A simple mechincal trading system
The Dogwood Report posted a sample mechanical trading system:
Go long if price is above the MA(50) and RSI(2) is less than 5
Exit when RSI(2) is above 70 or an 8 percent stop loss is hit
Go short if price is below the MA(50) and RSI(2) is greater than 95
Cover when RSI(2) is less than 30 or an 8 percent stop loss is hit
The results of this system were quite impressive.
Take a look at their results here:http://1.bp.blogspot.com/_-YWCgDK_Px4/SWQvNwoLXvI/AAAAAAAAC7U/DxV3aq5DZ2A/s1600-h/RSI(2)+Long+%26+Short.png
The one negative of this system is the number of trades this system creates is high. With a fixed cost broker like most people have, those can really cut into your profits.
I believe that this system is impressive and follows the philosophy that simpler is better.
It could probably be further refined to reduce the number of trades that it makes.
Play around with it yourself and see if you like it.
The original post is at:http://thedogwoodreport.blogspot.com/2009/01/wealth-lab-developer-51-experiment.html
