ChrisMoody

2 Stochastic POP Trading Systems From Jake Bernstein

FX:EURUSD   Euro Fx/U.S. Dollar
Two Systems Revealed Directly From The Creator - Let's Talk Trading Systems.

I spoke to Jake Bernstein and asked if he had any updates to his Stochastic POP Trading Method. At the bottom of the page is a PDF Jake published a while back (Please read for basic rules, which also Includes a New Method). I’m Labeling the Original method Stochastic Pop Method 1, and the other method Jake discusses in the PDF as Method 2.

Jake Bernstein will be a contributor on TradingView when Back Testing/Strategies are released. Jake is one of the Top Trading System Developers in the world with 45+ years experience and he is going to teach TradingView.com’s community how to create Trading Systems and how to Optimize the correct way.

Jake asked me to share that he has Updated Stochastic POP Method 1 Recently. Now across all symbols he has found the Stochastic Values of 60 and 30 to be the most profitable. NOTE - This can be Significantly Optimized for certain Symbols/Markets.

Below I will List Backtesting Results for both Method 1 and 2. A Daily Chart of the EURUSD             is used only as an example.

The point is to simply show soon we will be able to:
  • Find These Results Ourselves on TradingView.com when Strategy/Back Testing capabilities are released.

Strategy 1 Stochastic POP Method 1:
Go Long When Stochastic Crosses Above 60. Go Short When Stochastic Crosses Below 30. Exit Long/Short When Stochastic has a Reverse Cross of Entry Value.

Results:
Total Trades = 164
Profit = 50, 126 Pips
Win% = 38.4%
Profit Factor = 1.35
Avg Trade = 306 Pips Profit

Strategy 2 Stochastic POP Method 1:
Rules - Proprietary Optimization Jake Will Teach. Only Added 1 Additional Exit Rule.

Results:
Total Trades = 164
Profit = 62, 876 Pips!!!
Win% = 38.4%
Profit Factor = 1. 44            
Avg Trade = 383 Pips Profit

Strategy 3 Stochastic POP Method 1:
Rules - Proprietary Optimization Jake Will Teach. Only added 1 Additional Exit Rule.

Results:
Winning Percent Increases to 72.6%!!!, Same Amount of Trades.

Two Important Items to understand about Stochastic POP Method 2.
  • To code the rules precisely we need a function that will be available when Strategy Capabilities are released on TradingView.
  • There is one of Jakes Profit Maximizing Strategies that needs to be integrated with this code…which again we need the Strategy based Function that will be coming soon.

Strategy 1 – Stochastic Pop Method 2 System:
Go Long When Stochastics below 50 and Crosses Above 55. Go Short When Stochastic is above 50 and Crosses Below 45. Exit Long/Short When Stochastic has a Reverse Cross of Entry Value.

Results:
Total Trades = 151
Profit = 40,758 Pips
Win% = 37.1%
Profit Factor = 1.26
Avg Trade = 270 Pips Profit

Strategy 2– Stochastic Pop Method 2 System:
Rules - Proprietary Optimization Jake Will Teach. Only Added 1 Additional Exit Rule.
Results:
Total Trades = 151
Profit = 60,305 Pips
Win% = 37.1%
Profit Factor = 1.38
Avg Trade = 399 Pips Profit

Similar to Strategy 3 listed above in Method 1 we can turn this system in to a 75% win rate but the profits decrease significantly.

Multiple Key Metrics Jake uses when evaluating a Trading System were not included. These will be introduced by Jake.

I was going to list several observations as to why the two systems have a different amount of trades during the same period, and why Method 1 was more profitable…But I’d like to see what you guys think first…

Leave a Comment Below With Your Thoughts…I have a Feeling This Thread Will Introduce Some Important Topics.


