Know Sure Thing Rate of Change Strategy

Overview This trading method is called the Know Sure Thing Rate of Change based on work done by Martin Pring and developed into a trading method by Calvin Mays. A 3 month backtest are included.

StrategyMarket:
Stocks
Duration of Trade
Typically Week
Type of Trade
Momentum
Risk/Reward
Expected reward/risk ratio of >1.
Account RulesDrawdown: Will stop trading and close positions when I am down 10% of equity designated for this trading. Will resume when I have done a causal analysis to determine what was wrong and implement changes.

Tools Used
Computer: Dell Laptop
Software: Amibroker
Internet Connection: Qwest VDSL
Backup Systems: Work computer

ProcessTime in and out of trades
Initiating Long positions will occur only if the NASDAQ 8 day EMA is above the NASDAQ 55 day EMA

Setups
1) The stock must be listed on the current Valueline list for a timeliness of 1
2) The stock will cross over the 4 on the ROCTOT line. The ROCTOT of the stock is calculated as followsROCTOT = MA(ROC(Close, 25) + ROC(Close, 15) + ROC(Close, 5), 5)
3) The initial stop will be placed at 0.25 below the 21 day EMA of the close.
4) Once a week the stop will be raised to the 21 day EMA of the Close - 0.25. Possibly more often if it looks as if the market will change Position SizingShares = Equity / (5 * Share Price) rounded down to the next 5 share increment

Determining Exits
1) The stop loss is executed
2) The ROCTOT of the stock is below 4.

Metrics
1) Followed rule for when in trade
2) Followed Rules for Setup (yes or no for 1 – 4)
3) Position Sized according to Rule
4) Followed Rules for Exit and stop loss
5) # of wins
6) Total Trades
7) Overall Strategy working
a. Return on Equity (Month)
b. Reward/Risk Ratio (Month)
c. Expectancy (Month)
d. %Drawdown (Daily) Quick calculation

High of Low Period Strategy

Overview This trading method is called the High of the Low Period (HOLP) method. It is defined in the book “Mastering the Trade” by John Carter. It is a reversal play and I will put in 3 month trial runs of this method as examples to show how the backtesting worked.. This is the checklist and methodology for performing this method. I will use 50% of the equity in my 401K self-managed account to execute this trading method. I can do that since the execution of orders will be start of business each day.

Strategy
Market: Stocks
Duration of Trade Typically Week
Type of Trade Reversal
Risk/Reward Expected reward/risk ratio of >1.
Account RulesDrawdown: Will stop trading and close positions when I am down 10% of equity designated for this trading. Will resume when I have done a causal analysis to determine what was wrong and implement changes.

Tools Used
Computer: Dell Laptop
Software: Amibroker
Internet Connection: Qwest VDSL
Backup Systems: Dell Desktop at home, Work computer and internet connection if needed.

ProcessTime in and out of trades
Initiating Long positions will occur only if the NASDAQ 8 day EMA is above the NASDAQ 55 day EMA

Setups
1) The stock must be listed on the current Valueline list for a timeliness of 1
2) The stock will have hit a 20 day low in the last 5 days
3) The stock will have closed above the high of the day it hit the low to intitiate a position the next day at open
4) The initial stop will be placed at 0.05 below the low. Position SizingShares = Equity / (5 * Share Price) rounded down to the next 5 share increment

Determining Exits
1) The initial stop loss is executed
2) The stock Closes below the Highest High value of the lowest 2 day low in the past 10 days. IIF(Close <>

a. Return on Equity (Month)

b. Reward/Risk Ratio (Month)

c. Expectancy (Month)

d. %Drawdown (Daily) Quick calculation