World’s Best Trading Indicator Cross Over Strategy Back Testing Results!

5 Minute SPY Chart with Shift Theory Ratio Indicator

5 Minute SPY Chart with Shift Theory Ratio Indicator

The Shift Theory™ approach has excellent back testing results so I think it would be a great idea to show off what a basic strategy can produce in profits. I do want to mention that just because a strategy back tests well does not mean it will be a profitable strategy when it comes to real money.

Now the point I want to make about back testing and how to trade is this. No automated strategy by itself will ever be perfect. Sometimes things look great in theory but when it comes to real money that changes very quickly. That is why the Shift Theory Ratios™ are being sold as an indicator and not a trading system. Most automated trading systems of algorithms will never be able to take into consideration any of the following:

  • Bid/Ask/Trade Data for Tape Reading.
  • Spread Relationships.
  • Market News and Mood.

That is why Shift Theory Ratios™ should be used as a hybrid trading system or grey box trading system. It is a tool made to assist the trader and help guide them. The reality of any trading style is this. The tape (bid ask data) is what creates the bars on a chart. The bid ask data is what buyers and sellers create based on the latest information about the symbol. If a trader uses the Shift Ratios™ with the tape (gut feel) or a spread relationship between two symbols then the odds of success are in your favor. So here are some back tests and what they produced. These are all done with the TradeStation platform. NinjaTrader™ is our preferred platform for speed and reliability but TradeStation has more back testing data at the moment.

One of the most asked questions is: what strategy was used to back test, so here it is! The strategy used for back testing all of these markets was done on a 60 minute chart using “Look inside bar” back testing settings with tick data using TradeStation and the strategy was as follows:
Long Trades
If Upper Shift Ratio Crosses Over Lower Shift Ratio Then Buy Next Bar Market;
If Upper Shift Ratio Crosses Under Lower Shift Ratio Then Sell to Close Next Bar Market;
Short Trades
If Lower Shift Ratio Crosses Over Upper Shift Ratio Then Sell Short Next Bar Market;
If Lower Shift Ratio Crosses Under Upper Shift Ratio Then Buy to Cover Next Bar Market;

Agricultural Commodities

  • Corn
  • Wheat
  • Rough Rice
  • Soy Beans
  • Oats
  • Soy Bean Oil

Currency Futures

  • Australian Dollar
  • British Pound
  • Canadian Dollar
  • Dollar Index
  • Euro
  • Japanese Yen
  • Swiss Franc

Energy Futures

  • Crude Oil
  • Heating Oil
  • Natural Gas
  • RBOB Gasoline

Index Futures and E-Mini Products

  • E-Mini Mid Cap 400
  • E-Mini S&P 500
  • Nikkei 225
  • E-Mini NASDAQ 100
  • E-Mini Russell 2000
  • VIX or Volatility Index

Live Stock/Meats

  • Feeder Cattle
  • Live Cattle
  • Lean Hogs

Metals

  • Gold
  • Copper
  • Platinum
  • Silver

Soft Commodities

  • Cocoa
  • Cotton
  • Coffee
  • Frozen Orange Juice
  • Sugar

Soft Commodities

  • Cocoa
  • Cotton
  • Coffee
  • Frozen Orange Juice
  • Sugar

FOREX

  • AUDUSD
  • CADCHF
  • EURGBP
  • EURUSD
  • GBPCAD
  • GBPUSD
  • JPYUSD
  • NZDCAD
  • USDCAD
  • USDCHF
  • XAGUSD

Stocks

  • Apple
  • Amazon
  • Caterpillar
  • Facebook
  • Google
  • International Business Machines
  • LinkedIn
  • Netflix
  • Exxon Mobil

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.