June 3rd, 2011

The Alpha Power methodology plays mathematical functions; not necessarily market indicators. The formulas are in my papers. You pre-set your trading behavior based on these mathematical functions and then wait for the market to hit all the triggers generating the trades. If the market does not move in a way to trigger the buy, sell or stop-loss orders, you simply wait for it to come to your terms of engagement.

The method has for primary objective to accumulate shares for the long term. It will buy shares while in an uptrend ready to hold indefinitely if needed, or until one of the other two possible events occur: a short-term profit is generated in which case the shares are sold, or a stop loss is hit.

The method is a trend-following system; it buys on the way up while accumulating shares for the long run. It does need some form of trend definition. It appears, after some modifications, that the Livermore Market Key script may have, in this sense, a usable trend definition after all.

The test based on the second dataset can be found HERE.