 Good evening and a warm welcome to you to this low-frequency S&P strategy webinar presentation by myself Charlie Burton in conjunction with Tick Meal So before I can go into any part of the presentation then we have to do the usual risk disclaimers. The disclaimers are that the material provided is Indeed for information purposes only and should not be considered as advice the views information opinions expressed in the text along Belong solely to the author and not to the author's employer I'm not employed by Tick Meal, but I know what they mean Organization committee or other group or individual or company High risk warning CFDs are complex in instruments and come with a high risk of losing money, especially if you don't use stop losses So 75 74% of retail investor accounts lose money when trading CFDs with Tick Meal That's pretty much standard across the industry And you should consider whether you understand how CFDs work and whether you can afford To take the high risk of losing your money So we have to go through risk disclaimers when it comes to the markets because one thing that never ceases to amaze me is Just what to trade is get up to all around the world when it comes to risk. So always good to do that Okay, so a little bit about myself before we get started And the trading story actually is not about me So we're gonna tell it. I'm gonna start off with a trading story, but just two sentences on myself My name is Charlie Burton as I've just said I've been trading 26 years now and I Professionally manage money as well as my own. So I manage a number of Funds and so about five or six five now five it is now and So I've got a reasonable amount of experience in the markets. I've won several trading competitions I've appeared on the BBC on a couple of occasions and done all the usual sorts of interviews Okay, that's enough on on on myself Let's start off this presentation with a story and this story really comes to the heart of what we're doing here this evening So just in the short presentation tonight, I won't keep you too long this presentation it's short and it's punchy with regards to the data and The the strategy itself, which is really simple. So It won't this won't take too long. You'll be pleased to know Now this presentation this evening is giving some parameters of a given strategy, but Much like that risk warning that I've just given one thing that it's really important to to Always remember that whatever the stats are of anything you're using Nothing is a hundred percent guaranteed doesn't matter how good your trading strategy may be or your approach or some data that you have Nothing is a hundred percent. So let me tell you a little story here And some of you if you've seen me over the last week. I did another presentation with tick mill just last week I shared this same story This is about a story going back Probably around about 15 years or so ago. I'm excited as well. That's really nice of you to say that Shashank so There's a chap called rich here in the UK and he had he was fairly new to trading and he had a Strategy he was given a strategy that had a 60% success rate Roughly speaking and it was on the Dow. There was a specific strategy on the Dow There was some rules with with the strategy. I think it had at the time Something like a 30 point stop loss The the trade strategy was executed just at the close when this particular strategy set up and You would never do it on a Friday if it's even if it's set up on a Friday going into a weekend then You wouldn't take it on a Friday because there's always that weekend risk there as well And it was done on the Dow like I said so rich went off and Started trading this strategy and one of the worst things that happened to him that could have happened Was that he went and had in spite of a 60% success rate? He ended he actually started out and had 11 wins in a row So you can imagine now most of us who have been trading a long time. It's just a it's just a probability It's a stat and we know that if you flip a coin just over 10 times Then even if you're flipping a coin, it's unlikely that the coin is gonna come out heads and heads 50% heads 50% tails so But of course, he's relatively new to trading he very quickly forgot after his 11 wins over here that the strategies long-term Success rate is 60% now rich Got a little bit excited as you can imagine so he's had 11 wins on the bounce and he's decided He was trading with a 10,000 pounds accounts And this is so typical of what goes on all around the world every day of the year So rich decided to load up the account and put another 10,000 in it So he had 20,000 in his account Prior to this he'd been trading here in the UK What we call spread betting and he'd been trading at two pounds per point for every Dow point per point And at this point he put another 10k into his account and he decided to on the net very next trade after these 11 winners in a row to go to 20 pounds per point so massively increased his position size Not only did he massively increase his position size. He's confidence got the better of him because for starters, he took a Trade setup which the rules said don't take a trade set up on a Friday because you've got weekend risk Going into weekend just in case anything ever happens over weekend with with a tight stop-loss like it had so Don't take a trade on a Friday. What did he do? He took a trade on a Friday What else did he do the strategy had something like a 30-point stop-loss and he elected to Not bother putting a stop-loss in so all of a sudden he's massively increased his position size Taken a trade on a Friday going into weekend, which is not in the rules and He's also Elected not to use a stop-loss because his confidence was running high. He said, oh, I don't need to have a stop-loss I'm just gonna give it a little bit more room to breathe and Anyway, the following Monday the Dow came down something like 500 points and He didn't have a protective stop-loss