well, try this for a back test. Buy any stock that is on a pullback (for programming purposes Stochastics will work) but trading within 10% of its yearly high. Set a 10% stop and say a 30% target. Back test this - I get a 55% success rate on a basket of 130 stocks with CFD's available (I use this as a measure of liquidity) dating back to 2000. Now try the same exercise on stocks trading between 10% & 20% of their yearly highs - same story, but slightly less successful. Now try stocks trading below the 20% line - the stats get significantly worse. The point is not to demonstrate a system, but to show that momentum is the most powerful trading indicator out there.
... View more