One Day Trading System, Five Versions, Possible Improvements (Dramatic)

In today’s article I would like to present something interesting that I have spent a lot of time on. These are some straightforward comparisons that I think will interest regular day traders. I will indicate new possibilities on how to understand intraday trading.

So what is this all about? As I have already mentioned several times in recent months, Market Internals can be used to improve the overall performance of your automated trading systems. But can discretionary day traders use it too?

Generally speaking, the impact of the Market Internals (MI) application on day-to-day transactions can be absolutely essential and can really bring an “unfair” advantage against those who have never heard of MI before. A trading system can be developed in numerous versions integrating only different IM possibilities, and without even modifying the original system itself; without even touching it! As needed, we can, with the help of MI, improve just about anything in our system, from average profit per trade to percentage of success rate or reduction and quality of equity.

Let’s take a look at a simple trading system that I have traded discretionary with for years: the TNG (Touch-And-Go) method. This is a simple bounce from EMA 34. The system that I have used to test MI possibilities for day traders is based on the TNG method and I have tested it in a fully automated way. This automated version of the TNG-based system allowed me to test MI capabilities for day traders much faster, more accurately and in a simpler way. I was quite surprised how a system can bring in an immense number of versions without the need to interfere with the system itself in any way!

So, as promised, let’s take a look at some demos.

First of all, the basic version of the system provides very decent fairness (the TNG idea is still very powerful and universal), to my liking, with a single pattern it generates too many trades, which is taking its toll on an average profit. per trade (in the basic system USD 51). A reasonable decrease in the number of trades, a decrease in the halving (the original variant of the system has a maximum of DD 3,500 USD), an increase in the average trade and possibly slightly better equity would certainly be nice “bonuses “. The good news is that all of this is possible with the IM app. What I wanted to demonstrate is the variability that the IM application can bring in a single system, without touching the original system itself, without changing anything.

For example, one of my own MI techniques based on the MI moving average managed to radically reduce the number of trades, drastically reduce the drawdown, and appropriately increase the number of trades. And the character of equity will also change considerably.

My next technique with the application of my personal MI Bollinger Band application, for the change, reduced the system by about 20% of the worst trades and contributed to an overall considerable improvement. Equity stayed the same, but it’s a bit smoother, system parameters improved, 20% of trades disappeared (including some of the worst), and all of that without touching the original system at all.

I have also obtained a similar reduction and a similar improvement with another technique; a very simple one based on strong MI values.

What could be very interesting is the possible combination of both previous techniques; I think that in such a case all the results would improve even more.

The latest demo comes from a different MI area, identifying the optimal MI volatility and allowing the system to trade only on such trades.

What could be very interesting here is to isolate the most optimal MI volatility and then apply one of the above techniques (MI moving average or MI Bollinger) on it. All of these are undoubtedly impulses to keep improving. It is fascinating how a technique can dramatically and fundamentally influence a day trading system without the need to interfere with it.

And what is truly significant: many of the most important changes occurred at the statistical level. I am not going to detail all of them, since in reality there would be many. Basically, the most fundamental are:

– It was revealed that none the parameter can be improved with one of the MI techniques; it was possible to reduce the reduction by half (!),

– What was particularly impressive: MI can be excellent in helping to manage the number of contracts: for example, to add a contract in an especially strong situation, confirmed by Market Internals,

– MI can, in certain applications, really help to exit the trade when the sentiment in the market changes drastically, that is, even before the basic stop-loss and in this way dramatically improves the results,

– It is possible to drastically increase a not very impressive average. trading the original system through some IM techniques (the weakest link in the original variant of the system completely disappeared).

Personally, I am continually impressed by the possibilities of MI, especially when used in an innovative and creative way. I am amazed at how few day traders are aware of this technique or how few use it.

MIs are truly a unique technique that can have an exceptional impact on your operations if used in a creative and innovative way. So IMs are literally becoming an “unfair” advantage.

Happy trading!