Do your trading systems also work on stock indices?

I've a question, has anyone here ever tested a system that works well on currencies on stock indices?

If so, what were your findings? I have personally found the certain systems that work well on stock indexes don't work well on currency pairs, and vice versa.

What are your experiences with this and why do you think it happens?

try support resistance, it works in all instrument,

remember "history repeat it self"

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Buying New Highs and Selling New Lows

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This depends entirely on which type of system you are using. Trend following as well as range-bound strategies typically work in all markets. A trader must familiarize himself with the idiosyncrasies of his chosen market and specialize in that market to determine if his strategy is appropriate.


I use a simple trend-following system in both the stock market and forex market, however I greatly change the time frame with my strategy so that the daily gaps between opening price and closing price do not dramatically affect my equity. In the forex market, I have found that I am more successful day trading while in the stock market I am more successful swing trading. My system however, is identical in risk as well as entry and exit points.

Yes absolutely. I trade based on trendlines and support and resistance levels - it works on all markets in all timeframes (the longer the better though... of course!).

Regards,

Dan

I am of the belief that price behave in a fractal way...so if your strategy is price-based, it can work in any market and on any timeframe.

I think moving averages based strategies also can be used on any markets. In particular, trading chaos system. But moving averages traiding is a trend following system, so you must use only support and resistance systems on the being in a flat market.

I have 7 trading systems on my blog http://www.myforexdot.org.uk/FreeTec...ngSystems.html 6 work on currencies, 1 works on indices (S&P 500) but they rarely work on both, why do you think that is?

Why would that be? I don't have a clue, but nice blog! Thanks for the info. Still learning..

Well I don't know for sure, but I have my theories...

Currencies, especially the large liquid pairs like the EUR/USD, seem to trend far better than indices. I think the market's liquidity is a factor in the 'smoothness' of the trend. Once a market with a huge amount of volume like the EUR/USD picks a clear direction it takes a lot to stop it. So most of the time you can make a profit by just getting in at the price after a new significant high or low (like 80 to 120 days) and just waiting.

But with stocks I think more people often wait for a dip before buying into a rally, far more than they do with currencies anyway. Why is that? Well I'm open to hearing ideas but I suspect it's to do with the 'commericals' rather than the speculators

But anyway, in my experience, waiting for a retracement works great on indices, whilst with currencies it's best just to buy after the breakout and not bet on the price coming back. A system can't do both of these things at the same time. It can either be seeking to buy low and sell high OR buy high and sell higher and sell low and buy back lower. It can't do both. The first type of system is great for indices, the second is best for currencies, in my opinion.

Currencies also don't have a long bias like indices do.

chalk and cheese.

when was the last time a currency got delisted and disappeared forever? what about any stock (excluding indices)?

abundant leverage possibilities coupled with the unlikelyhood of a currency pair ever reaching zero make foreign exchange a different market than any stock exchange.

So you agree with me at least as far as to say Forex pairs and indices are very different and just because a trading system works consistently on one of them it doesn't mean it should/will work on the other?

yeah, i guess so. i'm saying if a 'trading system' or strategy or magic or whatever HAPPENS to work in both stocks and forex it is not because they are the same... because they are not the same at all.