[carltonp]

Hello Traders,

I'm trying to formulate a strategy that might take advantage of price pause after an instrument has paused.

Let me provide an example.

I have written a program that will alert me to when a price has paused for 5, 10 or 15 seconds. Also, the program will show me how many times a price has paused at the aforementioned seconds during, say a 5 min interval.

The strategy that I deploy using the formula is as follows:

YM (mini-dow) has reached an overbought/oversold stage on 5min chart. During the overbought/oversold stage the price pauses for 5 seconds at, say 11000. The price moves to 11005, and then 11008, but returns to 11000 and pause again for 5 seconds. The price then moves to various other prices but then returns to 11000 and then pauses for 10 seconds. This is all happening during the 5 min bar interval.

So, my strategy is to wait for a pullback on the following 5 min interval a enter at 11000 in the direction of the current trend.

So, my question is, can someone please tell me how I might improve on that stratey?

Alternatively, can someone please tell me if they deploy a strategy using price pauses in their trade setups? And any ideas would be great.

Cheers

Carlton

[wrbtrader]

Hi Carlton,

Most data providers have data pauses (stalls) due to bandwidth issues many times per trading day. These pauses or bottleneck of the data can last a few seconds. In addition, there's the issue of such occurring several times per day due to issues with the ISP.

Thus, with the combination of these data pauses occurring via data providers, ISP or computer issues...how will you be able to determine if it's a real price pause or an data stall via your data provider, ISP or computer connection.

[carltonp]

Originally Posted by wrbtrader »

Hi Carlton,

Thus, with the combination of these data pauses occurring via data providers, ISP or computer issues...how will you be able to determine if it's a real price pause or an data stall via your data provider, ISP or computer connection.

HI wrbtrader,

That is a good question, and one that I probably could never answer with all certainty. However, a very polite engineer at IB kindly did some tests with me and for 30 mins we both synchronized on clocks and watched the pauses independently.

Having said that, I will never know for sure.

The question still remains: is this a strategy, worth pursuing in your opinion, if valid?

Cheers

[Tams]

you can do a latency test to see how many hops and the time delays between you can your broker.

there are free website that can do it for you,
also, IB's website has instructions.

[carltonp]

Originally Posted by Tams »

you can do a latency test to see how many hops and the time delays between you can your broker.

there are free website that can do it for you,
also, IB's website has instructions.

Thats cool. Tams, thanks.

I notice that nobody wants to stick there neck out and comment on the strategy - same with ET. Don't understand why....

[Tams]

Originally Posted by carltonp »

Thats cool. Tams, thanks.

I notice that nobody wants to stick there neck out and comment on the strategy - same with ET. Don't understand why....

maybe that tells you something about the theory?
I don't know, I am open for ideas. Maybe the proposal needs more research and refinement?

[Tams]

Originally Posted by Tams »

you can do a latency test to see how many hops and the time delays between you can your broker.

there are free website that can do it for you,
also, IB's website has instructions.

how to use tracert

http://www.interactivebrokers.com/en...hp#trace_route

[carltonp]

Originally Posted by Tams »

maybe that tells you something about the theory?
I don't know, I am open for ideas. Maybe the proposal needs more research and refinement?

Thats interesting because traders are usually quick to comment on theories that are seen as not having any edge what-so-ever ...