by Philip Wu
As traders, we are always looking for ways to improve our trading strategies and achieve greater profitability. In this blog article, we will share the insights obtained from a quantitative analysis conducted in our Owl Group user meetings. We focused on studying six different strategies using the Owl Bundle on Thinkorswim and the Thinkorswim strategy backtest capabilities. Specifically, we examined the PSAR flip Entry & Exit, PSAR flip Entry and Baby Dragon Exit, RLxD Entry and Trailing Stop Exit, RLxD Entry and BabyDragon Exit, RLxD Entry and Previous bar high/low Exit, and RLx BabyDragon Entry & Exit strategies — all on the 3-minute intraday time frame. These strategies are based on Dr Ken Long's trading techniques and terminologies taught in the Applied Systems Development course. Our analysis also covers the performance of symbols in the selected watchlist, noteworthy findings, and actionable insights for traders to consider.
Quantitative Strategy Analysis:
After analyzing the performance of the six quantitative strategies, we found that the most profitable strategy was the PSAR flip Entry & Exit, closely followed by the PSAR flip Entry & Baby Dragon Exit strategy. On the other hand, the RLxD Entry and BabyDragon Exit strategy, as well as the RLx BabyDragon Entry and Exit strategy, were the least profitable among the strategies studied.
Symbol Performance:
Among the symbols in the selected watchlist, we identified the top five symbols as TSLA, EA, DVN, MCD, and INTC. During this testing period, these symbols exhibited high profitability across most strategies. However, it is worth noting that CAT and CVS were the least profitable symbols during this testing period.
Noteworthy Observations:
One symbol that stood out for its consistent profitability across all six strategies was EA, which achieved the second-highest gain. This positive performance coincided with an earnings report on May 9, 2023, and the results may therefore be an exception. TSLA and DVN demonstrated significant profitability, except when using the RLxD strategy with Trailstop. Conversely, CAT consistently showed unprofitability across all strategies in our testing period.
Watchlist Filters:
To effectively filter your watchlist, we suggest considering the following filters:
Swing System Triple Screen: identified symbols consistently performed well across all six strategies.
Swing System 551W, ORSHORT, WO: identified symbols that were profitable in five out of six strategies according to the Swing Systems filters.
Actionable Insights:
Based on our analysis, we suggest the following actionable insights for traders:
Consider utilizing the PSAR Entry strategy with either Baby Dragon Exit or PSAR Exit for 3-minute trades.
Focus on trading symbols such as TSLA, DVN, MCD, and INTC, which have demonstrated profitability across various strategies.
Pay attention to symbols identified by the Swing Systems filters, which can provide valuable insights for trade selection.
Remember that market behavior can change in future trades, so adaptability is crucial to sustained success.
Areas for Future Studies by Our User Group:
Our user group plan to explore the following areas for future studies:
Long or short positions only if not in a Z3 Pinch condition.
Compare the performance of strategies on different timeframes, including 30 minutes, daily, and 3-day intervals.
Analyze the strategies in different market conditions and their correlation with MACD spring, winter, summer, and fall.
Incorporate risk management factors such as RiskZ, Sector & Symbol Slopestat.
Explore the performance of other symbols that match the identified filters but are not included in our present portfolio of symbols.
Conclusion:
By leveraging the insights gained from quantitative analysis, traders can refine their trading strategies, focus on profitable symbols, and utilize effective watchlist filters. It is crucial to remember that trading is a dynamic endeavor, and continuous research and adaptation are essential for sustained success. The results presented in this article will likely change due to evolving market conditions and external events. Stay vigilant and keep improving your trading skills to stay ahead in the ever-changing financial markets.