$15,000 to Over $750,000 in 7 yrs Impossible? Think again!

tech/a said:

Yeh well so am I.

But as you say once you know,we can all consider these options which most if not all dont even consider.

It doesnt have to be harder than it is!

Attempting to trade $15000 to even $100,000 in say 2 yrs would be an impossibility in 95% of cases,I would suggest.

With a bit of lateral thinking the impossible becomes the achievable to most anyone.

Click to expand...

Indeed!

tech,

How did you get tradesim to understand margin in its position sizing setup ?
Great post and I've always noticed that small tinkering with postion sizing makes a much bigger diffrence than small tinkering with parameter values.


HM

Has anyone thken the effects of taxation by incorporating a super fund?

Hard.

On the main Parameter table you'll find Margin panel on the right,Its normally set at 100%. 40% is 2.5:1 33.3% is 3:1 etc. I have enterprise edition so that maybe the difference if you have the Pro edition.

Ill post a screen shot when home (Tradesim not at the office) if you cant find it.

It will also give you open and closed equity which is also very handy.
Thats a bit more complex to explain.

Noika.
While the tax aspect is advantagous I personally prefer to use my Super in Property--in particular our Offices and warehouse as you may be aware the tax advantages in this case are tremendous.

The main reason for this is that when trading I cant borrow against (Leverage) my positions. The effect of using others money (In my case) is far more profitable than tying it up in Super.

If I take out the leverage the returns even on my best method are (In comparison) to leveraged positions very ordinary.

However having said that its a personal thing.
I have funds I could place in super but choose not to for the reason of flexability,plus I can use the funds how and when I wish with a bigger return even having to pay the tax,mind you most are traded over 12 mths which cuts the tax in half.
Its a matter of balancing return.Sometimes its a minor benifit when compared to alternatives. Accountants who dont trade (Even those that dont trade particularly well!!) tend to be narrowly focused.

My accountant used to snikker (Cant use S******) with the 2 "G's in it.quite loudly when I mentioned I traded,that seemed to stop around 3 yrs ago.

tech,
Thanks, found it all ok, never used margin in trading before.Cant do that in an SMSF.



Rgds,

HM

Tech
Challenging post!

Challenging in that lots can happen between now and 7 years, but obviously not impossible. 20% return per annum is certainly very achievable with the right system, and in a good year 40% plus....

It gets a little harder as capital rises due to liquidity, although $750,000 isn't a problem in the Aussie market. $10 million plus would be a bit harder. Try getting out of a million worth of stock in a day where liquidity has dried up.

The key is what you stated in your first post - find something that you know works and trade it. But also make sure that the approach fits in with lifestyle and risk parameters of the individual.

Also some people should not trade shares and they should not be enticed to do so - they see the end result but they struggle to make the journey.

stevo

Here is a complete weekly mechanical trading system that I coded up a while ago.It is based on Alan Hulls publically avaliable ActVest system.Now his system has a few subjective components and some fundamental bits,however this Metastock/TradeSim code produces very similar results longer term.

I dont trade this system, however when I run it over the StGeorge margin lending stock list (about 500 symbols) it cranks out about 20% per annum with around 10% drawdown over the last ten years of data.2% fixed fractional postion size 20% limit per stock.




Rgds,

HM

Indicators -Paste into indicator builder
Cental Cord -:

LinearReg(C,13)

LowerDeviation Bull-:

If(LinearReg(C,13)>PREV,If(LinearReg(C,13)-(ATR(13)*2.5)>PREV,LinearReg(C,13)-(ATR(13)*2.5),PREV),LinearReg(C,13))

Sytstem - Paste into Explorer

{START SYSTEM}
IndexFilter:=If(Mov(P,3,E)>Mov(P,10,E),1,0);
{plot XAO weekly and click on it before running exploration}

Short:=Mov(CLOSE,3,E)+ Mov(CLOSE,5,E)+
Mov(CLOSE,8,E)+ Mov(CLOSE,10,E)+
Mov(CLOSE,12,E)+ Mov(CLOSE,15,E);
Long:=Mov(CLOSE,30,E)+ Mov(CLOSE,35,E)+
Mov(CLOSE,40,E)+ Mov(CLOSE,45,E)+
Mov(CLOSE,50,E)+ Mov(CLOSE,60,E);

Value:=((Short-Long)/Long)*100;

Trendy:= Value>3 AND Ref(Value,-3)>3 AND Ref(Value,-6)>3 AND Ref(Value,-15)>3 AND Ref(Value,-26)>3 AND Fml("Central Cord") > Ref(Fml("Central Cord"),-1) AND
Mov(CLOSE,30,E) > Ref(Mov(CLOSE,30,E),-1);



SetUp:=Fml( "ROR") > 30 AND (C < Fml( "Central Cord")) AND (C > Ref(C,-1)) AND (CLOSE * VOLUME) > 10000 AND C > 0.5 AND IndexFilter AND Trendy;
{NOTE - My Data Source Divides Daily Volume by 100}

EntryTrigger:=Setup;
EntryPrice:=OPEN;
InitialStop:= Fml("Lower Deviation Bull");

ExitTrigger:=CLOSE<Fml("Lower Deviation Bull") AND Ref(CLOSE,-1) > Ref(Fml("Lower Deviation Bull"),-1) OR Fml("ROR") < 20;
ExitPrice:=OPEN;




ExtFml( "TradeSim.Initialize");
ExtFml( "TradeSim.SetStartRecordDate",1,1,1997);
ExtFml( "TradeSim.SetStopRecordDate",31,12,2005);
ExtFml("TradeSim.EnableProtectiveStop",0);
ExtFml("TradeSim.EnableDelayOfEntryByOneBar");
ExtFml("TradeSim.EnableDelayOfAllExitsByOneBar");
ExtFml( "TradeSim.RecordTrades",
"Hull System ",
LONG,
EntryTrigger,
EntryPrice,
InitialStop,
ExitTrigger,
ExitPrice,
START);

Sorry, you will need this bit too.

