just playing the immediate gap fill. I generally don't look back more than 1 day. Too much noise.

Well that's a common mistake we all make as it needs recordkeeping and some work. Results are as anticipated

I don't understand what you're saying ak. Can you elaborate on your last post please? Are you saying I don't record keep or that I should look back more than 1 day for supports resistances etc. etc?

Originally posted by ak1

feng456 the gap is always filled but may take days sometime.

More often than not that is correct however there are some gaps that are never filled.

Yes if you begin to look back you will see amazing results. Also you will be surprised if you look at previous Monday's when trading Mondays and so on. Prices, triples, ratchets, highs, lows, all begin to work, I once posted somewhere that all #s are on mypivots. All we have to do is look for them,,,,,,,,,,

If Larry Williams was on here he would suggest looking at the specific days of the week and trading days of the month for further clues.....perhaps the big losses happen near month end for example...or big gains happen in the middle of the month.

It's another idea...!

Guys if you had to choose two or three things (no more) to pick a directional bias for the day, what would it be?

I am trying to avoid information overload and paralysis here.

Welcome to the world of confusion, noise, spikes and shadows

The most important thing I use for trend direction on any time frame is the direction of the 5 period sma. If its up I am most likely long Which I use in conjunction with larger time frames. I watch the 15 min so I also want to know the direction of the 60 and 120 min ma. Another way of knowing the trend is applying ganns swing hi/lo ie what has happened last 2 higher highs or 2 lower lows. And the third thing I watch is market profile large tpo count bulges (not so much as the va) and its more discretionary than the last 2, but after a while of watching MP you can tell if a market is hanging around what dalton called balance or if markets are probing new areas.

FWIW I listed these in order to what's important to me. Hope this helps

I tried fiddling with your moving averages. Unfortunately I couldn't get any reliable consistent results in the pre-open market.

the specific criteria data ur looking..of course noone else here has done backtesting for it. something u need to spend time doing urself.

gaps are good though at fading. just gotta find something that works and be disciplined enough to follow it.