"Next steps for these strategies?"

Here's a question from Brent S. on two strategies he sent for review. (Name used with permission, lightly edited for clarity.)

Brent S:

I have spent the last month learning .afl and have pulled together two starter strategies, probably very common starters. I started with the AFL template in your course for both. The first is an EMA/EMA crossover. The second is an EMA/VWAP crossover that I used ChatGPT to add some additional filters to, which I modified some myself in the end, but I am not sure how helpful the additional filters actually are.

I can see the strategy results in their respective analyses screens and on the charts look promising, but I'm very skeptical. Could you provide any input on what I would do from here? Optimize? Start over?

Dave:

Nice work creating these strategies - a lot of traders don't get this far.

Here's what I see when I compare the two strategies:

The EMA strategy looks a lot stronger, but there are almost twice as many trades in the EMA one, so the equity curve can be slightly deceiving.

I ran both of these strategies through the Cruncher, and here's what I found:

For the VWAP strategy, applying a rule for Yesterday Dojiness (definition here):

Applying that one rule would improve the strategy quite a bit by removing several losing trades from the system.

For the EMA strategy, things look even better when you add a rule based on Gap Percent:

This is saying that stocks that are gapping up perform significantly better than stocks that are opening flat or gapping down.

Note that this analysis only includes the columns that come with the sample strategy with the AFL course.

When you add the full MabeKit column library to your strategy, there will be many ways to improve the strategy.

Here's what I would suggest for next steps:

Now that you know these columns are highly predictive for the strategy, go back and create a new starting point by applying the rules mentioned above, but relaxing some other rules in your original versions.

That should create a starting point with even more trades with a higher average profit per trade.

See how your analysis ends up with the new versions and then compare them to your originals.

Nice progress with your strategy and AFL skills, Brent! Thanks for sharing with the group.

-Dave

P.S. Think you have trading skill but nothing concrete to test? Start with the proven backtest included in my Amibroker AFL Course and make it your own, just like Brent did.