Point based Automated Strategy?

Beginner Questions
1

I was wondering whether or not anyone had some input on a potential automated strategy:

  • it will consist of as many indicators as i can find encapsulated in functions
  • if an indicator gives a short signal it will add 1 point to the short global variable
  • if an indicator give a long signal it will add 1 point to the long global variable
  • at the end of every cycle the short and long variables will be compared.
  • if there are more short than long then the trader will take a short position
  • if there are more long than short then the trader will take a long position.
  • if the trader wants to be aggressive then he can check the difference between the short and long points and let them be small before taking the trade
  • if the trader wants to be conservative then he can make sure that the difference between the short and long points is larger before taking the trade.
  • the more indicators that are added over time to this strategy the more accurate it will be.

what do you guys think? is it worth it?

thanks

2

I’ve thought about doing this before, except I’ve never actually tried implementing it. Try it and see how it does. Who knows! :wink: I’m sure someone out there has though. :stuck_out_tongue:

3

I think you will find that using loads of indicators won’t actually increase performance at all. Many indicators describe the same aspect of price action, so having more than one of them from a given category doesn’t actually provide extra information.

4

The key here will be on your portfolio of indicators and what they tell you before adding a point. Some indicators might even have to subtract a point depending.
Also some indicators give false positives that need filtering e.g. the output of parabolic sar is not a certain signal in a ranging market, and stochastic crossovers can be false signals when occurring against slowing momentum (e.g during overbought or oversold).

An interesting consideration is trend. If we agree that your trade should be with the trend, then having a trend indicator immediately renders one of your variables 0 as despite all other indicators only one opportunity (long or short) would really exist if trend matters to you.

I don’t quite do it with summed vars as suggested here but my system does make use of 12 trade barriers. My system is willing to open a single position every trading tick throughout the day. The only thing stopping it are 12 barriers which are not summed as I don’t check later barriers if earlier barriers fail making the critical loop logic faster.

Get your concept coded and see how it gets on. Conceptually, it’s nice. Implementation and testing will inform any refinements going forward.

Best of luck.

5

Thanks guys! i got some good info from you all. I’ll code it and let everyone know how it goes.