# Outliers---where true profit lies



## tech/a (13 December 2008)

*Outliers.*

Events which are outside the norm of a data set (Which can be any chart of any commodity).
These are the true profit churners.
I remember having a look at some of Trembling Hands stats and it was very clear that the few outlier moves he managed to get on really turbo-ed
his profit.
In my own trading the REAL profits come from these outlier moves.The rest---the consistant churning of profit and loss keep us in the game.

Even when I look back on Property its been the Outlier moves in the late 90s and 2003 areas which have really made the investment in property so good.
If you managed to get on these moves then the rest IS history.

In Business its the larger projects (for me) which make the Big $$s,and they dot come around every week. The smaller projects keep the doors open for the times when the bigger projects do come around.

Ofcourse the challenge is to be in the best position to take advantage of an outlier move.
But more than that---realise when its highly possibe that there is a parabolic move occuring and belting it as hard as you can as early as you can--- with sound M/M in place to protect you when you fall.

Outliers are so powerful that one can set you up for life.(For me that was property). Ive also seen traders here who managed to get on the Outlier move Of Flinders Diamonds some time ago and if the number of shares traded were true would have been life changing for these traders.(What happened to that stock?)




Just imagine $20,000 investment.

So my topics for discussion are.
*(1) How do you recognise the characteristics of a pending outlier move.*
Sure some you cant FDL may well have been one of those.
BUT the massive slide DOWN in world economies could be forseen and those who were savvy did take advantage of the moves on the short side.

In property it was clear to me.
Interest at all time lows.
Housing cheaper to buy established than new.
Massive rent demand.
It was nearly IMPOSSIBLE not to buy a home and positively gear it.

*(2) How do you get on one even if you dont forsee it.*
What can you do to set yourself up to be able to take advantage of one when it comes along---Lasting from a day to a few weeks (in stocks).
I remember ADY clearly in June/July last year.One I managed to get on.

*(3) How do you know when its over--- how do you make the most of Outliers!*
I have my own way of dealing with these both in and out and happy to share.
But initially what do others think of the topic and do any attempt to take advantage of possibly the most powerful---and overlooked---profit generator in investment!


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## MichaelD (13 December 2008)

*Re: Outliers---where true profit lies.*



tech/a said:


> *Outliers.*
> 
> Events which are outside the norm of a data set (Which can be any chart of any commodity).
> 
> ...




Excellent topic. Here are my thoughts.

It is my view that the term Outliers from the outset is a psychological trap. Outliers implies that they are something unusual, something out of the normal distribution. This then presumes a normal distribution for whatever dataset the outlier is in.

Returns from the market (and from life) are NOT often in a normal distribution.

Why care about the semantics? Because it impacts the way you view trading. Yes, these moves are what make your profit, but THEY WILL COME. They are not out of the norm. They are part of the spectrum of returns.

The questions of how to deal with them then turn around from "how do I recognize an outlier" to "how do I maximize my return from a market which includes these sorts of moves".

There are two approaches to making money from the markets; take a little bit of profit often (profit stops) and miss the big moves or wait for the occasional big moves (let the profits run, cut losers short).

Can you recognize an outlier before the event? I don't believe you can.

eg You can decide that you want to trade breakouts. Some of these will turn into big returns. Most will not. Can you tell in advance which will pay off? Backtesting emphatically answers this with a NO. All you can do is to arrange your exit and money management to minimize your losses and maximize your profits and provide an overall positive expectancy.

As an example from my own personal trading; all my short term profits for the financial year to date have come from 6 wins in a row about 2 weeks ago, including a couple of outsized returns. Did I expect these trades to go the way they did? No - the entry setup was exactly the same as it has been for the rest of the year. Did I know the outcome in advance? No. All I know is that this method has a positive expectancy and it makes most of its money from the outsized returns when they come. All the other trades are just about surviving with minimal damage to trading capital.


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## mazzatelli1000 (13 December 2008)

*Re: Outliers---where true profit lies.*

IMHO

As has been quoted by many, trading is a business.

And like any other business, one can have an excellent or catastrophic year due to an "outlier" event.
In some cases your outlier could be where "true losses lie".

As you have stated tech/a, it is the day to day operations that one wants nail as this will bring in the bread and butter. Relying on an outlier to bring in the bread and butter is not optimal.

Like any business model, one is constantly assessing internal strengths and weaknesses, but many forget or do not devote as much time to scanning for opportunities and threats. I believe it is in the scanning of opportunites and threats where you can position yourself to hopefully profit from an outlier and/or avoid a catastrohpic outlier event.

BTW, I am pretty sure I would take TH's day to day P&L as it looks pretty darn good to me!!!


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## prawn_86 (13 December 2008)

*Re: Outliers---where true profit lies.*



mazzatelli1000 said:


> In some cases your outlier could be where "true losses lie".
> 
> 
> BTW, I am pretty sure I would take TH's day to day P&L as it looks pretty darn good to me!!!




Wouldn't the losses be negated due to stops?