ROR indicator -: { Rate of Return}

200*(LinearReg(C,52)-Ref(LinearReg(C,52),-26))/C

HM

hey tech/a great posts it has got me very interested. im starting to learn about these trading systems am reading tech analysis for dummies, which i've been using combined with fundamental anaylsis to trade lately.

what kinds of systems are available and what is the best way to learn the ropes?? i havent used a trading system at all previously

also some systems in the book are done making an average of i think 8 trades per month, maybe more. do you guys find that it is better to go long in some cases. ie reduced brokerage, reduced tax (capital gains 1yr plus)

cathers_420 said:

hey tech/a great posts it has got me very interested. im starting to learn about these trading systems am reading tech analysis for dummies, which i've been using combined with fundamental anaylsis to trade lately.

what kinds of systems are available and what is the best way to learn the ropes?? i havent used a trading system at all previously

also some systems in the book are done making an average of i think 8 trades per month, maybe more. do you guys find that it is better to go long in some cases. ie reduced brokerage, reduced tax (capital gains 1yr plus)

Click to expand...

Cathers.

An important question which I feel (I could be wrong) many would like answered in the way of guidence in their pursuit of developing a trading methodology.
I'm thinking of putting together a thread in answer to your question basically walking you through the steps of systems/method developement.
Not actually designing one although we could do that but more pointing in the right direction.
I expect there would also be some good questions.

If people would like a seperate thread let me know and I'll get started.

tech/a said:

Cathers.

An important question which I feel (I could be wrong) many would like answered in the way of guidence in their pursuit of developing a trading methodology.
I'm thinking of putting together a thread in answer to your question basically walking you through the steps of systems/method developement.
Not actually designing one although we could do that but more pointing in the right direction.
I expect there would also be some good questions.

If people would like a seperate thread let me know and I'll get started.

Click to expand...

Thats a great idea tech and 1 im sure many would find both interesting and educational

tech/a said:

I expect there would also be some good questions.

If people would like a seperate thread let me know and I'll get started.

Click to expand...

yes please tech

i think thats a great idea. for many ppl like myself i feel i have developed a basic idea on analysing a company on a fundamental basis. BUT am wanting to expand this to a technical viewpoint also.

the more i research the more i feel i have to learn. topic areas like

charting
indicators
patterns
trendlines

trading systems
analysing data
entry/exit points
filters - how to use them and change them
system trading rules

tech/a said:

Cathers.

An important question which I feel (I could be wrong) many would like answered in the way of guidence in their pursuit of developing a trading methodology.
I'm thinking of putting together a thread in answer to your question basically walking you through the steps of systems/method developement.
Not actually designing one although we could do that but more pointing in the right direction.
I expect there would also be some good questions.

If people would like a seperate thread let me know and I'll get started.

Click to expand...

I would be very interested tech, and I am sure although a lot on here think they trade a method, actually don't.I am not totally happy with my methodology, if I have one.:dunno:

cathers_420 said:

i think thats a great idea. for many ppl like myself i feel i have developed a basic idea on analysing a company on a fundamental basis. BUT am wanting to expand this to a technical viewpoint also.

the more i research the more i feel i have to learn. topic areas like

charting
indicators
patterns
trendlines

trading systems
analysing data
entry/exit points
filters - how to use them and change them
system trading rules

Click to expand...

Agree, thats pretty much where im at

Definitely go for it Tech. I'm struggling to get back into my education regime. I thought I was doing well but then got dragged into something at work and all the books & cd's went on the back burner. The only constant at the moment is being able to hit this site whenever I get a spare second.

A big thanks for all the 'edumacation' from all the experienced guys here.

Tech/A that'd be really appreciated. Thanks.

Interesting post.

Re: Some system design issues.

I have found issues with liquidity in some ASX200 stocks, so Stevo's point is worth considering.

Also I'm interested in how survivorship bias was handled as a 7 year period would incorporate some notable new economy stocks that are no longer gracing our screens.

My figures for June 99 (13539) - June 2006 (30405) for the AOAI demonstrates a CAGR of 12.26% so a mech system returning 15% is admirable.

Though the point of compounding is a valuable one, and the particular system might not be so important.

Interesting stuff, but I don't understand the numbers. If we start with $15,000 and compound at 15% per annum for seven years, as per the original post, we end up with $39,900, not $46,000 as stated. Add an extra year, though, and we will reach $45,900:

• Year 0: 15,000.00
• Year 1: 17,250.00
• Year 2: 19,837.50
• Year 3: 22,813.13
• Year 4: 26,235.09
• Year 5: 30,170.36
• Year 6: 34,695.91
• Year 7: 39,900.30
• Year 8: 45,885.34

In the next stage, I don't understand what you mean, Tech, when you say "and now we reinvest profits". If you are making a return of 15% per annum and reinvesting profits then surely you will get exactly the results shown above? That is, in the first year, you will make 15% of $15,000, which is $2,250. This is added to your equity and compounded in the second year ... I don't understand how you suddenly jump from an ending equity value of $46K to around $100K. Could you explain this?

Cheers, Staybaker.

Staybaker,
Tech is using Leverage.