ASX Game: Successful strategies for very short term, when risk is not a concern?

[Hodgie]

Hi Nick,

Just so that you are aware. Rather than speculating on what the players currently near the top are doing you should know that half way through the game and also at the end of the game the top players are asked to provide a short summary of the strategy they are using in the game to get to where they are.

I think at the start of this game there was an email sent out which included insights from the last years players.

On another note, I would not worry too much about how well other players are going in the game. I had a work collegue in my office who for a 2 week period was coming in 1st place. What he was doing was concentrating his portfolio in a single industry (this was mining) and hoping that there is an upswing in that specific market. He also had some highly leveraged companies in there and picked the minimum amount of stocks (i think you can invest a maximum of $12,500 in 1 company). At one point he was over 2k in the lead.

His portfolio would swing thousands of dollars in both directions each day.

This is a strategy that he would never implement with his own money as it clearly ignores a fundamental rule of diversification. A Very high risk strategy especially considering the current conditions of the mining indistry. One of his chosen companies has now gone under (FGE).

If you want to learn or test your strategies and system this is not the way to go. He got nothing out of the game rather than going for a shot at the prize money.

Just something to consider when playing the game and comparing your portfolio to other players. Not everyone is playing for the same reasons.

 

[NickF]

Re: The ASX Game - Successful strategies for very short term, when risk is not a conc

Nicee, I broke even for a while in the last couple of weeks, and then went negative for a little while. I'm going okay now at 50,900, ranked 1434 though. I'm doing another portfolio comp for uni, I was trying to use a different kind of strategy in the first practice round I came like bottom 50 haha.
How you going now?

Hi Skraze, I am not doing too well. On Friday I was around $50200 and today I was $49261, I encountered quite large losses since my peak. Probably I made such mistakes as not being patient and I switched from my original strategy, which apparently was more successful. I also got into some hilarious situation, when I notified the admin of the game for some orders not going through (my buy order was higher than the current price). I got a puzzled answer back, saying that a many stocks from my portfolio were not part of the game, and only a few were. I eventually discovered that when I used my software to buy the stocks, I selected an incorrect list (ASX 300) instead of the game list That did not change much the situation, I had to clear all those stocks and buy something else. Now I try to understand if using a Stop-Loss strategy has a positive effect or not. I am doing simulations and if I implement a stop loss strategy, it seems to affect quite badly the successful trades as well. I make (in simulations) most of the money when not having a stop-loss, but the variations are wider. I thought I found a strategy that can bring overall about 15% profit per year (this happened for the period from 2003 to 2014). However, when running the same strategy for 2013 - 2014 I was on negative most of the time and only got back to positive in the second part. Overall, the simulation shows $50 made in 30 trading days for every $5000 investment. I am happy that I found a set of conditions that can be implemented in a computer and get positive results and I am working to improve the outcome.

Regards,
Nick

 

[NickF]

Hi Nick,

Just so that you are aware. Rather than speculating on what the players currently near the top are doing you should know that half way through the game and also at the end of the game the top players are asked to provide a short summary of the strategy they are using in the game to get to where they are.

I think at the start of this game there was an email sent out which included insights from the last years players.

On another note, I would not worry too much about how well other players are going in the game. I had a work collegue in my office who for a 2 week period was coming in 1st place. What he was doing was concentrating his portfolio in a single industry (this was mining) and hoping that there is an upswing in that specific market. He also had some highly leveraged companies in there and picked the minimum amount of stocks (i think you can invest a maximum of $12,500 in 1 company). At one point he was over 2k in the lead.

His portfolio would swing thousands of dollars in both directions each day.

This is a strategy that he would never implement with his own money as it clearly ignores a fundamental rule of diversification. A Very high risk strategy especially considering the current conditions of the mining industry. One of his chosen companies has now gone under (FGE).

If you want to learn or test your strategies and system this is not the way to go. He got nothing out of the game rather than going for a shot at the prize money.

Just something to consider when playing the game and comparing your portfolio to other players. Not everyone is playing for the same reasons.

Hi Hodgie,

Your comments are sensible. However, I think the people who are in the top at the moment have more knowledge than I have, some of them manage to remain consistently on top 100 almost all the time and even to gradually increase the amount. Which means it's not entirely pure luck on their side. My actions in the game are of course, based on the knowledge and strategy I have at this moment. In case I come up with a better strategy, I will test it, either in this game or the next one. You are right, the maximum one can invest in one stock is 25% of the cash (or total amount?) they have.

