PowerTrendSystem – vs – Momentum System
Here are the differences between the two systems
Bill from Investing Systems here,
Since we’ve had the Power Emini Alert Software and Momentum System on the market for about 8-years now, I knew when we released this brand-new program I would get questions about the differences between the systems – so I created this page to explain the differences in detail.
I wanted to create a new algo that traded trend reversals – without disrupting or affecting the Power Emini software and Momentum System
The Momentum System and the Power Trend System share a lot of similarities, however the Power Trend system produces the Long and Short Alerts in a totally different way. It’s a trend reversal system and a trend catching system.
It doesn’t have the limitation in the Momentum System – where an alert can only be generated when the price is inside the morning range and breaks out.
The Power Trend System gives alerts when major Trend Shifts and Trend Reversals occur. These can happen at any time during the session – and frequently occur later in the day.
The Power Trend System will frequently nail the high or low of the day at a major turning point.
In many cases the Initial Stop will be just above the session high or below the low, which is the optimal place for the stop IF it does indeed turn out to be the high or low of the day. It might be a couple hours or more into the session when this occurs.
When we started working on the new “Trend” software, we wanted to create a different type of system that generated Long and Short signals in a totally different manner based on “changes in trend” rather than Range Breakouts. We wanted a system that would catch big trend moves that can start at any time throughout the session – not just early on.
The Power Emini Momentum System works great and we plan to offer and support it indefinitely.
The Momentum system software code originated years ago and has been modified many times. As you can imagine the technology has changed a lot since then. So it made sense to create the new code from scratch to drive the new algo. The Power Trend system software is a brand-new state-of-the-art interface and takes advantage of the latest technology.
There have been quite a few sessions during testing where the Momentum System and the Power Trend system give almost identical alerts in the morning. The Entry price was just slightly different and the targets were a bit different.
With the Momentum System there are times when the price escapes the early morning range, but we’ve either been knocked out of an alert or the alert hit already hit the targets so no more alerts can be issued. But we frequently see big moves / trends after the Momentum System has already gone dormant for the session. We also wanted a system that was able to identify a trend shift once the high or low of the session was in.
We wanted a system that could provide a Trade Alert right after the High or Low of the day was in.
I can’t tell you how many days I’ve watched the price action and said to myself “the low of the day is in” and the market starts turning up. I could place a stop just under the session low and catch the trend move in the other direction. Whereas in many cases it’s likely the price was already outside of the “Momentum Range” at that point in the day, so the Momentum System would not catch those type of moves (which frequently occur mid-session or later in the day).
We wanted to refine the Trailing Stop methodology
One of the other differences is the way the Trailing Stops move. The Power Trend System specifically has every trade at exactly virtual breakeven when T1 gets hit. This means you have locked-in partial profits at T1 and any additional contracts have no risk of a loss at that point. Then, as price moves toward Target 2, the Trailing Stop will ratchet again to the exact Entry level (Breakeven on remaining Contracts). Once Target 2 gets hit, the Trailing Stop will protect the gains at the Target 1 level. The Trailing Stop moves are slightly different and designed to protect profits more aggressively than the Momentum System. In other words when price is between T1 and T2 the Trailing Stop will be tighter. In addition to what I just described, when T2 gets hit, the Trailing Stop will ratchet and tighten more aggressively going forward with the Power Trend System.
The Power Trend System uses the ATR’s and Ranges in a different way
Both systems adapt to current market conditions based on the ranges and ATR’s in the market at the time. However PTS is more adaptive and will have varying distances to the stops and targets based on the most recent intraday behavior in the market. In other words, there might be an Alert early in the day with a tight stop and small targets and then the price action picks up, the ATR’s expand and a subsequent Alert might have a much wider stop and much further out targets.
We may consider adding the Momentum System Alerts to the actual PTS software interface at some point down the road. But the main idea is that we are taking all the concepts we’ve developed for the Momentum System over the years and optimizing them for a different type of trade setup – trend reversals and trend shifts.
I’ve been running both programs on the same computer along with my trading platform and it’s a snap. If you have a decent size monitor or more than one monitor it’s no big deal to have them both running at the same time and you can stack them on top of each other or just minimize them to the taskbar.
We wanted to keep the programs totally separate since we have a lot of users that have been trading the Momentum or Scalper in the older software that have been using it for years. These are both fairly complex programs and I can’t imagine what it would look like to a new user that’s never seen the programs before if we had the Momentum, Scalper and Trend System all wrapped into the same interface. I can’t imagine creating the documentation to explain all 3 systems in one program. Plus the new interface is far superior – as well as the new back-end we created to drive everything.
System Performance Differences
Since the Power Trend System is brand-new we want to forward-test and analyze the performance for a period of time
As mentioned in other sections of the Help, we’ve done extensive back-testing and we have tested various configurations of the parameters. But market conditions evolve and as we enter the slow Summer months, we will need to see how the system performs in dull, low volume, low participation sessions. In theory it should keep us out of choppy, sideways non-trending price action. But it’s important that we put the new system through its paces during the Summer months which are typically slow and dull with a lot of sideways price action. There may not be as many “trending days” and we need to see how things pan out.
We have both systems calibrated to achieve (roughly) a 70% Hit Rate on Target 1 over a long series of Alerts
And as far as results, keeping this new system separate makes the most sense so that we have time to analyze and optimize everything without affecting current Momentum System users that are perfectly happy with what’s working for them now.
The Power Emini Momentum System works great and we plan to offer and support it indefinitely.
We created the Power Trend System software to take advantage of a totally different type of trade setup. That’s basically it.
I hope this helps explain the differences and I’m happy to answer any questions you have about either system – or go more in-depth about anything mentioned above. If you have questions just email me at info@investingsystems.com