Also, TH tends to have 'worse' (but still profitable) results if you remove the outliers from his data, from what i have seen


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## Garpal Gumnut (13 December 2008)

*Re: Outliers---where true profit lies.*

This argument is akin to Nick Taleb's ideas,

90% of capital in Treasury bonds.

10% in out of the money options.

Recognising outliers, Taleb is a bit hazy on.

He thinks the Bell curve is a load of codswallop anyway.

gg


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## mazzatelli1000 (13 December 2008)

*Re: Outliers---where true profit lies.*



prawn_86 said:


> Wouldn't the losses be negated due to stops?
> 
> Also, TH tends to have 'worse' (but still profitable) results if you remove the outliers from his data, from what i have seen




So how about large sudden gaps????

But it will depend on the circumstances - and I emphasize the word COULD


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## jonojpsg (13 December 2008)

*Re: Outliers---where true profit lies.*



tech/a said:


> *Outliers.*
> 
> 
> So my topics for discussion are.
> ...


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## skc (13 December 2008)

*Re: Outliers---where true profit lies.*



MichaelD said:


> 3.  This would be where trailing stops comes in?




Looking at the FDL chart I personally would have been stopped out multiple times. It moved from over 0.15 down to ~0.07 on the second day big red bar. Even if you could live with seeing your profit halved, 2 weeks of consistent falls at start of Jan would also likely shake most people out who got in at 0.01.


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## motorway (13 December 2008)

*Re: Outliers---where true profit lies.*

have a look at the work of Peter L Swan

From the School of Banking and Finance, Faculty of Commerce
University of New South Wales




> My explanation for the equity premium is based around ‘illiquidity’ and is a very simple
> one. While financial economists are used to thinking of equity markets as being highly liquid,
> they are in fact highly illiquid relative to government securities such as bonds and Treasury
> bills.
> ...








> Investors seem to have a significant desire for liquidity and appear willing to pay more for
> an asset which is both easy to acquire and dispose of. This is a natural consequence of people’s
> desire to trade and is related to Black’s (1986) description of “noise” traders.2 I take up Black’s
> challenge when he concludes: “we may need to introduce direct utility of trading to explain the
> existence of speculative markets”





 OK trading is a buzz people are attracted to it... And stocks that have liquidity see traders
flock to participate.. Volume attracts volume.. And any discount against value evaporates 



> My empirical evidence demonstrates that illiquidity is priced.




 He is saying the more illiquid,, the less volume... The more real value will be discounted.
It will be a buyers market ... They will set the price and require significant discount .



> It is based on 30 years of monthly NYSE data on
> security returns and turnover for 880 stocks. After controlling for stock size, book to market
> ratio and CAPM beta, annualized returns diminish at the rate of 0.54% per 1% increase in stock
> turnover.




 For every 1% increase in liquidity the return from holding a security as an investment
declined by .54% PA 



> *Liquidity in the form of signed order flow is intimately associated with information content in
> security prices* and hence the driving of security prices closer to fundamentals. This link
> between liquidity and information content needs to be explored further so as to provide a fuller explanation for why liquidity is so valuable.




 prices disperse information.. significant volume and liquidity.then. Information Known by everbody...Fully priced... quick transition with new information fast dispersal ..
Low Volume low liquidity,then,, Buyers demand discount.. And information disperses slowly new news has a delayed effect and will always be under priced 


His conclusion
*BLUE-chip stocks may be unsuitable holdings for personal investors, says a Sydney professor who has produced a theory explaining the differences in returns produced by various assets.*



> UNSW's Peter Swan argues patient investors should consider buying "illiquid" stocks – those which trade less frequently – as these stocks produce better returns.




So maybe look in the right place to *start* with is step _one_.


motorway


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## motorway (13 December 2008)

*Re: Outliers---where true profit lies.*



> Big Winners - Returns – best 10% to 20% of all stocks!
> The far right-hand tail of the theoretical normal distribution holds about 2.0% of
> the total population.
> 
> ...







> A. I had always thought that to be a good investor you needed to hit a lot of singles and not strike out often. I was wrong. Investing, especially in small companies, is a home-run-hitter's game.
> 
> Q. When did you learn that?
> 
> ...







> As a stock departs from the central part of the distribution the relative strength improves.
> 
> In my
> opinion
> ...




Given the obvious preliminary steps ( trend of market etc )

Here is a possible _second_ step 

The changing trend in relative strength

Here is the important suggestion

Not whether it is + or -
over a look back period ( always non optimised ? )

relative strength will find a bottom BEFORE
absolute strength...
( as it will in finding a top )

because (all that matters ? )

Accumulation & Distribution

Ralph wanger is well known small cap investor
-Manager of the Acorn Fund

Clay Allen is a Point and Figure practitioner
with an emphasis on Relative strength

DYOR
motorway


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## It's Snake Pliskin (13 December 2008)

*Re: Outliers---where true profit lies.*

Tech/A,


> *Outliers.*
> Events which are outside the norm of a data set (Which can be any chart of any commodity).
> These are the true profit churners.



We need a better definition of the word. If outliers are relied on for regular income and profit, then should they be called outliers? If they are common then they may not be outliers. And only the mother of all moves may be considered outliers because they happen rather rarely. 