Link To PDF:
https://dl.dropboxusercontent.com/u/77187122/TradingView%2520Posts/JakeBernstein%2520Stochastic%2520Pop.pdf
Excellent work as always Chris. Thanks.
+1 Reply
Can't wait to see more! Thanks for sharing..
+1 Reply
On the settings,(45 55 method 2 & 30 60 method 1), I can see little difference on any timeframe using his entry/exit rules. Maybe by a bar. I looked at EURUSD and other ETFs like SPY. What I do like about it is that it makes you wait for confirmation for a trend. On longer timeframes (weekly) it's the bees knees:) Keeps you in longer (method 2, 45 55). Daily charts lately have a lot of chop...not much help. You probably want to use something else for choppy markets...at least my observation. Can anyone show me where I'm wrong?
+3 Reply
Sounds great! "Proprietary Optimization Jake Will Teach"...where?
+2 Reply
As mentioned...when Strategies are released Jake will be conducting a few Webinars for TradingView
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"Similar to Strategy 3 listed above in Method 1 we can turn this system in to a 75% win rate but the profits decrease significantly. " ... would like to see more on this as I'd rather hit a lot of singles than swing for the fences with less than a 40% win percentage (with less than 40% I think almost any indicator will probably give the same results so don't see the significance of this over anything else). Thanks for sharing.
+1 Reply
I understand. I have accounts that utilize strategies for both. Just know a lot of traders like to have a high probability of success or high win rate. Trust me...as atrader I understand this. Typically to get these results....around a 80% Win rate it requires taking profits quickly.

I will say it's necessary to to capitalize on the Long-Term or Major move. Systems capitalizing on these moves typically have a lower win rate. Let me be clear...I'm not saying I trade systems with a 38-40% win rate....You can have a much higher win rate getting you in to major trends. Several of theses systems will be brought to TradingView within 30 days(Estimate). I look forward to working with Jake and bringing these to you.

But it's important to understand...I can turn either of these sytems into a 80%+ win rate...but they get you out of the trade quickly....and most importantly...they make a lot less money than systems designed to keep you in for the long move.

Heres a tip....and we will be bringing these methods to you. What if we combined the two thought processes mentioned above.
1. We took a quick profit on a very high win rate setup (closing a 3rd of half of the position).
2. We bring our Stop to Break Even.
3. This gets us out of the "Danger Zone" as Jake calls it...
4. Let the remaining position capitalize on the Big Move.

Look forward to sharing more on this concept in the near future.
+2 Reply
IanLip ChrisMoody
sounds like a smart approach.
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financeguru ChrisMoody
Hi chris, I am a new member and just saw this post. Do you have an update on what you mentioned here? Vijay
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Looking forward to any insight Mr Bernstein may share here at Tradingview.com and am grateful to Chris for sharing.

However, having said that please allow me to make a statement and ask a couple of questions. First of all, about 75-80% of all retail traders lose money and never become successful at trading. There are thousands of indicators available that suggest success. There are as many systems available that suggest success. Yet, 75-80% of all retail traders still lose money. A very few people actually master trading and become consistently successful trading. There is a huge market for trading products and services.

Why can't there be consistently successful traders who share the exact trading system they use and do it in such a away so that it is cost effective to the average student/trader, presented in such a way that will allow the student/trader to see how the system is implemented over an extended period of time so that folks can actually become successful?

Instead, it seems the guru's charge enormous sums of money for trading classes and/or indicators and/or systems that ultimately never prepare the student/trader for success. And, frankly, many if not most of the information being sold, including training, advice, indicators and systems simply never meet the needs of the average retail trader and mostly don't work.

Best of success to everyone.
+3 Reply
ChrisMoody PRO Codetrader
It would be IMPOSSIBLE for me to AGREE with your comment any more that I do. Personally, I've spent well over 100K on these educators you mention. A few were good...90%+ terrible. Without sitting here bashing other educators I'll just mention what I'm excited about regarding Jakes Systems.