Cheers,
Nick

 

[NickF]

Re: The ASX Game - Successful strategies for very short term, when risk is not a conc

Gday Nick,

Thank you for sharing your experiences so honestly with us.

A strategy that many punters use is exit if the close is above the upper Bol Band and RSI (14 day)is > or near 70% ....not the Holy Grail of course (there isn’t one) but it would have given you pause to think twice about entering CBA on such a high. Of course many times a stock will just catch its breath at such a high and continue soon after. Never mind if you miss it ... there will be plenty of other opportunities every day to get in at the start of a trend.

Another warning sign is if Big White candlesticks and range/ATR get well above *2...tighten your Stop Loss if you are already on board.

I admire your coding skill, but no point in reinventing the wheel. For a few hundred dollars purchase Tradesim (or trial it very cheaply), which works perfectly with Bullcharts and other software to backtest any theory you like. If you are able to write the indicator in BC or use one of the many preset ones, it’s a cinch to backtest it in seconds over many years and hundreds of stocks using Tradesim.

If you do backtest a system be careful of past post betting...using “if it CLOSES above x...” and assume you would obviously have been on board that stock earlier in the day. You don’t know where the close will be. The Big White Candlestick of the morning could end up being a Shooting star or worse in the afternoon. You’d have to realistically test a system by writing ..enter at High,Close today, or Open next day.

I incorporate any successful indicators into Excel to automate my live scanning, then most important of all eyeball the weekly, daily, and one minute charts of the codes it throws up.

Good luck, mate.

Hi Cudderbean,

I considered the Bollinger bands one of the most significant indicators and even my earliest strategies involved buying when the price was under or close to the lower Bollinger band. Unfortunately for me, when I decided to buy CBA I did not even bother to check the graphs and reconsider if the position relative to the Bollinger bands is a safe one. All that was in my mind at that time is that the crisis is over and in no time the prices will go back close to where they were before and if I don't buy NOW, I will lose the opportunity I need to be more patient...
Thanks for letting me know about other software available, I might have a look at it so see what are its capabilities. So far I am reading some books and I swing between optimism and pessimism about share market - some believe there is hardly any value in technical analysis, while others tend to ignore the news and concentrate purely on the numbers. I tend to agree with the statistical analysis and although past performance does not guarantee future performance, I'd rather stick with a strategy that worked well in the past (if there is any such strategy) than with one that never worked. On youtube there are some interviews of what is claimed to be successful people and they say they developed a system (or experience) that gives them very positive results. There is a lady who does option trading and it is claimed she can make on average around 50% per annum and she does not read news or business data, just checks the numbers. I already noticed, sometimes there is really good news and the prices sink, it's quite crazy and unexpected.
Some people say that if one strategy works, it won't work for too long, since there are many smart people in the market and they will soon discover what works.
When testing various conditions, I try to be careful not to read data from the future.

Cheers,
Nick

 

[Hodgie]

Re: The ASX Game - Successful strategies for very short term, when risk is not a conc

I already noticed, sometimes there is really good news and the prices sink, it's quite crazy and unexpected.

Nick

Which ever way you decide move forward with your strategy, something to keep in mind in terms of new released is that there is a massive difference between unexpected news and news which was already factored in as a possibility to current and potential investors.

If something is completely unexpected which has a significant impact on the underlying operations of a business it is much more likely to follow through and have a more immediate impact on the pricing of the company. An example could be a legislative change out of the blue which comprimises the profitability of a company/industry or a fatal accident in a mine causing the shutdown of operations.

Alternatively if the news is something that was already considered to be a likely possibility and is therefore reflected in the current share price of the company (even before the news being released) then there will be a far less significant impact on the share price the day the news is released. This could be something like the RBA not changing the cash rate recently or the announcement of a particular political party winning the election where the win was already all but certain. In these situations the share price is likely to move gradually over time to reflect the likelyhood of certain changes coming into effect depending on the perception of how those changes would affect the company rather than a huge change in share price upon the release of the news.

Just something to consider when looking at particular companies and how the release of news affects their share price.