CSX Corporation (NASDAQ:CSX) : CSX: Exactly How and When Technical Analysis WorksDate Published: 2018-01-14
The results here are provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation.
Even though we can see that CSX Corporation (NASDAQ:CSX) stock is up 219.47% over the last 5 years, in that same time frame, using a the CML moving average / momentum (Mammoth) technical signal with an empirically tested trigger, has created larger returns of 428.4%.
There comes a point, after all the charts that are shared on CNBC and social media, when we simply must examine, in truth, whether technical trading has actually worked in the past, and if so, which signal, how is it generated, and what are the historical results -- explicitly?
We are looking for answers that are empirical and explicit, not just lines on a chart, not one example that looks good.
ANSWERS: CSX Corporation (NASDAQ:CSX) CML Mammoth Technical Trigger
The idea behind all of this, and all technical analysis, is that past price behavior and key levels are watched by so many people, that patterns can repeat, and if those patterns can be identified ahead of time, they can create higher probability trades than those entered without them.
The breakout from the CML Mammoth attempts to find these bursts -- based on tens of thousands of historical trades and machine learning.
The goal, of course, is to find these breakouts before they occur and to scan the market for the best historical performers.
* Open the long 70 delta call (in the money call) on the day the CML Mammoth has been triggered and coincides with upside momentum of at least a 1% up move.
* Close the call at expiration.
* Use the options closest to 15 days from expiration.
* Always avoid earnings -- irrespective of the trigger and momentum, this back-test closes 2 trading days before a scheduled earnings date.
This is a straight down the middle bullish bet -- this trade wins if the stock rises and will lose if the stock does not.
Owning the 70 delta call in CSX Corporation (NASDAQ:CSX) over the last five-years but only after a CML Mammoth was triggered had produced these back-tested returns:
The mechanics of these back-tests and everything in the TradeMachine™ are such that it uses end of day (EOD) prices for every trigger, both entry and exit.
We see a 428.4% back-test return, which is based on 17 trades in CSX Corporation. A bullish signal triggered from the CML Mammoth doesn't necessarily happen often, but it is designed to objectively pinpoint the beginning of a short-term period, using moving averages, momentum, and volatility oscillators, when a stock is likely to move higher.
It's a model based on several indicators rolled into one signal and is based on probabilities, not absolutes, so it won't work all the time. The full details, including not only the empirical modeling but also the full closed form equation, and live scans for breakouts, are all available to CML Trade Machine members.
Looking at Averages
The overall return was 428.4%; but the trade statistics tell us more with average trade results:
➡ The average return per trade was 21.94%.
➡ The average return per winning trade was 67.03%.
➡ The average return per losing trade was -86.28%.
For the details about the CML Mammoth model, what is included in it (exactly), how it works, and when it's triggered, using Trade Machine you can learn about scientific technical trading from the link (which leads to a short video).
This is one way people profit from the option market -- whether it's technical analysis, momentum trading or non-directional option trading. Take a reasonable idea or hypothesis, test it, and apply lessons learned.
Please note that the executions and other statistics in this article are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity and slippage.