The Best of The Best
3
specific 5-day Stochastic systems are clearly the "best of the best"
trading
systems. These are:
1)
The 5-day Stochastic K-Line turning up
below 20 for a Buy and
turning
down below 80 for a Sell. This was the best trading system
7.4%
of the time. (Chance would yield only 2%) This was the
best
system in more than 10% of the stocks sampled in 1993,
2004,
2006 and 2012-2103. Even in the strongly trend markets
of
2008 and 2009, this system still occurred more than chance
would
suggest.
2)
The 5-day Stochastic K-Line crossing the 5-day
Pct-D to the
upside
for a Buy and crossing to the downside for a Sell.
This
is the best trading system 6.0% of the time.
2) The 5-day Stochastic K-Line crossing the 20 level
from below
is
a Buy and crossing down below 80 is a Sell.
This
is the best trading system 4.6% of the time.
The
K-Line simply shows how far up from the 5 day low to the 5 day high,
the
stock is. This is sometimes called the FAST Stochastic. These K statistics
are
smoothed by taking the 3 day average and this become the SLOW
or
Pct-D Stochastic.
The Power of The Five-Day Stochastic over Time.
I
want to show here the power of the 5-day Stochastic systems over time.
I
had to re-write the Peerless program to show the percentage of all cases
that
each trading system was. As you look at the results below for a large
sample
of mostly SP-500 stocks since 1990, understand hat pure chance
would
present about a .02 probability for any particular system being
#1.
In other words, if 300 stocks are sampled, then chance would suggest
6
instances on average, for any given Tiger trading system being #1.
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