TRADE RANGE OPTIMIZER

The Trade Range in Tactical Trading is the dollar price move that a stock must make, up or down, to trigger an action. An action is typically a Buy, Sell or No Action.

The base Trade Range for any stock is equal to the Daily Move. The Tactical Trading system (TTS) allows for adjusting the base Trade Range through use of a multiplier. The question is, what is the best multiple of the Trade Range to use?

One way to customize the Trade Range is to use the Five Lines chart and adjust the Trade Range multiple so that the five lines envelope captures most or all of the recent price movement. This method works well and usually produces an adequate Trade Range. There is a better way however, introducing the Trade Range Optimizer.

The Trade Trange Optimizer works by running backtests on historical price data for several variations of the Trade Range, each over the same time period with the same Cycle parameters. These variations are calculated on 25%, 50% and 75% +/- of the base Trade Range.

For example if the base Trade Range is $1.00 the backtests would run on $1.75, $1.50, $1.25, $1.00, $.75, $.50, $.25.

A report is generated showing the profitability of each backtested Trade Range as well as other pertinent data.