1. We're bringing Jakes Trading Systems to Retail Traders for the first time ever.
2. We are going to undercut the prices everyone else charges by a Significant Amount, while delivering what NO ONE Else is Teaching. We will deliver Proven Trading Systems for traders just looking for a reliable Trading System...AND Teach those who want to create there Own Trading Systems How To...Teaching You to Fish per se...
3. All of the Trading Systems will be 100% unlocked Indicators so you know Exactly what your trading with. No Black Box Systems or Proprietary Code.
4. All Systems will be set up to Backtest...And will have 100% Rules Based Strategies...No Interpretation...Clear, Concise Rules...so you know the statistical probability of every trade you take. You will know if you have and Edge, or Not.
5. I will be providing Weekly, Ongoing, Live Education for Students Sharing everything Jake taught me regarding his 45+ years of experience on what factors are important in developing a Trading System (This differs slightly depending on Time Frames You Trade, & Whether your staying in trades for a Long Time...or a couple of Bars). Jake will stop by the Live Session when his schedule permits.
6 We will be releasing 4-6 Complete Trading Systems from day 1....and by the way the Stochastic Pop Systems didn't make the top 4-6 list...I just asked Jake if I could share it when ucsgears (good friend of mine) coded a modified version of Jakes old Stoch Pop System

Thanks You SOO Much for your comment...Everything you said is the EXACT Reason we decided to bring the same concepts and methods that Multi-Billion Dollar Institutions pay Jake for...To the Retail Traders....

Can't wait until the first day we release....just waiting for Strategies and Back Testing...Since All Methods taught by Jake are 100% Rule Based and you need Back Testing capabilities to see for yourself...We don't believe in "Hey here is a Power point with statistical data"....we want you to see for yourself...

Thanks Again For Your Comment....
+6 Reply
ChrisMoody PRO ChrisMoody
Oh and I forgot to mention...Unfortunately, we won't be selling something new that you "Have To Have"every month...Traders will have lifetime access...and if we release a new method...everyone just gets access to it....Hey what a concept....
+4 Reply
Seal PRO ChrisMoody
Refreshing change. Jake is the first webinar guru I ever attended in person 10 years ago or so. Great to be circling back with him and yourself. Thanks Chris!
Reply
Codetrader ChrisMoody
I believe that if Chris Moody is involved that what ever takes place will be first class, upfront and honest. I think we are in for a major treat. Best of success to everyone involved!
+1 Reply
ChrisMoody PRO Codetrader
Thanks....That means a lot.
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I tested and backtested those methods manually on several Forex pairs. My conclusion is as follows: they often give the wrong signals, but it is enough to compare with standard MACD to eliminate most of them. If POP method gives signal and MACD line just sharply crossed signal line or approaching 0 signalling potential price turning point/fast PA, winning percent increases to 70-80%. But if POP indi gives signal but MACD is flat/still in the same direction/lines don't cross - you should ignore POP signal. Yesterday I ran it even on 5min charts and found POP method perfect as an alert tool that draws your attention to specific chart few minutes before fast PA starts and after it ended and correction begins. Thanks a lot Chris for sharing this idea.
+2 Reply
IanLip Jeff_Wheelwright
Jeff, thanks for testing and the info, if what you tested is correct and if I'm understanding what you wrote, than for example GPRO is now a buy, correct? POP is green & MACD just crossed 0 ... anyway, will be interesting to see.
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Ian, I don't know what timeframe you're looking at, but I checked 5min chart of GPRO and from what I see this week we had 4 perfect signals, especially given by method #2 and confirmed by MACD (green vertical lines - POP gave signal, MACD just crossed sharply signal line), 1 false (red vertical line, we're in loss so far) and one not confirmed by MACD that doesn't change its direction (yellow line - position if taken could be closed in small profit or at entry price). This chart also shows how I want to use this method to give signals in my judgmental trading. I don't like to sit all day long looking at the charts :)
snapshot
+1 Reply
POP on 1D GPRO looks bad, it gives signals way too late. 4H is so-so, 1H almost perfect (just my opinion :))
+1 Reply
IanLip Jeff_Wheelwright
yea was looking at the daily and at both POP 1& 2, which gave earlier signals but the MACD confirmation didn't cross over 0 till just the other day, so this result seems to have missed a nice move already, but it still may go higher if this system is accurate.
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KXRTrading123 PRO Jeff_Wheelwright
So, I also did some review across timeframes. I would say that many stocks do not trend on the daily and have 2 -3 day chops that make the indicator sometimes not seem good, but if you look at in these time frames I think you will see very good moves and alerts - 3,5,15,60 and look at it on weeklies for those those that maybe buy and hold. Also, to me the Pop 2 55/45 method seems to be better, have not trade for trade compared, but is my preference.
+1 Reply
jbourgault PRO Jeff_Wheelwright
Hi Jeff, thanks for sharing. I re-implemented this Pop indicator in cAlgo and made a bot out of it so I can easily backtest and optimize for the best parameter set possible for each Foxrex pair.

