Millionaire Traderssupport and resistance trading, or astrology [laughter]. As long as
it can be verified, historically, I’ll take that preponderance of evi-
dence and say at least it shows a statistical advantage, historically.
And although past results are not indicative of future performance
exactly, they certainly provide a lot of evidence to support some
methodology that I’m considering. And if we don’t have any sta-
tistical basis for what we’re trading? Then we’re just taking the
random walk down Wall Street, as they say, and what good is
random trading?
Q: How far back do you usually test?
A: Well, when I did short-term trading, which is any timeframe
below one hour, I generally don’t go back any further than the
advent of the euro, meaning I’m trying to take advantage of a
current market. I want to actually experiment with the market in a
similar way back then as it is to now. So I do not want to experiment
with the 15-minute charts in a time where the Deutsche mark and
the Italian lira and the Spanish pesetas were all basically floating
and affecting volume. I won’t do anything short term any further
back than 2000–2001. If I’m experimenting with the daily charts or
something longer term, I’m more willing to go back into the mid
to late 1990s. But if I go back too far, I’m going to go back to a
time when currency trading was all done with the good old boys
club and they were all using rotary phones. It feels uncomfortable
to me to go back any further than that.
Q: Yes, the market was traded very differently back then.
A: Exactly. Traders were writing down their orders and the British
pound/U.S. dollar currency pair would have one-hour candles that
were 100 pips large each time. It doesn’t make as much sense to
me to expect the market to be similar then as it is now.