I swing trade a few ETF's and use Inside (outsides too) bars as part of my setup. I filter any IB that follows a bar twice its range. So for example if the bar before the IB had a range of 40 and the IB had a range of 15 I would pass. Just something for you to look at, not sure if it could be added as part of your backtesting or not. I have not tested it, just noticed alot of losses was following really large bars...
The following user says Thank You to wirechild for this post:
Yeah, that's my sense too. In fact, I was near my computer while I saw the bars form and I didn't like that it was taking a setup after such a large bar and felt uncomfortable with the trade. But anytime you're trading statistical probabilities you need to take every trade (discipline?) in order to achieve your statistically expected results so I let it ride. I will add that filter to my list of backtesting scenarios to work on.
Wednesday, June 14th - I set up to fade an up gap, but that was it. The U-CO looked neutral, but it was strong in the YM and NQ gap guides, so I seriously considered setting up that zone too, but stuck to my rules. It opened with a 2pt gap in the U-CO, took about 3pts of heat but turned around and filled the gap nicely.
Got 2 IB winners, 1 loser and 1 small exit on close loser for +22 on CL and -5 on 6E
Currently, I target +24, SL at the other side of the IB, and I don't adjust my stops. Follow the back testing messages I posted last weekend starting here. It's not ideal and I'm looking to work on improving it over the weekend but that's the current plan I'm trading now.
Thursday, July 15th - I set up to fade some gap and extended target zones and the market opened just 1 tick up which qualified for a short extended target trade, though due to slippage I was actually filled below yesterday's close. Still, the market moved hard to the downside and it easily hit my target on ES.
After 2 bad days trading IBs on 6E I thought about turning it off and doing some more testing on that instrument but I stuck with it and got a nice win.
I got 2 nice IB winners on CL as well. So today was a trading hat trick. 3 more ES ticks and I would have had that oh so elusive triple double I keep hoping to get.
wirechild do u have a feeling if all this losses u mention after big bars are predominant counter or continuation trades?
another q reg your swing method....do u use any other pre filter to the ETF selection.....like trading long only for ETFs trading in a daily uptrend? which timeframe do u use? how are your results using this setups on ETF?
am asking all this because I am seriously analyzing applying some IB/OB/Pin Bar setups to stocks/ETFs on a larger timeframe and any best practice working may help me tune my plan...
I have a friend that trades ultra ETFs and he noticed because of their daily compounding, which causes price decay, if you want to, let's say, be long financials, instead of buying the FAS you short the FAZ and it puts the price decay on your side. However, the ultras can be hard to borrow sometimes.
The following user says Thank You to shodson for this post:
Friday, July 16th - The gap guides were pretty awful across the board, so much so that I thought it'd be worth going with-gap but that's not in my trading plan. Turns out the market opened below the close and went on down hard in the morning.
I had a terrible day trading IBs. Was down over $1000 later in the day but came back with a winner late in the day, but I still wiped out most of my previous day's big wins. I decided to not trade IBs until I get more of my research done and trade these in a more sophisticated manner.