More Trade Strategies

Today I did no funded or even real time practice trading, rather it was just backtesting on the simplified trading strategies - one long, one short - both short-time daytrading on a 3 minute time period.

The backtesting I did was on crude oil. That is something my uncle is interested in and asked me about yesterday. He thinks it's totally bogus to make money on the S&P and that one company out of the 500 could create so much volatility for the whole S&P. That's just not the case. He and I have completely different philosophies on trading, though, we are both technical traders. He is very news driven, while I am not.

He even had a seat on the NYSE with his son (my cousin). His son couldn't cut it as a trader, and in some sense, my uncle admires that I'm doing this, and continue to do this.

My results from a week's worth of trading Crude Oil (CL):

1 Tick on CL = $10
Margin for 1 contract = $1,000
Contracts Used = 1

CONDITIONS:
- Hrs Traded: 9:30 am to 3:15 pm EST
- Took EVERY trade setup available between those hours exactly following trading strategy
- Instant Replay Mode on Trade Navigator Gold (Streaming Replay is better, but was not available for the CL)
- Dates Traded: 3/10/09 to 3/16/09

LONG STRATEGY:
- Total Trades = 43
- Total Profits = 34
- Total Costs = 9
- % Profitable Trades = 79.1%
- Avg Profit = $346
- Avg Cost = -<$111>
- Largest Profit = $1,650
- Largest Cost = -<$300>
- Net Profit = $11,760

SHORT STRATEGY:
- Total Trades = 43
- Total Profits = 37
- Total Costs = 6
- % Profitable Trades = 86.0%
- Avg Profit = $260
- Avg Cost = -<$177>
- Largest Profit = $850
- Largest Cost = -<$430>
- Net Profit = $9,610

TOTAL NET PROFIT = $21,370 (Using only 1 contract of the CL for the whole week)
- % Total Profitable Trades = 82.6%
- Gross Profits = $23,430
- Gross Costs = -<$2,060>
- Profit Factor ($Profits/$Costs) = 11.37
- Avg Trading 1 Hour/Day = $682 (~$161K/yr net on 48 Wks) - 3 Trades/Hr

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DAILY BREAKDOWN:

Tuesday, 3/10/09
- Total Trades = 17
- # Costing Trades = 1 (Long)
- % Profitable Trades = 94.1%
- Gross Profits = $4,350
- Gross Costs = -<$100>
- Profit Factor ($Profits/$Costs) = 43.5
- Net Proft = $4,250
- Avg $ Per Trade = $250
- Avg # Trades Per Hour = 2.62
- Only Trading 1 Hr = $655

Wednesday, 3/11/09
- Total Trades = 15
- # Costing Trades = 3 (Longs)
- % Profitable Trades = 80.0%
- Gross Profits = $5,140
- Gross Costs = -<$260>
- Profit Factor ($Profits/$Costs) = 19.8
- Net Proft = $4,880
- Avg $ Per Trade = $325
- Avg # Trades Per Hour = 2.3
- Only Trading 1 Hr = $747.50

Thursday, 3/12/09
- Total Trades = 24
- # Costing Trades = 5 (2 Longs, 3 Shorts)
- % Profitable Trades = 79.2%
- Gross Profits = $5,290
- Gross Costs = -<$650>
- Profit Factor ($Profits/$Costs) = 8.14
- Net Proft = $4,640
- Avg $ Per Trade = $193
- Avg # Trades Per Hour = 3.69
- Only Trading 1 Hr = $712.17

Friday, 3/13/09
- Total Trades = 18
- # Costing Trades = 4 (2 Longs, 2 Shorts)
- % Profitable Trades = 77.7%
- Gross Profits = $3,680
- Gross Costs = -<$320>
- Profit Factor ($Profits/$Costs) = 11.5
- Net Proft = $3,360
- Avg $ Per Trade = $187
- Avg # Trades Per Hour = 3.43
- Only Trading 1 Hr = $641.41

Monday, 3/16/09
- Total Trades = 12
- # Costing Trades = 2 (1 Long, 1 Short)
- % Profitable Trades = 83.3%
- Gross Profits = $4,970
- Gross Costs = -<$730>
- Profit Factor ($Profits/$Costs) = 6.81
- Net Proft = $4,240
- Avg $ Per Trade = $353
- Avg # Trades Per Hour = 1.85
- Only Trading 1 Hr = $653.05

The key here is to follow the trading strategy to the "T"!!!! I also during this backtesting experimented when I did not follow the strategy, but did not record those results. Sometimes I just went by my gut. Profits actually turned out better, in that when I saw I was at resistance or support, I would get out for greater profits, but that wasn't following my trading strategy to the "T".

However, by not following the strategy, I would incur FAR GREATER costs, and in the end, that really ate into my profits.

Following a good trading strategy to the "T", at least mine, will often not give you the very highs nor the very lows, but it will get you consistent profits and keep your costs down.

One of the caveats of INSTANT replay as opposed to STREAMING replay is fairly different. The candles are already formed as you replay in backtesting. In STREAMING replay, this is far better as each candle is formed as if the market were actually occurring. Sometimes what looks like one thing is developing, is really not and STREAMING is much more realistic.

Unfortunately for the CL, only instant replay was available. I was just gathering the data for my uncle on how profitable using my strategy could be, but he doesn't like to get in and out of trades so often.

Now I'm going to trade the same hours for the ES, which is what I trade and see what the results are.
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