What this comparison may bring about in your mind is which is more important, the Entry or the Exit. The reason this is a valid question is because we are using the exact same prices and entering in opposite directions when there is a divergence in the signals.
The ML1 and MS1 are designed to determine intra-day direction these are the IDMM Levels (Intra-Day Momentum Method Levels).
The ‘Trend’ column or ‘DDI – Daily Directional Indicator’ attempts to determine the most recent short-term trend.
This is the most basic example of the research. The ML1 and MS1 levels are show in their respective columns. The Daily Directional Indicator is show in the ‘Trend’ column.
Study 1: In the above example, all three ETFs would assume a Long position at the ML1 level.
Study 2: In the above example, the SPY and DIA would take a Short position at the ML1 level. The QQQ would assume a Long position at ML1.
Study 1
In the first study (Chapter 14), I use the IDMM Levels, ML1/MS1 as entry. The entry is in the direction of the Level. Only one position is assumed each day. Therefore, the first level reached is always taken in this study.
ML1 = Long Position
MS1 = Short Position
Exit = Close of the day.
Data for the study:
https://qatsystems.com/bookdata/Study-IDMM.php
Study 2
In the second study (Chapter 15), I use the exact same levels (ML1/MS1) but assume a trade in the direction of the Short-Term Trade as indicated by the ‘Trend’ column. No matter which level is reached, the Direction of the trade is determined by the short-term trend indicator.
If Trend = Long
ML1 = Long Position
MS1 = Long Position
If Trend = Short
ML1 = Short Position
MS1 = Short Position
Exit = Close of the day.
Data for the study:
https://qatsystems.com/bookdata/Study-DDI.php
As you can see, the 2nd Study had a lower success rate, but a better W/L Ratio. It also had a better total points gained.