So is there a better and more concise interpretation of what an outlier is? 

Why not just call them percentage moves and grade them with broader grades as they get bigger?


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## It's Snake Pliskin (13 December 2008)

*Re: Outliers---where true profit lies.*



Garpal Gumnut said:


> This argument is akin to Nick Taleb's ideas,
> He thinks the Bell curve is a load of codswallop anyway.gg



I agree too.


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## It's Snake Pliskin (13 December 2008)

*Re: Outliers---where true profit lies.*



> *(1) How do you recognise the characteristics of a pending outlier move.*
> Sure some you cant FDL may well have been one of those.
> BUT the massive slide DOWN in world economies could be forseen and those who were savvy did take advantage of the moves on the short side.



By having a good understanding of what you are looking at and then letting luck play its role.


> *(2) How do you get on one even if you dont forsee it.*
> What can you do to set yourself up to be able to take advantage of one when it comes along---Lasting from a day to a few weeks (in stocks).
> I remember ADY clearly in June/July last year.One I managed to get on.



Congratulations. Would you like to share how you got onto it? 
I don't see how you can foresee something that is not foreseeable, but perhaps only in the hindsight reality of results viewing which would lead one to think it is foreseeable. Semantics? Yes.
But in short find the two types of money.


> *(3) How do you know when its over--- how do you make the most of Outliers!*
> I have my own way of dealing with these both in and out and happy to share.
> But initially what do others think of the topic and do any attempt to take advantage of possibly the most powerful---and overlooked---profit generator in investment!



Have a way of knowing when the dumb money is pumping.


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## weird (14 December 2008)

*Re: Outliers---where true profit lies.*

Interesting post, but I don't think there is anything special about outliers except making oneself available for them, good and bad (unfortunately) - they appear unexpectedly - but it is the old mantra which steads u good in the end  - cut your losses , and let your winners run - which really comes through there - which may answer part of the question -that is possibly the the best way to deal with them and ensure that they do occur for u - however there is a tendency to bank any available profit and then hope a looser will come good which works against positive gains from outliers.


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## Trembling Hand (14 December 2008)

Big wins are a funny thing,

My trading became consistently profitable when I stopped chasing the so called "Out-liners". It even became more focused & painless (relatively) when I stopped beating myself up on missing the big moves after they have happened.

The great thing about not chasing the next big move is that you develop trading methods that are profitable with out relying on the lucky trade. And as already stated by others being able to stay in the game you greatly increase your chances of snagging the big moves.

Another trading paradox- don't chase them and you will get them.


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## cuttlefish (14 December 2008)

Trembling Hand said:


> Big wins are a funny thing,
> 
> My trading became consistently profitable when I stopped chasing the so called "Out-liners". It even became more focused & painless (relatively) when I stopped beating myself up on missing the big moves after they have happened.
> 
> ...




This is very useful insight. I think I've been starting to see some of this effect in my options trading.


Great thread too - lots of interesting contributions.


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## MRC & Co (14 December 2008)

I think some moves are possible to forsee to some extent.  

Like the 1% unexpected rate cut like 3 months back.  Or even the tank on Friday, global markets fell off a cliff a while after the rejection of the bailout and SPI actually followed (my god, but with that ferocity, the likelihood was very high).

Then there was the Friday at the low, where global markets took off all at the same time for no reason.  Someone was obviously buying up SPI big time.

Moves like these, while of course you don't KNOW, if you grab your nuts and get on them early with a bit of size, are pretty good chances of outlier profits.  Other than that, I wouldn't have a clue, one reason I think it's important to scale out.


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## It's Snake Pliskin (14 December 2008)

MRC & Co said:


> I think some moves are possible to forsee to some extent.
> 
> Like the 1% unexpected rate cut like 3 months back.  Or even the tank on Friday, global markets fell off a cliff a while after the rejection of the bailout and SPI actually followed (my god, but with that ferocity, the likelihood was very high).
> 
> ...




Seeing it like that then by taking a position in the AUD/JPY when the AUD was down to sub 60yen would mean an outlier result in the future if global fundamentals can pick up to allow the outlier result of above 90 yen per dollar. I know a few who have taken the position of waiting for the rise to where it was a few months ago. 

However there could be an outlier in the opposite direction of loss.


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## MRC & Co (14 December 2008)

No idea about Yen.  Don't trade it.

But some INTRADAY moves happen after big news, or on HUGE and sustained volume, allow you to bet a bit more aggressive as the flow is pretty damn clear.


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## tech/a (14 December 2008)

> Congratulations. Would you like to share how you got onto it?




Snake as I said I'm happy to.

Ive had this interest in Outliers for over 10 yrs now and know of only *ONE* way to get on to them consistently and *WITHOUT* sitting in a trade hoping.

Before I go into it in detail I need to make a call tomorrow.
All will be clear soon.

By the way 530 stocks rose between 100% and 300% at sometime over the last 12 mths.

There have been some god points made in the posts above.
Motorway in his initial post hit the nail on the head.



> UNSW's Peter Swan argues patient investors should consider buying "illiquid" stocks – those which trade less frequently – as these stocks produce better returns.