in play. So anyway The long story short is he got caught on the wrong side of the market Then couldn't bring himself to close the trade He could have just closed out taken a loss and gradually his P&L was just come I say gradually was going down and down and down Because he couldn't bring himself He was hoping that the market the Dow was going to turn back up. So In the end he blew his 20,000 account because he was then trying to revenge trade to make back the loss of their original trade So just a classic story really of the sorts of things that I get told these stories in every year and It's so a typical of what can go on out there And I'm sure some of you will have your own horror stories because most of us who have been trading for any length of time Might may well have done when we started but for me I always want to make sure that anyone that I come into contact with if they're going to Trade then they're trading with responsibility with risk management So that they never become a statistic like we like the story of rich like I've just shared okay now I've just gone through the The risk warnings so to speak let's get in yes, exactly. Yeah, yeah So let's get into the nuts and bolts of this. Like I said, this is quite a straightforward Strategy, it's very simple and I'll warn you some of you will think this evening you'll be thinking actually no That's way too boring for me And that's fine because it is that's all this is this is not going to Make you your millions It's a low frequency strategy with low returns. So for many people they're thinking. Oh, no, that's that's too low And that's fine. I'm just sharing this as a As really some thoughts for many people because the one thing whenever I show any type of Trading setup a technical trading setup is I want people to go away and test it for themselves And adapt it more importantly So take some of the the rules and the the general rules that I that I'm gonna share this evening Go back and test them. You'll you might want to test it on different markets. You might want to test it on different time frames and And so you personalize it to your style and And I'm going to share not only the strategy this evening, but I'm also going to show a trader that I know What he's done with it because he's personalized it. So Let's go through this Exactly a ardent. Yes. Boring is safe ardent said or boring is safe for long-term trading account nothing wrong with that exactly So yeah, and the thing is if you have and the other thing I'd always say with boring If you've got a boring low frequency strategy that let's say yields 10% a year But you've got a few different strategies that might may yield 10% a year All of a sudden you're starting to get into some pretty decent returns. Aren't you so this is just one strategy Okay, let me just check Down the the list here just bear with me two seconds Okay. Yes. He is here I just remembered someone who said they were gonna be here personal friend of mine and he is here in attendance tonight as well And he's been trading cranky 25 years himself, I'm sure so and there's people with all sorts of experience levels who are here who Who might just be interested in this right? Let's get on So it's a simple rules-based strategy It's developed for traders happy with something slow as I've already said, however You can use it In a slightly less slow version, which is what I'm going to be showing this evening as well So you can trade it the way that I've had it programmed But you can actually have it programmed or tested or whatever you want to do with it So that you can get maybe a little bit more bang for your bucks both so to speak if you go off and back test it So For me I look at the S&P with this strategy, but again, it can be applied to other stock indices now most stock indices as majority of you're aware They have an upside bias especially the US indices they tend to have an upside bias, of course they go through bear markets like we saw in 2022 And they have deep pullbacks at times bit like they had just this summer from July down into October but They especially the American markets that like many others they're predisposed to wanting to go up indices stocks are Periodically withdrawn from indices that are underperforming and new stocks are added which are expected to do well so Overall if the stock market has an upside bias For a strategy like this. It's a long only strategy You don't use it for You know when a market's going down. I've tested this. I've tested this very strategy for Bear markets and I've the sunny with the the the parameters that I've used by all means go and try it but in the main I've not found it to be successful in Downward trending environments. It's not that it won't catch trades. Of course it will but a lot of downward trends They finish quite quickly as well and they can be quite choppy so overall I've only worked with this With the S&P you could use it on the Nasdaq the Dow comfortably and you if you want to try out on others Global indices, then you could do such as the Australian market Even the London market European DAX is DAX etc etc Okay, so what we're looking for is a trending market and buying on a pullback. It's as simple as that It's such a ridiculously stupid strategy really, but Sometimes you know basic strategies or approaches Are fine. It won't set the world a light. It doesn't even do many trades. I think it does on average a Hand full of trades per year Year it really is something just to put in the back pocket potentially, you know Like I said at the beginning most people will be like, oh no, it's too slow for me. However Like I said a trader I know has adapted it to trading it off of Six hour charts and I'll show six hour timeframes and so therefore he does get more trades from it so Again depends on how you want to take it away. I'm always I always stress whatever I show Take it away and back test it for yourself and adapt it because That's what it's all about Okay, so