Nice idea and post. The reason I am not a fan of such strict systems (unless they are backtested long term, see GTAA) are the false signals. Especially with profit taking. For example, if you had sold gold when the RSI was >= 75, you would have missed the whole nice rise in September.
Personally, I am currently trying (with the same basic idea as you) to focus on 1-2 commodities (gold & silver) with strong momentum, and then to sell on the basis of a signal that makes intuitive technical sense.
Example: on the 4h candle chart, gold has not fallen below the 50d EMA since the start of the big rally, but has always rallied just above it.
So I take this line as a sell signal.
However, the strategy has not been running long enough to deliver meaningful results. Same goal, different implementation 👍
Personally, I am currently trying (with the same basic idea as you) to focus on 1-2 commodities (gold & silver) with strong momentum, and then to sell on the basis of a signal that makes intuitive technical sense.
Example: on the 4h candle chart, gold has not fallen below the 50d EMA since the start of the big rally, but has always rallied just above it.
So I take this line as a sell signal.
However, the strategy has not been running long enough to deliver meaningful results. Same goal, different implementation 👍
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@Simon_n Thanks for sharing your approach - it sounds super exciting. How do you choose the 1-2 commodities? How do you evaluate/recognize momentum? Do you use key figures here or do you rely on experience?
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@Liebesspieler I use the following metrics for my momentum stock experiment: Beta > 1.5
1 month performance >20%
and price > 50EMA
However, the selling rules are clearly defined there: if one of the 10 stocks falls below its 50EMA, it is sold and exchanged for a new one with similar momentum.
I handpicked the 10 stocks in the model.
I did not use these metrics for the commodities, but simply read the obviously strong momentum on the chart and wanted to surf the trend. It worked very well until the dip today 😅
1 month performance >20%
and price > 50EMA
However, the selling rules are clearly defined there: if one of the 10 stocks falls below its 50EMA, it is sold and exchanged for a new one with similar momentum.
I handpicked the 10 stocks in the model.
I did not use these metrics for the commodities, but simply read the obviously strong momentum on the chart and wanted to surf the trend. It worked very well until the dip today 😅
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•@Simon_n Thank you for the explanation. Your momentum share experiment also sounds exciting. I like this platform so much precisely because of such exchanges of experience - many paths lead to the goal
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