And while his suggestion of Relative Strength has merit (Something I have looked into in some depth)



> relative strength will find a bottom BEFORE
> absolute strength...
> ( as it will in finding a top )




Relative strength in illiquid stocks can jump around all over the place.

The trick is to find these *Possible* prospects when they are in the initial throws of taking off.
This equates to *ON THE DAY* and often *IN THE HOUR*.

I only know of ONE way of doing this and will let all know tomorrow.
Sorry need to get the info correct---and yes all will be able to do as I have in the past.
Its the exact same way I found ADY.

*TH*
For me its not about chasing Outlier moves but putting myself on the train as it leaves the station---with the biggest opportunity of not having the train return,also with the greatest possibility of loading more of my luggage(Money) on the train as it increases speed,and dumping it all off when it hits its inevitable brick wall.
There is nothing wrong with consistent profits but you have to admit that if you could be reasonably consistent hoping on potential outlier moves,that can be traded with relatively minimal risk and massive R/R potential---that you'd at least have some interest.

Recognise potential
Minimise risk both initial trade risk and opportunity risk (Not sitting in a trade doing nothing).
Get on board--when you know with relative surety
Get off when you know with relative surety.

*Weird*
They do appear unexpectedly but if you* KNOW* when they *HAVE and ARE *going then the un expected may not be so unexpected.


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## Trembling Hand (15 December 2008)

Ah Tech/a!!



tech/a said:


> *TH*
> There is nothing wrong with consistent profits but you have to admit that if you could be reasonably consistent hoping on potential outlier moves,that can be traded with relatively minimal risk and massive R/R potential---that you'd at least have some interest.




Maybe but maybe not. I can say with certainty there is not a day go by when I sell a 10 tick profit when there was 80 to be had. or pick the low for the day almost to the point but never hold it for long anyway. Yet I feel no need to change a thing. (well almost)

I have my own way of catching outlier days (which have been plentiful this yeah) that if I think you are ever receptive to another persons method I may share with you. :


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## jonojpsg (15 December 2008)

Trembling Hand said:


> Ah Tech/a!!
> 
> 
> 
> ...




Hey TH, are you willing to share with the rest of us?  Definitely interested


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## Frank D (15 December 2008)

I agree with TH on this one, but you have to separate the reasons why you are trading.

If I’m trading the SPI then all I’m concerned about is achieving my primary income targets for each day:- income and standard of living.

I’m not concerned about 100 point moves in the market, all I’m concerned is taking small chunks of 10-20-40 point moves, and over a course of the day that could be a number of times.


If you are trading on the side (another job) and/or  don’t have to rely on these 'trades'  (stocks/forex) to pay for your daily income targets, then sure hold the trades for the big moves.


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## tech/a (15 December 2008)

T/H and Frank.

Not disagreeing with either of you.

Ive presented the topic of Outliers with Stock in mind as this has been my interest over many years (Well one of them).
Haven't been involved in FX or Futures,but would like when I have time to investigate these as well.

Ive only ever found 3 ways to profit.
Have more winners than losers
Have much bigger accumulated winners than accumulated losses.
Or a combination of both.

Outliers can have a dramatic impact on the bottom line.
They can turn R/R on its head particularly if there is some consistency.
Most feel that its just pure luck and a fluke if you get on one and getting on multiple moves---well thats impossible.
I dont think so.



> then sure hold the trades for the big moves.




This is how most veiw is the only way to "Fluke" an Outlier move.
To me holding and hoping is NOT the way to find or trade these!


Unfortunately I only know of one way.Hoping there may have been others.

But maybe if I share what I have found then more heads may toss up fresh ideas.

You wont get them all
You wont want them all as they dont fit with characteristics.
But you'll be able to get a fair share.
Anyway more later.


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## wayneL (15 December 2008)

Frank D said:


> ..but *you have to separate the reasons why you are trading.*
> 
> If I’m trading the SPI then all *I’m concerned about is achieving my primary income targets for each day:- income and standard of living.*
> 
> ...




The discussion is at sixes and sevens; the pertinent sections in red.

Traders who need their profits to pay for groceries, the lease on the Porche and a bottle of Moet at the end of the week, aren't primarily concerned with outliers, it's about income.

Those who already have that covered with a day job and are trading for the purpose of building wealth, can wait for the fat tails.

Of course I've just paraphrased Frank, but maybe said a different way.

Of course there is nothing to stop the income trader doing both.


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## theasxgorilla (15 December 2008)

tech/a said:


> Most feel that its just pure luck and a fluke if you get on one and getting on multiple moves---well thats impossible.
> I dont think so.




A skilled surfer can do more with poor conditions than a less skilled surfer.  But no matter how skilled the surfer he can't make the conditions.  Being in the right place at the right time plays a part.  Call it luck, fluke, good timing, perseverance...whatever.


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## jonojpsg (15 December 2008)

theasxgorilla said:


> A skilled surfer can do more with poor conditions than a less skilled surfer.  But no matter how skilled the surfer he can't make the conditions.  Being in the right place at the right time plays a part.  Call it luck, fluke, good timing, perseverance...whatever.