like I've said, it's a low frequency strategy just a handful of trades per year It's average historical return is around 10% a year and I'll put a question mark that next to that because actually The average historical turn has dropped This year it's just dropped to about actually 8% Actually because it's actually had an underperforming year It's actually at minus 5% for this year based on the way that I've got it set. Okay, but it's a just a long term Strategy it plots along. It'll never really do upset too much and but But that's what it does so But that's the way that I've got it set you can have it set differently like the trader I know and he's actually up 20% with it. So again depends on the parameters that you want to use with it and I'll show you some of those tonight. Oh, okay Jose as asking Could you please explain? What do you mean developer for traders happy with something slow? You lost internet connection? Yeah, it's I think you're probably seeing some of the slides now are some of the the lines here, but It's developed to be slow. Like I've said, it's a handful of trades per year It's not intraday trading. It's not, you know, it's not gonna take, you know, a trade a day It's not even necessarily it's not even gonna take a trade a week and So it's very very slow. So yes, very infrequent So now you can make it more frequent by having it running on Simultaneous markets so you can do that and you can go down to smaller time frames I've got it And had it running and tested on the S&P only and on daily charts only So you could go to a smaller time frame and have it simultaneously running on other markets So like one of my traders has done But anyway, let's move on and we'll go through all of that Now again, whenever I go through a strategy like tonight, I Like to talk to people about the downsides of any given strategy because I could very easily just When I put slides together cherry pick some nice looking slides for you and Which all look wonderful and that's what typically goes on in presentations, of course, but I have to show you some some slides of When it works, but I also have to show you slides of when it doesn't work so you can see that as well. So Like I've said because of the low frequency, it's peak to peak equity can be long What I mean by that is is that if you take an equity Curve that's doing this and this is running on a single market like I've had it running on the S&P and And so you've got a peak one here and then it goes into a dip because all systematic types of Trading systems will have Drawdowns or dips sometimes it's just flat. But anyway, so peak to peak. So once it then breaches the peak at one That could be quite some time at times sometimes so that could take I don't know could take a year for example That's what I'm talking about down here. So again, it's slow. It's boring and for most people they won't want it But that's what it is. You can make it less boring You can make it less slow and you can reduce the peak to peak as well by Changing some of the rules around. I'm just showing you how I've had it running Okay, so let's start getting into the nuts and bolts So I've got a simple chart here of the daily timeframe of the S&P on a CFD here and I've also in the bottom part of pain. We've just got an RSI indicator I'm going to go through the settings in a moment, but and on the chart here You can see this yellow line here and this is a 250 day moving average simple moving average So one of the first things Yes, this is swing trading. Yeah That's what I said at the beginning. Yeah, so this is slow. Like I said It's a few a handful of trades a year in in the main on daily charts If you go to smaller time frames with it, you can do more, but we'll talk about that in a moment. So One of the Parameters is the price the price itself needs to be trading in a generally in an upwards direction i.e. It needs to be above the 250 day moving average now You could use 200 day moving average again You want a longer term moving average most likely some of you might get cute with it and say well actually I'm gonna test it with a 21 day moving average or 55 and If you use Fibonacci numbers, so Anyway, I'm using it in this in this fashion, but you can you can use others So so first things first is price above its 250 day moving average. Yes Then all we're looking for is a pullback in price if we take this pullback here, for example and And during that pullback if the RSI indicator goes below The given level with my horizontal red line. I'm going to go through all the settings for this in a moment so if the RSI dips below that level is Typically 30 lots of traders will use 30 as a lower level and 70 as a upper level Those aren't the levels actually that I use but I'm using here One of my traders does and so again, you can play around with these levels But essentially all we're looking for is a short term in the short term the market getting Oversold and when the RSI gets oversold you would be buying at the close buying at the close and then With a stop loss of course always use a risk management So with a given stop loss and the stop loss is based on the average true range I'll go through that in a moment as well. And then the exit Such a simple exit again, you could have a variety of different exits you could test But for pure simplicity just use an exit of when the RSI then goes back to the others You know to now be an overbought over here So once it crosses the The upper red line here, then that's the exit. So somewhere over over here somewhere So you'd have got in Down here in this instance and got out over there. It's that's it in it in its raw Self that is it. Of course, there's a number of parameters to this, you know What is the stop loss calculation? What is the RSI? What are some of these other levels? So I'll go through those with you so So you can see on this chart and we're gonna come back to this chart shortly I'm gonna need to go through some of the