AMZN longer term short trade

[Mike]

Pascal,

Being a longer term trader, I tried AMZN as a 50-day bounce play short on the 50-day moving average using the breakout calculator. Below was my results:



Question, should this tool work at the 50-day? Your examples are much shorter.
There are only 8 prior trades, is this enough?
I chose 211 days for the evaluation period because that is when AMZN put in its top.
If I went longer than a 20-day holding period the results were a little worse but still good.
Notice that I have both long and short term averages set at 50 days. Is this okay?
Also a 9.8% stop is large but if I put in a stop of 7% which perhaps I could stomach the results come out slightly better with a 7.3% expected profit per trade and a strategy efficiency of 5.52.

[Pascal]

Pascal,

Being a longer term trader, I tried AMZN as a 50-day bounce play short on the 50-day moving average using the breakout calculator. Below was my results:

Attachment 27054

Question, should this tool work at the 50-day? Your examples are much shorter.
There are only 8 prior trades, is this enough?
I chose 211 days for the evaluation period because that is when AMZN put in its top.
If I went longer than a 20-day holding period the results were a little worse but still good.
Notice that I have both long and short term averages set at 50 days. Is this okay?
Also a 9.8% stop is large but if I put in a stop of 7% which perhaps I could stomach the results come out slightly better with a 7.3% expected profit per trade and a strategy efficiency of 5.52.

Mike,


When you use the 50MA for bot the ST and the LT averages, then you basically test a pullback to the 50MA after the stocks has broken below the 50MA. This is why you only have 8 cases.

I believe that for longer-term trading, the best is to use a shorter average such as 20 days, even keeping the LT as 50 days. In such a case, you would short when the short bounces back to the 20MA after having broken below the 50MA.

The results are below. These settinfs (20MA/50MA) work fine for long-term trading. This is good to start a position and then add on the way down. This also allows to keep stops small such as 6% here.


Pascal