Intro & Methodolgy
by PRASHANT SHAH -
The biggest advantage of Point and Figure patterns is that they are objective in nature. Hence, they can be easily back-tested to analyse past performance, but the task is not very easy, given the multiple parameters to plot in P&F charts. This chapter deals with these difficulties and we test the P&F patterns from different ... Read more
Close-Only Method Testing
by PRASHANT SHAH -
Close-Only Method Before we analyse the testing results, it is important to understand that for back-testing with closing price method, the box-price that qualifies the pattern is considered as an entry price. It may differ from actual price because it gets updated at the end of the day and it also doesn’t take gaps into ... Read more
High-Low Testing
by PRASHANT SHAH -
High–Low Technique of plotting and analyzing High–Low charts were discussed in Chapter 5. High–low charts are horizontal in nature; hence, basic signals are not applicable on them. To avoid the presentation of unnecessary tables, we will move to testing the pattern performance based on profit exit methods because exit based on basic signals is not ... Read more
Other reversal value testing
by PRASHANT SHAH -
Other Reversal Value Back-testing All testing results presented so far are on three-box reversal charts. Tables 9.3.1 and 9.3.2 show the performance of basic P&F strategy on two-box and five-box reversal charts. Two-box charts Table 9.3.1: Back-tested numbers of P&F basic strategy on two-box reversal charts on Nifty 500 stocks over 20 years of daily ... Read more
Nifty 50 Index testing
by PRASHANT SHAH -
Nifty-50 Index As discussed in the pattern segment, behavior of index is different than that of stock. It may be incorrect to assume that same kind of results would be generated when tests are conducted on an index such as Nifty-50. In this section, back-testing numbers of pattern performance on Nifty-50 index are presented. Nifty ... Read more
Back-testing Summary
by PRASHANT SHAH -
Summary Though details can be analyzed and observed from the given tables, it appears from overall testing that multi-column breakout, Triangular and Broadening formation across instruments and time frames have a definitive edge. Strategies can be designed based on these formations for better results. Note that returns are shown in percentage terms and position-sizing rules ... Read more
