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CFDs - Eric Kratzer S/T Method

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prawn_86

Mod: Call me Dendrobranchiata
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Hi all,

I have dedicated this thread to the discussion of a trading method i have come across designed by a man named Eric.

It is an intraday/short term plan and is really very simple and has produced excellent results so far, although it has not been operating for long.

I have been in contact with Eric and have his permission to post it so here it is:


I am going to start paper trading this method today to see how it pans out, as my biggest concern is the brokerage costs.

More details can be found at his website:
http://www.tradingaustralianshares.com/index.html


Enjoy!
 

Someone should be able to back test this system. Anyone?

The problem I see with this systems is the targets in practice are not large enough for the stops. With bad fills + brokerage plus nothing to keep you out of the market when longs are fighting the days treads + nothing to play on the short side your risk to reward with MA crossovers don't pay off.

But still willing to be shown otherwise.

Why don't instead of paper trading you do 1 share CFDs trades. It’s going to cost you $20 per trade but I know it’s a waste of time paper trading a 2 minute chart. You will always be taking a guess as to your fills. With that kind of trades the entries and exits can be a huge part of the profit or added loss.
 
I really cant afford to do the 1 share trades, the brokerage will kill me lol.

Student = low capital base.

With my paper trading i am going to have all my screens in front of me so i will make the buy and sells as accurate as possible.

Check out Erics site to see his results so far.

I do agree however that the R:R is very low, but i guess that comes hand in hand with intraday trading.
 

Tell you what if it works I will set up a BOT using IB and run it live for you.
 
Awesome, thanks.

One other thing i noticed when i was manually eyeballing the charts yesterday was that another exit to preserve profits is to red candles (when going long) in a row.

If you exit then it generally saves you trailing down to the EMA15.

But that is just my addition which i will be testing.
 
Yesterday didnt fare too well, i think it was because there was not enough range in the market (maybe).

I wont be doing any paper trades today as i have to study for exams. But let me know if anyone else out there has tried.
 
prawn_86 said:
I do agree however that the R:R is very low, but i guess that comes hand in hand with intraday trading.
Click to expand...

I don't really agree with this, you can still have a good R:R intraday trading imo. A good R:R is a big part of being profitable, with a low R:R you only need a small run of a few losers - which will happen with all traders and systems - and it becomes hard to pull it back with a low R:R ratio. Just my
 
I'll backtest this in WealthLab if anyone knows where I can get free intraday historical data. Doesnt have to be ASX.
 

exactly.
 

Actually I beg to differ.

Shorter term systems TEND to have lower R/R and higher win% than longer term systems, and this is associated with the short trade length.

Maximum string of losses is actually entirely dependant on your win%. Nothing to do with R/R.

Prawn_86,

This system needs to be backtested before you trade it.
The backtest will tell you several critical information which is required before you risk real dollars.

Such as:
*Is the system profitable over a statistically significant number of trades?
ie. a month?
*What is the Profit factor and average win:average loss?
*What is the win%
*How long is average trade length?
*How many trades a day do you expect to make? ie. opportunity/trade frequency.
*What is maxDD?

Ibradman,

Free intraday data? lol if you find it, let me know please
 
Yeh i would love to backtest it Nizar, but its not really a mechanical system as such, its more designed to be used manually while all your screens are open. thats not to say a system couldnt be designed for it, if it was profitable in backtesting.

But since i dont have the correct programs/data/experise i am just going to paper trade it for a while and see what i think.

Thanks for the discussion so far guys.
 
But the margin used was only $300 per trade as it was via 3% CFDs.

Does this make it better? I think it was like a 20% profit in 6 weeks
 

This method won't backtest well. I don't think there is much point in trying to make it mechanical. It(or a variation of it) could make money with a small amount of discretion involved in trade selection though.
 
professor_frink said:
It(or a variation of it) could make money with a small amount of discretion involved in trade selection though.
Click to expand...

That is also what Eric has stated in my discussions with him. He has said it is part intuitive, and obviously needs some fundamental basis when being applied.

Eg - If a company has released a bad announcement but the MA crosses up at some stage, it is probably not going to rise high enough for brokerage to be covered.
**this is just my own example not Erics** but i think (hope) it makes sense.
 
professor_frink said:
This method won't backtest well. I don't think there is much point in trying to make it mechanical.
Click to expand...

And as such I wouldn't trade it.

But all the best with it Prawn_86, i will be keeping an eye on this thread to see how you are going.
 

Yeah that makes sense. Another problem you will find with this kind of method is dealing with the opening period+ gaps. The moves around the open are more volatile, and you'll miss out on quite a bit of action, as the MA's won't respond to a gap opening well. If I was going to trade it, I'd look for a different strategy for the open(unless it's a flat opening).

Honestly Prawn, I think you would have a much better chance of success trying this kind of method on index cfd's. The intraday swings on a 5 minute chart are generally going to be big enough to make up for the slightly larger spread(compared with the futures market)
 
Funny you mention that prof, I actually was going to try it against the index prbably tomorrow when i get a chance.

thanks for the heads up
 
nizar said:
Such as:
*Is the system profitable over a statistically significant number of trades?
ie. a month?
Click to expand...

I only just noticed this part of your post nizar. Why would a month of trading be considered a statistically significant number? Sure you may get a few hundred trades out of a test, but it takes a hell of a lot longer than that for the market to experience different levels of volatility intraday. If you ran a test out over a month, and then ran an out of sample test for another month and found a good system to trade, you could get smoked when you try to trade it live and the intraday volatility all of a sudden dries up.

Because I'm not a mechanical trader, feel free to ignore any advice that comes from my keyboard, but that sounds like it could be a fast track to quite a bit of lost money.
 
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