Great analogy!  Living in Tassie we know all about finding the right conditions for a surf - its an art form, especially finding the BIG ones!  It's also about having the right information at your fingertips - which is exactly the same for getting on an outlier I would think.  Knowing the fundamentals of companies, the trading data, the macro trends, etc.  all these are necessary for getting on at just the right time


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## peter2 (15 December 2008)

Outliers from a statistical aspect occur rarely and are only idenitied by looking at a batch of results. Trades with a huge profit also occur rarely but whether they are outliers depends on your trading strategy. If you target large wins then they are not outliers but happen as a consequence of your planning. 

I believe tech/a is discussing whether it is possible to target large wins (using normal sized risk) rather than statistical outliers.


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## tech/a (15 December 2008)

theasxgorilla said:


> A skilled surfer can do more with poor conditions than a less skilled surfer.  But no matter how skilled the surfer he can't make the conditions.  Being in the right place at the right time plays a part.  Call it luck, fluke, good timing, perseverance...whatever.




Of course.
But if The surfer was alerted that a 6 ft swell was breaking RIGHT NOW then chances are he would be there.

Pete 
Possibly.
I have called the person I wanted to speak to and have good and not so good news.(Cleared it with Joe also).
I'll write it up when I have some more time.


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## cuttlefish (15 December 2008)

tech/a said:


> I have called the person I wanted to speak to and have good and not so good news.(Cleared it with Joe also).
> I'll write it up when I have some more time.





Well you've definitely got the curiousity up from my end ... don't leave us hanging too long please


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## cuttlefish (15 December 2008)

I'd hate to pollute a technical discussion with comments about fundamentals ... but in my view fundamentals are great for assessing whether a stock has the potential for a significant move.

Getting the timing sorted out is another matter.


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## awg (15 December 2008)

I will be very interested when Tech posts his methodology.

Very many of the stocks that rise 100% have been small caps, or taken a very heavy fall.

In the limited testing I have done, my success has relied on picking one that had a rise approaching 100%.


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## peter2 (15 December 2008)

Ha, tech/a you crack me up.  
You are a natural showman. Just the hint of you possibly releasing some secret trading info is enough to start the Pavlovian response.

Take your time. We wouldn't want to see you breach copyright or someone's tightly held trading secrets. Whatever you do don't post the Holy Grail trading method!  That would really piss me off. The whole trading education industry would shutdown overnight.  
Even though Joe has OK'd it you should probably get the US Senate to vote on your motion. :


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## MRC & Co (15 December 2008)

Trembling Hand said:


> I have my own way of catching outlier days (which have been plentiful this yeah) that if I think you are ever receptive to another persons method I may share with you. :




Yeh, this I would be interested in.

I guess it is taking most of the contracts off the table and trailing a couple for the rest of the day with a wide stop?  But which days to do this and which to not?  I wouldn't have the slightest.  Only moves I can see are HUGE volume ones, where something is really going on, but it usually ends within an hour or two max with some MONSTOR squeezes amongst it.


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## tech/a (15 December 2008)

peter2 said:


> Ha, tech/a you crack me up.
> You are a natural showman. Just the hint of you possibly releasing some secret trading info is enough to start the Pavlovian response.
> 
> Take your time. We wouldn't want to see you breach copyright or someone's tightly held trading secrets. Whatever you do don't post the Holy Grail trading method!  That would really piss me off. The whole trading education industry would shutdown overnight.
> Even though Joe has OK'd it you should probably get the US Senate to vote on your motion. :





Pete whilst I see where you get the idea from that's not my intention which will become clear I hope in the following.

All of these very quick aggressive moves all seem to have common characteristics.
(1) Large to massive increase in volume
(2) Large to massive increase in number of trades.
(3) Often gaps away from the previous days price close and often the high.
(4) They tend to break from long consolidations or from consolidations after an initial break.

Sure its easy to find them the next day but that's often to late.
Marketcast which used SBS signal had a capability of searching the whole of the ASX in real time returning this information in real time on a spread sheet which ranked highest to lowest.
You could refresh the page at the click of a mouse every 10 seconds or so if you wished.
It becomes very obvious very quickly which are moving up the spread sheet on each click.

It was a matter of then looking up the live chart (I used 5 min and daily for pattern) and placing the best low risk trade I could on the stock if it met the criteria.I then managed with the 5 min chart.Allowing 50% retracements of any move from a high.

Today's Phone call was to Scott the principal of http://www.markettools.com.au/
And long term programmer with Marketcast.
Marketcast ceased business sometime ago and with it went the ability to do these instant searches.
My question to Scott was if his software Prospecta could do it.

Unfortunately according to Scott---the Net and SBS work very differently so its not possible to do instantaneously with the net.
He has however offered to see if he can find a solution.

The only work around I have found is Just Data's snap shot downloads at 30 mins from open then every hour.
You could then search the criteria (All but number of trades---which is a bugga as this is important--you don't want a 30% move on high volume from 2 trades!).
I have Bodhi 5 now and am in the process of trialling the above idea for prospects.


There is more to the trade management than that above and I'm sure I and others could improve on how I pyramided aggressively and quite possibly exited.

