T17 is designed to generate buy sell signals based on astro cycles. This is a description of how this module works. It is for daily data only.
Solar trading system - trade with Annual cycle
The diagram below shows the Annual cycle for Dow Jones Industrial index, the data since 1995 till 2011 are used:
Looking at this diagram, we can specify these turning points: bottom is when the Sun passes a middle of Leo (in the beginning of August), top - when the Sun passes mid of Scorpio (in the beginning of November), bottom - the Sun passes mid of Pisces (the beginning of March) and top when the Sun passes mid of Taurus (the beginning of May).
Now let's create the trading strategy that is based on these turning points. Run T17 ("Terra Incognita" section) module and follow these steps:
You have to do only one thing: type these lines there (copy and paste the lines below):
Buy when SUN passes 15Leo
Sell when SUN passes 10Scorpio
Buy when SUN passes 17Pisces
Sell when SUN passes 10Taurus
And click "Calculate" button. Immediately you will see in the Main screen the equity curve and buy and sell signals based on these astro events. Also you will see the information about Annual returns and Win/Loss ratio:
Here we analyze always in trade strategy. it means that this record:
Buy when SUN passes 15Leo
Sell when SUN passes 10Scorpio
means that when the Sun passes 15 degrees Leo we close previously opened SHORT
position and open LONG position - this is BUY signal. When the Sun passes 10 degrees
of Scorpio we close LONG position and open SHORT position - this is SELL signal.
You can define any astro trade using these controls
In example above a trading system was demonstrated that is not really good; a composite module is a very good technique to generate projection line though not to generate buy/sell signals. Using special optimization procedures, you can get much better trading strategies like this one, with win/loss ratio 75%. This issue is explained at the end of this article:
Lunar trading system
The same manner we can create the trading strategy that is based on the Moon position. It generates Buy signal when the Moon passes 12 degrees of Aquarius and Sell signal when the Moon passes 27 degrees of Scorpio (always in trade strategy):
As you see this system generates in average 16% return per year with 55.7% win/loss ratio. It was just a "good" example, for real trading I would recommend to start with conducting a back testing procedure (it is explained at the end of this article)
You can also use the angle between planets to generate signals/ Here the strategy which is based on the Moon phases - buy signal when it is the New Moon and sell signal for the Full Moon:
Not always in trade strategy
Now let's consider another strategy. This strategy has no short positions, long positions only. This is an example of this strategy:
In the beginning of October we buy shares and sell them in mid of May, from May till October we are out of trade. You can define this strategy this way:
It mean we buy when the Sun passes 16 degrees in Libra (the beginning of October) and stay in long position till the Sun passes 26 degrees of Taurus (mid of May). In May we take our profit (or loss) and go to a long vacation till October.
Close - means that we close all positions (long and short).
This is statistical information for this system - average profit 10.6% per year, 87% trades are winning:
There is another version of this system; we trade since October till May and in January we have one more vacation for 3 weeks to be away from that crazy stock market:
This is how this strategy looks:
Optimization
Now you will see how we get the strategies in the examples above. It is not done manually, that would be too much work.
Let's create one of these strategies together. As an example, we want to make two trades within a year and make some profit. We plan to open two long trades within the year, and we need to find proper moments to close these trades. To do that we have to create four events Buy, Close, Buy, Close. Do not worry about the exact Sun position, set it as 0 degrees of Aries, the program will find these degrees itself during the optimization procedure:
Now in "Optimize" tab 1) click "Randomize" button; then 2) click "Optimize" button:
Next step - look at this strategy. This is very important. Not all strategies are good, very often we may get strategies that are not suitable for trading, mostly because signals are located too close to each other. In this case you need to repeat this procedure, i.e. click "Randomize" and "Optimize" buttons once again. You can make it many times, till some good strategy is found.
To make these signals visible, check "View" tabs:
This notation for signals is used:
Examples
Example #1 Long trading: Buy on 0 Virgo, close on 12 Scorpio, buy on 2 Aquarius, close on 17 Aries.
Follow these steps. Buy signal when Sun passes 0 degree Virgo, i.e. open long position (we expect that price will go up):
Close this long position when Sun passes 12 degrees Scorpio - Close signal:
Open long position when Sun passes 2nd degree Aquarius - Buy signal:
and close this position when Sun passes 17 degrees Aries:
This is price chart with trade signals:
Example #2 Short trade: Open short when Sun passes 20 Taurus, close on 10 Cancer.
Look at this diagram:
It shows us that in average price goes down when Sun passes interval 20 Taurus - 10 Cancer (beginning of May - end of June). In this case we can make short trade. We do not buy shares, we borrow them. In this case we make money on falling stock market. To create this short trade strategy follow these steps:
Sell signal when Sun passes 20 Taurus = open SHORT position.
Close this trade when Sun passes 20 Cancer.
This is price chart with trade signals:
