As I said at the end of the previous update, the market got extremely weak the moment I started logging the trades. The patterns were all pretty good but it just could not get enough out of each one to hit the targets. There were still some solid winners but they were rare. I know this pattern is valid since I’ve seen it get massive wins on multiple occasions. Sometimes it feels like I’m predicting the future, but due to market conditions or the scans I’m using they do not work consistently at the moment.
Wins: 7 46.67%
Losses: 8 53.33%
Break Even: 5 25.00%
Wins + BE: 12 60.00%
The stats appear pretty bad in my eyes. There are more losers than winners but that doesn’t tell the whole story since the P/L is profitable. If you factor in the fact that 25% of the trades were break even it’s not as bad. Break even means the stock moved up enough (15c) for the algorithm to move the stop to the entry price.
After seeing so many break even trades I added a “weak market” flag that I can toggle. This lowers the price targets and increases the minimum volume required. With this flag set: $NDLS, $QNST, $PYX, $SPAR, $DRYS are all removed. $ACRS becomes a tiny win, $VTVT first flag is a win, second is a loss but the profit is higher, and I can’t test IGC since it has been delisted - most likely the first one would have won and second a win since that’s what happened when it traded it.
This bumps the win rate up to about 65% but there is no way to actually know if that is accurate because the scans are now different. I will need to test the modifications and log them.
I am going to make a few changes to the algo in my next iteration of tests:
- Never trade Greece shipping stocks. They are literally always shorts due to all the bag holders from 2016 onward.
- Increase minimum scan volume to 500K. This would prevent the $PYX trade and $SPAR. Possibly others.
- Add scan filters now that the TWS API has support for it. Trades, volume USD, and shares outstanding (instead of just market cap).
- Apply my volume tweak to trade stocks where the pull back volume is a little more than the large move candle.
- Enable my “weak market” tweaks which take profit sooner and move the stop so there’s at least 1c of profit after commissions.
Today alone it traded $CLVS (win), $PXS (win), and $HUYA (break even) with the modifications. Not bad so far. I’ll start logging these in a new post.
I am not a registered financial adviser/broker/anything. Use this information for entertainment/informational purposes only. Any tickers mentioned are not recommendations to buy/sell/or sell short. They are used as examples only.
Please remember that past performance may not be indicative of future results.