The problem of course is that if you cant get on to these as early as the first hr or so chances are you'll have missed the best possible low risk entry.

Hope this generates some thought and discussion.


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## MS+Tradesim (15 December 2008)

Netquote provide the ability to do real time searches based on your criteria if you're prepared to pay $149/mth. I used it for some time when intra-day scalping years ago.

http://asx.netquote.com.au/equitypro.asp


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## MRC & Co (15 December 2008)

theasxgorilla said:


> A skilled surfer can do more with poor conditions than a less skilled surfer.  But no matter how skilled the surfer he can't make the conditions.  Being in the right place at the right time plays a part.  Call it luck, fluke, good timing, perseverance...whatever.




Yeh, that is a big part too.

There were some periods this year, where big guys were showing their size to try and desperately get in/out of positions.  You only had to wait for size and frontrun it and you could have made money!  Most of October comes to mind!


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## Trembling Hand (15 December 2008)

Tech I might be able to help you.

http://iguana2.com/spark

I beta tested this new software through the year. It has some very nice real time data scanning, what they call "Smartlists". From their web site,



> Smartlists
> With Smartlists you can filter the market to find trading opportunities that would normally go undetected in the broader market.
> 
> Some example Smartlists include
> ...




Have a look all you punters and tell them I sent you. 

MR C will get to you Q's in another thread tomorrow. Its now Beer O'Clock.


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## MRC & Co (15 December 2008)

Trembling Hand said:


> MR C will get to you Q's in another thread tomorrow. Its now Beer O'Clock.




ha ha, sweet as!  

I remember you talking of trailing some contracts up on some of those HUGE moves back around October.  I often think to myself, wish I just let a contract run today, but it never happens!


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## Wysiwyg (15 December 2008)

Spark Smartlist hmmm.

For years I have looked for a scanner that monitors the ASX constantly for any stock that meet predefined criteria.Software that runs in the background with a visual and audible alert to which particular stock has moved.

I used to trade live news which reeled in some good winners.Of course the best positions were taken leading up to the news and were promtly exited when fever set in.

I have always thought % moves would suffice as the main scan criteria.Followed by a discretionary perusal of reasoning -- either technical, fundamental or as yet undetermined -- before deciding  on entry or not.

note : - this would be to make the most of those outliers by nabbing them in the early stage.


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## tech/a (15 December 2008)

Thanks T/H and M/S I will ask some pertinent questions to both and grab one.

$200/mth is pretty good.


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## MRC & Co (15 December 2008)

Wysiwyg said:


> I used to trade live news which reeled in some good winners.Of course the best positions were taken leading up to the news and were promtly exited when fever set in.




Without inside information, isn't that just pure gambling Wysiwyg?  

Agree with Tech though, in that big volume usually accompanies big outlier moves, it also generally provides the liquidity to get out QUICK (if the volume isn't simply crossing a large spread), which is needed, along with the moves being more likely if all major markets in the region are moving together.  When Nikkei, Hang Seng, S&P night session and SPI all start moving fast and furious in one direction with large volume it usually continues for a while and is perhaps the only time you should chase a trend and perhaps widen stops.


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## Wysiwyg (15 December 2008)

MRC & Co said:


> Without inside information, isn't that just pure gambling Wysiwyg?




Me ... gambling ... not on your life fella. 

I`m an astute investor with impeccable judgement and morals of the highest standard.


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## lindsayf (15 December 2008)

one way of identifying possible big breakouts is to look for shares trading in a horizontal channel for a significant length of time that show the following characteristics:

volume spikes--showing interest by those in the know? 
rising volume nearing breakout time
rising on balance volume over a longer period, showing gradual accumulation

you then capture the break with a previously placed conditional buy and then manage it as you will...

Not many fitting this bill lately


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## Cartman (15 December 2008)

I dunno  I reckon picking up a hundred points on the SPI 4 times in a row with a modest stop loss is a hell of a lot easier than picking XYZ at 20 cents and hoping it runs to 40 cents with only a 2 cents stop in place  Same profit target with less risk!


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## Wysiwyg (15 December 2008)

So if all 2 baggers (or higher) from Jan. 2003 to Jan. 2008 were analysed, then certain characteristics would be particular to all the  2 baggers.

Upon identifying the 2 baggers (or higher) the lead up to breaking up would have the characteristics lindsay identified plus others and what I think that is most significant in recognising them, the sector.That being for example ...

if the demand for uranium was going to be insatiable then all stock in this sector would have to placed under strict observation for news on grades, tonnage, location etc.

note ; 2 baggers from low


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## It's Snake Pliskin (16 December 2008)

Wysiwyg said:


> So if all 2 baggers (or higher) from Jan. 2003 to Jan. 2008 were analysed, then certain characteristics would be particular to all the  2 baggers.
> 
> Upon identifying the 2 baggers (or higher) the lead up to breaking up would have the characteristics lindsay identified plus others and what I think that is most significant in recognising them, the sector.That being for example ...
> 
> ...




But each stock and market condition are different and the particular market character would have to be taken into account. A lot like comparing apples and bananas for not so precise, nor clear statistical, usable information. 