parameters first of all But you can see that there's several periods through This year, this is I don't know when this was taken from actually but And down here as well when and down here where price got oversold according to the RSI indicator and And developed trade signals, okay So but it's not that many and you'll go through long periods where it won't have any signals at all From March here all the way through until May, okay So that's only a couple of months But there are there are periods where it can go six months nine months sometimes on the daily chart without taking a single or without giving a single Signal, okay, so that's its raw nuts and belt bolts from a visual perspective We're gonna come back to this chart and some others in just a moment But I need to bed down all of the settings like what is the RSI? What is the overbought overbought? Level and the oversold level so what are those and what some of the other rules so? Okay, first things first There's a 200 period SMA. Sorry 250 period SMA So if price is trading above the 250 SMA And then it put does a pullback and the RSI which is a four period RSI gets oversold And again, you can change these values. I haven't said at 32 for oversold and 77 for overbought, but you can play around with this. Like I said one of my traders He's got I think 30 and 70 or something like that. So again, you can use whatever you like So if we get that pullback so Price is in a trend. It does a pullback the RSI down the bottom get so goes below If we put that There it goes below the Let's call it 32 here, but it's whatever 32 30 whatever gets oversold And then all you're looking for is you've got a stop-loss down here based on the average true range and Then once price comes back up and closes back about and sorry the RSI closes back above the the upper value Whether it's 70 or 75 or whatever you want to choose and you can back test Then it gives an exit signal Okay, the as far as the stop-loss is concerned I use a 30 period ATR on on the daily time frame again You could use a standard setting of like 14, but I use a 30 period average true range And then I use a three times that so three times the average true range So the period setting for the ATR So the backward period that the ATR is looking at is 30 prior bars And then you just and that will give an average true range So if you take the average true range of like let's say the S&P. So let's say the the S&P's average ranges for argument sake 50 points and So if I'm using a three times the ATR then Therefore my stop at that point is 150 points simple again You don't have to use a three three times ATR all these things can be tested. It's so easy to go and back test simple strategies like this these days and So yeah, and then you can personalize it Okay, so like I've just said I use a three times average true range stop-loss But again, you can use a two times whatever you want to utilize that So the dynamic exit the profit taking is when the RSI closes on this on the daily charts above 77 you could change that you could have it at 70 you could have it like a I'll show you in a moment One of my traders I know he's got it. I'm pretty sure set at 70. I'll show you in a moment You could have it set at 75 80 whatever again. It's personalizing it To to your own preferences I've got it based on risking 1% of trading an account per trade Is how I've done all my testing on it based on that I'm going to show you the test results in just a moment. Obviously you can risk less than that I wouldn't recommend going more than that, but you can certainly risk less than that Do bear in mind by the way tonight's record Session is being recorded. So if you think oh god, he's gone through stuff And I've forgotten some of the bits that he's gone through. Don't worry. It's being recorded. You can get the recording Okay, so I'm being asked what the average true range is essentially the average true range is looking back if I Take us back to a chart here. So what it does is if we take the hard right? Let's let's assume that this bar in the top right hand corner is today. Okay? So you're gonna look it's gonna look back Well in this instance 30 bars, so let's say 30 bars is here So it's gonna take the average range of those last 30 days To give us a number. So that's what the app on out In simplistic terms, so that's what it's gonna give us is gonna give us the average range taking all of those the different volatility of Of that entire period to give us an average Range and then once we've got that average range then we can then say right. Okay. Well, I want to have my stop loss If I get a setup, so let's say I go back to our example back here as Prices come down. So I've got the setup got the entry is Signals delivered here, but the stop loss might be let's say down here. Okay based on the Three times the average true range, but you could use two times the average true range as well, whatever so So it's allowing for the natural volatility within the market and just giving you room to breathe a little bit for your trade Okay Now like I keep on saying all of these can be adapted to personal preference So it really that's what I have to emphasize is Go away and play with it for those of you that are going to do that And I'm gonna give you some other thoughts on this in a moment as far as different time frames and markets, but if you go back and And Test it yourself you can either manually back test it or you can use this plenty of programs that you could Utilize to go back and and back to something like this and then you can then adapt it To how to to your preferences, and I think that's really important Now like I've already just said one of my traders he uses multiple markets and a six-hour chart So he's got it set on a six-hour time frame not daily time frame. So just by default a six-hour time frame is going to generate more Trading opportunities Now you have to be very careful and because some people are thinking well, what