I tried to confirm then signal with MACD, added auto-breakeven, trail stop, exit on MCAD inverse cross, played with the pop entry levels, all without much success. Maybe I'm missing something.

Would you mind sharing the parameter for which you had success with? I'll setup the bot accordingly and post the result here.

N.B. Chris : I'm currently doing the same with the WVF by the way (turning the thing into a cAlgo bot). It apprears that it generate very good signals on specific pair/timeframe.
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Hi JB. Judgmental trading often cannot be easily automated :) But I'll try to describe how I tried to recognize good signals using POP and MACD. I use default MACD (12, 26, 9, close price). Signal from POP should be preceeded by thrusting price move for at least 3-5 candles or clear bullish/bearish pressure that lasts for minimum 8-12 candles. Choppy price action means weak signal. The angle of MACD line crossing must be big - 70 degrees or more, except of signal given after long period of constant price pressure in one direction. If price approaching round number or strong support/resistance/trend line/breaking point/Fibo level - I'll wait whether it'll be broken or not. If POP signal points to trend reversal and was preceeded by candlestick reversal pattern - I consider it as very strong signal, especially if there's a divergence on MACD that suggests trend change. I think that's all.
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jbourgault PRO Jeff_Wheelwright
Thanks for the feedback. I'll try to make most of it configurable and see what the optimizer gives me for the past 4 years.
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jbourgault PRO Jeff_Wheelwright
Oh wow. Just got very good results on 1D EURCAD.

Stochastic : 16/20/18 (with entry level around the Method 2 default levels)
MACD : default

In this case, the angle of the MACD line made a big difference indeed. If the current vs the previous bar value differ of at least 0.0005). Also breaking even at 50 pips and using a trail distance of 50 pips.



Reply
jbourgault PRO Jeff_Wheelwright
(can't find the option to modify the previous post).

...MACD line made a big difference indeed. As-is, there a major drawdown issue. But confirming the signal with the current bar value of the MACD line being at least 0.0005 higher or lower than the previous bar value fixes it. Also used breakeven at 50 pips and using a trail distance of 50 pips.

When based on tick data from 2012/01/30 to now : 100% wins / + 436% on account / 30.69% max equity drawdown.
When based on 1m bars from 2011/04/01 to now : 96.6% wins / + 390% on account / 32.87% max equity drawdown (5.01 Santino Ratio/1.51 Sharpe Ratio)

1% of the account was used at each trade with 500x leverage.
+3 Reply
I'm glad to hear that you've got such a good backtesting results. Currently I'm working on multi-timeframe POP indicator in order to put trades based on POP signals validated by MACD or two SMA crossing, but only in one direction - direction signalled by POP indicators from higher timeframes. Such strategy should have better win:loss ratio I think.
+1 Reply
Thanks for sharing, Thumbs Up :)
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My analysis on eurusd:
EURUSD: Final bearish leg?
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For trading system learning 2 books are pretty good: one by Davey, the other by tomasini.
Then capital, patience and a lot of errors coding ;)
All the best to Chris with the new venture. Looking forward to learning more about new ideas / strategies in the future
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Is the backtesting available for subscribers only or everyone? Thanks.
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Thanks for sharing. This is looks very good. How I could back test this trategy? Only draw and wtach the chart. Have you got a simplier method? Thanks.
+1 Reply
It's seems to be a great system, thank you!! But let me know from where can I download these two indicators mentioned above? Please let me know as soon as possible.
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Have you checked this out? http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:stochastic_pop_drop
+1 Reply
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