Five Minutes a Day Trading – Late Surge Delivers – the February Wrap

Another profitable outing for the Five Minutes a Day Trading Strategy, but what a month! After success on the second trade, a horrible run of nine losses tested commitment to the strategy. However, the overall result ran true to the analysis, and wins on the last two trades pushed the strategy to a profit of 56 index points for the month.

For the record, here are the details of the last trade:

20130301 dax prices

Once again, the trade was triggered and the profit target hit early in the trading session. Here are the details of all the trades for the month of February:

20130301 results

Observations:

  • The strategy hit the minimum number of trades required for a clear profit. Any more successes would have added 46 points to the final profit (35 won, 11 not lost).
  • The maximum draw on capital for the month was 75 index points.
  • As in the August 2012 5MADT experience, the successful trades “clustered”, with four of the six wins adjacent to another winning trade.
  • The strategy finished the month at its highest profit point (trade tonight anyone?).
  • A trader executing the strategy may not have gained all 56 points – stop entries by their nature are subject to slippage, especially in fast moving markets. The study does not include slippage, as it will differ from trader to trader, depending on factors like the time of order entry and the size of trade.
  • As in August, the strategy rewarded late starters.

This ends our daily reporting on the strategy, but of course any trader could implement the strategy in the future. Traders doing so should be aware of daylight savings changes. Here’s the original paper for those looking to do their own calculations (it also refers to the first 5MADT strategy on the EUR/USD).

Now it’s your turn. We’d like to hear from any traders who followed the month. Did you use the strategy? Did you modify it? What was your experience? Do you have any suggestions for improvement, or any market quirks for us to investigate for a future 5MADT strategy month?

Finally, thanks to all those who generously contributed their thoughts and comments throughout the month.

About michaelmccarthycmc

Chief Market Strategist - CMC Markets and Stockbroking Regular on ABC, BBC, Bloomberg, Channel TEN, CNBC, SBS and SKY
This entry was posted in Market, Shares, Stocks, Trading and tagged , , , , , . Bookmark the permalink.

16 Responses to Five Minutes a Day Trading – Late Surge Delivers – the February Wrap

  1. James says:

    Thanks Michael for your consistency in blogging on the trade.

    Would be great to see more strategys tried and tested here.

  2. Greg Taylor says:

    Hi Michael, I have tested different strategies like this over the years. Unfortunately the number of instruments x the infinite number of entry and exit signals, makes for a lifetime of research and testing. So I am so grateful to you and CMC for taking this initiative, and doing this type of testing and trying to genuinely assist us traders to achieve success.
    Thanks, Greg Taylor

  3. Jason says:

    A solid result. Congrats on putting your ideas on the line and documenting them for all to see.
    Would be interested to hear if you and the team come up with any other trading ideas. Again, nice work.

  4. dv34 says:

    Thanks to you and your quant as well M, always good to hear some different ideas

  5. Luke Mc says:

    In one of my previous comments i asked how likely the strategy could become obsolete which you should defiantly could due to a organic market. How can we tell early or as soon as possible when and if that possible scenario arises?

    • Hi Luke – there’s no easy answer to this one – the strategy will stop working when it stops working. Early signs would be behavioural – particularly if the market started out with the pattern we are seeking – and then heavily reversed itself,. However, as the strategy relies on a minimum 6 out of 20-22 successes per month, the strtegy could renmain succesful while the pattern evolves.

  6. Col says:

    Congratulations on the result and having the persistence despite the early discouragement. One thing I am curious about is the timing of the trade which is clearly critical in this sort of setup. The Germany 30 opens at 18:00 our time but the trades are not taken until 19:15. Similarly, with the 5 minute EUR/USD experiment, how was the opening time decided?

    • Hi Col – thanks for your thoughts. The first hour of trading is based on futures markets – CMC translates the price to the cash market in this period – the actual opening occurs after that first hour – which is why we wait another 15 minutes to allow the opening gyration to play out before a dominant trend asserts itself (if it does on any given day).

  7. Brent says:

    Nice work Michael. I traded this on a demo account for the month. Interesting to see the string of loosing trades which is just part of trading and learning the discipline to stick to the strategy. I’m going to start trading this on my live account this month and we will see how it goes. Id be interested in learning more about how you test such strategies. Thanks for the learning and advice. I like the approach of keeping it simple!

  8. Brent says:

    I traded the strategy for March. The month started again with 9 consecutive loosing trades one of which gaped significantly before the stop loss was filled resulting in slippage of 2.5 times the normal risk per trade. With the slippage and three winning trades for the month the result was a net loss twice the size of winning trades. Based on the back testing the strategy does have loosing months. As trading is all about discipline I will keep going and see how we fare for April.

  9. Den Harnett says:

    Please advise frequency and timings of this blog.   Thanks, DEN

    ________________________________

    • Hi DEN – I’m not sure if you’re asking about the 5MADT strategy or the blog overall? There’s not a regular schedule for posting – we tend to post when we see a market opportunity. If you subscribe to the blog (requires an email address only) you’ll nbe notified each time there’s a new post.

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