about if I take it down to a five-minute chart? Well, it's likely on a five-minute chart because of the nap the amount of noise You get once you go down to much smaller time frames that the strategy probably just won't work But anyway, he uses it on a six-hour time frame. So therefore it does generate him Generally more signals it's still not crazy, but it does give him more trades. I'll show you in a minute his results and He also trades it on not just the s&p. The only thing that I have an issue is He's got it on the s&p. He's got it on the Nasdaq. He's got it on the Dow. He's got it on the Australian market There's a fair bit of correlation going on positive correlation. So but I think he risks less than 1% risk per trade I think he's got it like maybe half a percent or something like that But nevertheless, there's still you know a reasonable amount of correlation, but you know, he's an experienced trader He knows what he's doing. So anyway Let's go and have a look. So this is the historical return of this is a back-tested return over the last 10 years of This strategy so and that's based on the strap on the on the settings that I've given you tonight now The historical return coming into this year was actually sitting at 10% per year this year Or we've gone into yeah coming into this year just over here. Oh It's this period here It's just got a bit it was up this year and then it's just fallen back Basically the strategy got caught in the summer when the s&p had its pullback from July down into October the you know like all strategies It just went into a drawdown because it got caught on the on a longer pullback than normally we see So I'll show you all that in a moment But anyway, this is the these are the historicals. It's a real plod. Oh, it's only done 298 trades over 10 years now There's something else to mention I'll go through that in a minute because people might be saying well actually Charlie That's a reasonable amount And Yes, but there are trades within a trade. So I'll explain that in a moment There's only actual general trading opportunities that you won't find those huge numbers What it might do is take a cluster of trades in a short period when they're setting up and I'll explain that in a moment other than that the The the long-time drawdown is quite acceptable given the the risk on this trade per trade Considering it's risking 1% per trade. That's a more than acceptable drawdown very low volatility Sharp ratios, okay I've talked about that peak-to-peak Stagnation that's what that is. It's peak-to-peak. So you'll find times whereby Price make sorry the equity makes a peak here. This is in July of 2015 and looks like it took until about July of 2017 before it made a new equity high Like I said at the beginning this is a strategy to not go and make you a monthly income or anything like that It's a long-term strategy. It's a long-term plodder It's not going to set the world lights is something to have, you know, if you go off and program it yourself to have running in the background Sort of something you can yeah, you're not really going to have to get too involved with particularly Expectancy ratios decent. It's above 0.2. So that's decent as far as expectancy ratios concerned as well So overall It's it's alright. It's got quite a high win rate historically at 68% But there is a caveat with that that look at the risk to reward the average loss is 1% The average win is 0.9 with these settings So the risk reward is actually slightly inverted for this strategy But it you know, it is profitable It's just that because it uses that dynamic exit if I changed the RSI parameters, then I could Try and have it run for you know a higher win rate So again, all of those things can be adapted, but it just seems to work over an a 10-year period here Okay, now this is These this is the Information of this trader I was talking to you about he's got this trading on a six-hour time frame And he's been trading this since about March of this year So not a huge amount of time that he's been trading with this his return is 20% Since March of this year He's had an 8.7% Drawdown over this year as well so A fairly manageable drawdown running it on six-hour time frame his win rate is 62% excuse my coughing here His risk to reward as you can see he's risking his average risk is 0.8 of 1% his average reward is 1.05 and he looks like that's an expectancy ratio. I think they're 1.31 pretty decent so I'm not sure. Well, I've taken the screenshot. I'm not 100% sure on that. But anyway So let's go into his settings because he's obviously been doing Reasonably well with this this year looks like again even for his his peaked in July of this year and it's flattened off since October I haven't done a fresh update on this but But again when the stock market was coming down, of course, you know, he's you know Even with his settings it pulled back a little bit Okay, let's go into So as you can see here, he's taken the original settings that I've just gone through here this evening and He's adapted it. So he's using a 200 period moving average still using a four-period RSI But he's now using an RSI oversold level of 20. Remember I had mine at 32 so great. He's completely changed it and he's got an overbought so an exit level But 70 whereas mine was what 77 so completely Personalized it he's using a different average true range because he's looking at a different time frame just a six-hour chart So you can see how he's taken the core concepts and and actually played around with them So and that's what you know, if anyone is looking to do anything with this That's what I'd encourage you to do take the basics from this and then say, okay I want to look at different time frames different markets and look at some of the values like this chap has done and So that you personalize it to you just like he has personalised it for himself Okay, so let's go back To the visuals again because earlier on I went through this Very nice example whereby at the close of this bar here the RSI Closed below the 30 area the lower oversold level Triggering the the by signal right at the close and then it just took its time But then it exited as I said over here But it's not always going to be like that and so let's see if we can find a slightly different example. So Here's an example here whereby I can see that the RSI came below the oversold level here Which was actually all at this point here However, it then ended up coming lower so it bounced for one day then came lower here So there's one and there's two and the RSI has then come back down below The 30 level again. So here's our point to here. So in fact, it's generated two trades Like I said earlier on although overall, it's a low frequency Pattern when it actually starts taking trades it can Didn't hear and it didn't hear and it didn't hear it just would have taken one trade there and one trade here As well, but there are going to be points if price starts chopping its way on a pullback Where I'll take more it'll get deliver more than just one Bi-signal. So you've got one bi-signal there two days later. You've got another bi-signal Now you don't have to trade it that way. You could just say no, I'm only going to take the one bi-signal And I'll ignore all other bi-signals all the time the RSI is below you could do that I'm just saying how I have it running and how he has it running there when I've done all that testing on it So it and and you can see it down here as well the RSI got below The oversold level somewhere over here I would say bounced a little bit then came back down so delivered a second Bi-signal here bounced again still hadn't got to the overbought level. So it didn't give the exit So all you're just sitting in trades. The the stop-loss is down here somewhere And then it's delivered a third bi-signal here Again, you don't have to do it that way or you can tailor your risk to allow for all of that And again, it'll all present itself to you in your back testing. You could say well actually I'm only gonna look like Stuart does is I'm only gonna look for RSI readings of Lower than 20. So I want this like he does. I want my level to be much lower So in that it's less likely to generate as many signals. So again, that's where you can play around with it Anyway, and then over here, then it would have exited somewhere over here I'm just showing you the realities of something like this. So you could end up sometimes Yes, you're just gonna get you know, just a singular bi-signal and then it goes up and gives you your target other times It might give you multiple bi-signals, which you could take Or you just take one and you ignore the other signals and that's it Okay, again, all of that is down to personal Taste when it comes back to your back testing of it like I can't emphasize enough how important is to go and back test something like this all these sorts of simple mechanical type of Trading Strategies if you will are easy to back test and then you can then Personalize them to your own risk parameters, etc. Etc. And your own sort of style of what you want like Stuart has got You know, it's got it running in a more frequent way and and actually is running quite well with it Different people are gonna want different things from it Now the second chart I'm showing because this was a period in 2022 when the stock market the S&P was in a bear market For much of 2022 so all of the time it was delivering the RSI was getting oversold down here down here down here Down here through all of this. There was no bi-signals because the S&P was below its 250 day moving average So all the time it's below the the 250 day moving average There are no Bi-signals only when the S&P is trading above is 250 or you can use a 200 day moving average or whatever you want You can use a 50 period or like I said earlier on if you want to have it much tighter. So again, that's Keeping it out of bear runs Okay, so I wanted to bring up this summer. What what created the Yeah, good question As far as if you're trading it on a CFD There would be overnight costs, but I don't think the overnight costs Absol are that high that are really going to affect you. So So no and bear in mind if you're holding a CFD then you will receive any dividends that That are paid out so you will receive a little bit of that anyway So, you know, it offsets a little bit of the dividend payments do offset the The Any little swap fees that you get they're not that high. So it's not that yeah Johan no what I said at the beginning Johan, maybe you missed it The I've back tested it in bear markets and it didn't seem to work in bear markets So by all means going back test it yourself, but so no, I've not I've not got it Programmed or I've not I've done some back testing on it for bear markets and Based on these settings if you just reverse these then it didn't work You'd have to then create your own settings and see how you get on so Okay, so Now moving on to this job, I think I've answered your question there So what I want to do is talk about this pullback that we had in the S&P this year This summer and so this is a classic example of a We've had some nice pullbacks earlier in the In the year where yeah, it delivered a buy signal here and it delivered some buy signals here Which played out reasonably nicely to the upside Not down here because price was below the 200 down there But up here in the in through the summer of this year. We just had these prolonged prolonged pullback The irony was I was shorting through this and but that's for other reasons But as far as this system this this strategy is concerned it It had a buy signal somewhere about there that got stopped out because price carried on coming lower So it got stopped out then it delivered another one somewhere here and then another one here So you can see that oh, okay. It had a number of stopouts through that period Then it had another buy signal here The RSI didn't