Better off to learn it then look for it as it plays out in the current market taking into account what the current market and stock is doing. If a stock is rising into a falling market and there is an inkling of investors wanting to sell after some rises then how hard is it for that potential outlier to keep going when the overall market mood is against it? But if it has a unique position within the market then perhaps it hasn't suffered the heavy investing and will not be hit hard by sellers because the real money is behind it. 

So once again oranges and lemons.


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## Wysiwyg (16 December 2008)

It's Snake Pliskin said:


> If a stock is rising into a falling market and there is an inkling of investors wanting to sell after some rises then how hard is it for that potential outlier to keep going when the overall market mood is against it? But if it has a unique position within the market then perhaps it hasn't suffered the heavy investing and will not be hit hard by sellers because the real money is behind it.
> 
> So once again oranges and lemons.




Valid point snake.Yes within the bull market there will be a sector that out-performs the rest.Within that sector would be the most likely place to find an outlier, or multi-bagger for us amateurs.

Though when the rocks were hot the odd AIDS miracle cure did well.Citrofresh I think from memory.


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## nomore4s (16 December 2008)

lindsayf said:


> one way of identifying possible big breakouts is to look for shares trading in a horizontal channel for a significant length of time that show the following characteristics:
> 
> volume spikes--showing interest by those in the know?
> rising volume nearing breakout time
> ...




Typical Wyckoff set up (as well as other names), really just building a base, need to have the balls to hang on through the reactions after you enter, this is the bit I find the hardest.

Will be plenty of stocks fitting this bill in the next couple of years or however long it takes to recover from this current mess.


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## motorway (16 December 2008)

> *Surprising Trend Changes*
> 
> The case has been built that trend changes are usually the result of an
> unexpected change in the workings of the market or the economy. Experience shows
> ...



---But the consensus is always vulnerable to the minority of doubters who are always open to the unknown unknown...* Turning Points*




> volume spikes--showing interest by those in the know?
> rising volume nearing breakout time
> rising on balance volume over a longer period, showing gradual accumulation




So a chart of MQC

from the peak of 05 to the peak 07 
accumulation or distribution ?

motorway


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## BBand (16 December 2008)

Given the option - I'd put my money on Cartman (#45)


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## Cartman (16 December 2008)

BBand said:


> Given the option - I'd put my money on Cartman (#45)




Ah!!  You are obviously a clever man BB  not trying to hijack the thread cause Outliers are great if you manage to get em but why back the long shot in a two horse race !!


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## It's Snake Pliskin (16 December 2008)

Cartman said:


> Ah!!  You are obviously a clever man BB  not trying to hijack the thread cause Outliers are great if you manage to get em but why back the long shot in a two horse race !!




I addressed this in my first post:



> Outliers.
> Events which are outside the norm of a data set (Which can be any chart of any commodity).
> These are the true profit churners.



By Tech/A.
And then me:


> We need a better definition of the word. If outliers are relied on for regular income and profit, then should they be called outliers? If they are common then they may not be outliers. And only the mother of all moves may be considered outliers because they happen rather rarely.
> 
> So is there a better and more concise interpretation of what an outlier is?
> 
> Why not just call them percentage moves and grade them with broader grades as they get bigger?



So what about the profit from non-outliers which is very nice to get indeed?
Why not just look for percentage moves that are more common than outliers in frequency?


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## tech/a (16 December 2008)

Cartman said:


> Ah!!  You are obviously a clever man BB  not trying to hijack the thread cause Outliers are great if you manage to get em but why back the long shot in a two horse race !!




Because *as the race is running *you can place your bet even though its obvious the long shot is 10x faster than the other horse and has bolted 5 length clear out of the gate.

You don't back it as its being led to the gate!

*Snake*
Nothing wrong with that and preferable to most.
However if you can clearly see the above (Horse analogy) then why wouldn't to take a low risk trade with possible excellent R/R?


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## It's Snake Pliskin (16 December 2008)

tech/a said:


> Because *as the race is running *you can place your bet even though its obvious the longshot is 10x faster than the other horse and has bolted 5 length clear out of the gate.
> 
> You dont back it as its being led to the gate!




Why not look for percentage moves that are more common than outliers? There is a chance one may be the big one.

Outliers happen very rarely.


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## It's Snake Pliskin (16 December 2008)

> *Snake*
> Nothing wrong with that and preferable to most.
> However if you can clearly see the above (Horse analogy) then why wouldn't to take a low risk trade with possible excellent R/R?



Exactly my point below.
But when you read this it will be above


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## Cartman (16 December 2008)

tech/a said:


> Because *as the race is running *you can place your bet even though its obvious the long shot is 10x faster than the other horse and has bolted 5 length clear out of the gate.
> 
> You don't back it as its being led to the gate!
> 
> ...




Hey Tech  I know where youre coming from but my horse analogy is meant to be a bit cryptic

Whatever stock/index/whatever you pick is irrespective  the TWO horses in my race are PRICE      It will only go up or down      My point was ----- why try to pick a penny dreadful looking for a  riskier return when u can back a highly liquid futs/index/fx  with a stack of historical data to study from 

ps I knowyou are good at these plays and have minimum risk with your setups but new players might be better off concentrating on my kind of horse race     definitely not the 5th at Flemington !! (No 3 if anyones interested)


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## tech/a (16 December 2008)

Well look at that.
IB's workstation and E'signal seem to have what I want.


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## Cartman (16 December 2008)

tech/a said:


> Well look at that.
> IB's workstation and E'signal seem to have what I want.




Links dont seem to load Tech -------- please enlighten  us as to your point --


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## tech/a (16 December 2008)

Cartman said:


> Links dont seem to load Tech -------- please enlighten  us as to your point --




No its a screen shot of IB (Interactive Brokers) which is my trading platform.
Just mentioning that it seems I can get what I want from a source I already have.
I dont subscribe to their data as I have a live feed already so will see if I cant run both (As the other live data is also e'signal which is also IB's source I think.

Sorry to confuse Posted it incase others are using IB.


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## wayneL (16 December 2008)

Cartman said:


> I dunno  I reckon picking up a hundred points on the SPI 4 times in a row with a modest stop loss is a hell of a lot easier than picking XYZ at 20 cents and hoping it runs to 40 cents with only a 2 cents stop in place  Same profit target with less risk!



Have a look at oil futures too.

Yesterday's range was near enough to 600 ticks and that is quite common.

Catch one $2 move per week net of costs stop outs etc, day trading with one contract, and that's wages.

Catch a big trend on any of the commod futures, pyramiding in a few contracts can be a career maker.

The move on oil from the highs to where we are now is worth ~$100,000USD per contract.


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## Cartman (16 December 2008)

wayneL said:


> Have a look at oil futures too.
> 
> Yesterday's range was near enough to 600 ticks and that is quite common.
> 
> ...




Absolutely WAYNE ----- much rather take the highway a few times than the bumpy road to maybesville ----- plus m'sville is never where you think it is on the map!


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## It's Snake Pliskin (24 December 2008)

tech/a said:


> No its a screen shot of IB (Interactive Brokers) which is my trading platform.
> Just mentioning that it seems I can get what I want from a source I already have.
> I dont subscribe to their data as I have a live feed already so will see if I cant run both (As the other live data is also e'signal which is also IB's source I think.
> 
> Sorry to confuse Posted it incase others are using IB.




Tech have you sussed it out yet? Is it a viable option using IB?


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## tech/a (24 December 2008)

No not yet.
I have live data from esignal on Tradeguider and the same on IB.Will have a look into it in the new year.


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## It's Snake Pliskin (24 December 2008)

tech/a said:


> No not yet.
> I have live data from esignal on Tradeguider and the same on IB.Will have a look into it in the new year.



Ok. What was the purpose of this thread then?


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## tech/a (24 December 2008)

Discussion on outliers.
Plus I have found possibly 2 sources if mine doesnt pan out.

You got nothing from it?


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## It's Snake Pliskin (25 December 2008)

tech/a said:


> *Discussion on outliers*.
> Plus I have found possibly 2 sources if mine doesnt pan out.
> 
> You got nothing from it?




Tech there has not been much discussion from you. It seems you have just wanted to play the giving links to partial information role. I formed a question through opinion and you have failed to address it. Please look back at my first posts and what I said. 

You provided an idea that lead me to believe you had something to genuinely share that was groundbreaking. I have still been waiting and now you say next year you will look into it. 

Why not just wait until you have real authority to talk about it?


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## tech/a (25 December 2008)

*Snake*

Told you how I did it and how I would do it if the software was/is available.
Did it for 3 yrs,when I had the time to watch the screen.
Managed to get some great outlier moves.

Worked very well.
Just to re cap then.

You need real time scanning capability.
I looked for 
(1) A sharp increase in number of trades.
(2) A sharp increase in volume.
(3) A strong % gain from yesterdays close.
(4) I found small gaps if any were better than large gaps.
(5) I looked for pattern---did the move originate from a basing.

The software had the capability of being refreshed every click of the mouse.
The results were realtime and ranked from largest to smallest and it was/is very easy to see a stock moving up the ranks often by the minute.

Have a Great Xmas and hope this helps.


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## It's Snake Pliskin (25 December 2008)

tech/a said:


> *Snake*
> 
> Told you how I did it and how I would do it if the software was/is available.
> Did it for 3 yrs,when I had the time to watch the screen.
> ...




Thanks for your response Tech. What did you think of my opinions in the first few posts?
Have a great Christmas too. 
Lets have some meatier discussions in the new year.


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## tech/a (25 December 2008)

It's Snake Pliskin said:


> Thanks for your response Tech. *What did you think of my opinions in the first few posts?*
> Have a great Christmas too.
> Lets have some meatier discussions in the new year.




I was and am thinking of those which turn into the larger very rare moves (In a chart). Given bullish conditions they occur often across a sector and recently across resources.
While the above will identify all of these you of course need to have seen the move early enough and actually be on it.

I saw many I was to late and many that I didn't see as I wasn't looking.
However there were enough taken to be significant.


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