get above The upper level the overbought level to deliver the the exit signal So that one just rolled over got stopped out then it had some some other buy signals through this Now The lower entries did go and hit target So some of the higher entries which started kicking in up here got stopped out because it still went lower but certainly there was an there was an entry down here on this big red bar and price did go up from there and Hit its target It was unfortunate some of these entries back here because they were quite they were all right But the RSI never quite got to that overbought level just missed out. So it was actually doing all right So it was a bit unlucky the system here was a bit unlucky in the middle of the summer there But nevertheless that was just a period which created a drawdown like I said at the beginning of today's presentation I'm not going to sit here and show you all the all the nice pretty stuff I'm going to show you when something doesn't work because There's all whatever the strategy is you ever look at there's always going to be periods where it's going to go into drawdown So and that's what happened to it through the summer and then but then As we got into if I turn that off as we got into October not down here didn't develop any buy signals there because price was below the 250 day But over here it did develop a buy signal here It didn't get stopped out the stop loss must have been just a little bit lower Um, and I'll show you the trade on the on the system that I I've got Um, and it exited of course over here. So, you know, it had it did have an exit there um, but nevertheless That period there from sort of august and september um was a low losing period for it. So it just Brought the stats down for it overall because it ended up taking A few trades through that whole period. So it's now if you didn't take Every one of the trades setups if you just took one And until that gets stopped out then you might take another one fine But um, and you might have fared better, but again that comes down to personal choice. So if I actually go Look now. So just think of this period here This little pool as price came down here this red bar Which developed the the signal down here and then the the up move that we saw coming into Through october. So if I now go to the next chart, um, this is where it Went below the 250 day moving average down here. So no signals down there But over here there was a signal And it didn't get stopped out with the atr stop loss that it had and it just had a small gain there So just an example of um, I've got another example Of you know actual signals as they came in and what it did once the rsi went above The overbought level and there's another example here similar sort of thing There's your 250 Period moving average there. Um, it's got the signals come in and then the exit's over there So there's plenty, um of these sort of signals that are just going to work and they're going to be fine And in the main it really is just a plodder of a strategy most of the time It it will have losing trades, but it's quite It's quite good at plodding along like I've said overall your you know, it has a Oh greater than 60 win rate. Um, so it does have its losses. It's just like like all losses They they tend to come in clusters. So, um, overall long-term win rate is about is up is comfortably over 60% But again, you can fine tune this light steward And taking it down to a smaller time frame change the settings around do whatever you want to do with it to tailor it to your To how you might think actually I could use this in a slightly different way with different settings and Then you've got something personalized okay So like I've said because it's fairly straightforward. There's a few rules, but once you've got the rules which you've got Um, it's easy to back test You can play around with the settings and I would urge you to play around the settings and personalize there I've only looked like I've said those daily charts, but like I've said stewart Is doing it on a six hour time frame and who's to say you couldn't do it on a I don't know an eight hour time frame or Certainly on different markets as well and playing around with the settings. So personalize it to yourself Like I've said, I don't think it will make you rich Um, stewart's done all right with it. I must admit over the past. Um, what's that seven eight months? um, but He's doing it in a different way um But it is a long-term plodder. So like I said at the beginning of the presentation this evening um Most people Probably won't be interested in it But some people might say do you know what I'll go and have a play with that And I'll see what I can do with it and that if that's the case Then I've done my job in presenting something to make some people go off and have a play with it And maybe a few of you will decide once you've gone and tailored it to your own Parameters to actually go and trade with it Okay Any questions here at this stage? It took me a little bit longer to go through that this evening than I thought I thought we were going to be all over in about 35 minutes, but um It's um, it's amazing how sometimes how long it does take to to go through something so at the moment, um, I'm just waiting to see if we've got any questions and because on the The zoom software here. I can't see when anyone's typing. So I'm just having to Assume that there might be some comments or whatever coming through. So there are so Gustavo all good very simple. Yep. Good stuff. Does it apply on forex? Um Again, you could you could test it one day a one dial um I've only done limited testing on it in my limited testing Uh, I it didn't seem to like it was going to work, but I only tested it on like one forex pair um, I I genuinely think it's better To markets which trend so you could uh look at some forex pairs that you have, you know, that do have great trends, but um In the main I think it works quite well with stock markets because they are predisposed to going up Apart from when they're going to bear markets and that and there are settings for avoiding Of course that as we've just gone through But um, but don't let me put you off by all means try it on other Markets you could try it on commodities as well if you wanted to but um um I think you could probably do enough There's enough there with a couple of stock markets and that will probably be enough for you anyway Thanks, Johan Uh Arden enjoyed this great to be reminded that trading can be simple. Um, okay. Thank you very much. That's very very kind of you Uh, what leverage do you use? Oh, yeah, um, michael Um, it's not about the leverage per se. Um It's about how much are you risking of your account balance? So if you've got ten thousand dollars in your in your account balance like I said earlier on I was testing it with risking. What was it one percent? So one percent per trade on a ten thousand account balance. So That's what you calculate it on so you use like a just use a you know a position size calculator Most brokers will give you that or you can get them online And so what you'll do is you'll say right this position. It needs a 75 point stop loss I want a risk. Let's say half a percent per trade on it and Then it'll calculate What that position size therefore comes out at so then it might say okay. It's uh, it's a Two lot trade for argument same just making that up. So It's not really about How much leverage because it's your percentage at risk on your account, which is the important stuff That's what keeps you safe. So, um, I hope that answers your question Excuse me. Excuse me for my croaky voice that I've been in london today. So I've been talking all day. So Um Yeah, you could use a stochastic. Yeah, do the same job. Um, yeah, exactly if you use a short term stochastic daniel so, um For example, you could use. Yeah, you could use a four. Okay So stochastic settings are slightly different because there's there's three inputs values, but um, like four three and three might be When you input a stochastic into your charts, um, it would give you a similar wouldn't be exactly the same But be similar. So yeah, you could use it with a stochastic indicator It's doing the same type of job an oversold over bought type Indicator so absolutely you could do that. Yeah right, okay, um Marcel with one percent risk. What is your preferred and achievable reward percentage? What I need to now do is just take you back into the presentation and I do appreciate that there's even though it's a simple strategy There's a lot that I'm going through because I have gone through this. So, um Let me take you back to if you remember the back Stuart's Stuart settings like I said earlier on he's risking an average of 0.8 of 1% per trade and his average reward is 1.05 With a 62 percent historical success rate. So again It's going to depending on the settings that you want to play around with then it will give you different risk rewards remember like I said at the time This one the back test on the daily charts With those settings that I've shown tonight actually gives an inverted risk reward It gave a long-term average loss of 1% and an average gain of 0.9 But of course it's got a nearly 70 success rate, which is still delivering An annual a given annualized return there. So Um, but you can change that very easy Just by changing the parameters. So how do you go about getting a higher? Um average win relative to average loss. Well, um, you can Only take settings where for example, you use the rsi level below 20 So only take setups when the rsi goes below 20 And then, you know, if you're using 20 and let's say 70 up here or even 77 then it's going to be looking for the rsi to get further up and therefore Naturally, your risk to reward is going to be higher Also your atr setting remember your stop loss You can you can play around with the atr. I just had it at what three times the average The average true range, but you could say well, what about if I have this stop loss at 2.5 Again, you'd be tweaking the risk to reward there, which might give you a better risk reward. So again Play around with those settings Um To personalize it. Yeah That's no problem. I'm glad I'm glad you asked myself because if you Didn't ask someone else would be thinking it because you know, I is a simple strategy, but it's There's still a lot There's still a number of different settings and so it's good to go through back through some of the settings And some of the questions so the questions around some of those settings. So yeah, good Okay. Well, I think that's about us. I'm not seeing any other questions coming through So um I think thank you, kelly. That's very kind of you I think we'll call it an evening or a morning depending on where you are in the world And thanks for coming along and having a listening in and do check us out at tick mill There's plenty of presentations at tick mill that both myself and other traders deliver for tick mill as well. So Um by all means check out other presentations that they do Over there at tick mill and they're very good broker. I'm sure many of you do trade with them um Would you suggest an entry like this after pinboys pin bars? Yes, daniel personalize it. Yeah, by all means you could One of my other traders that I know does indeed do do not quite that He doesn't use pin bars, but he uses a different type of candlestick formation. So he uses all those parameters But then requires a certain type of candlestick as the final Entry criteria. So yeah by all means yeah Good stuff. Well, um, no doubt. I'll be doing some other webinars for tick mill in the not too distant future Do check out. Um, yeah, it looks like I'll be doing some market analysis On cnbc for them as well perhaps. Um, so look out for that next year Take care for now trade safely out there. Always watch your risk management That's the best the best advice I can ever get ever give take care for now