This is a mobile optimized page that loads fast, if you want to load the real page, click this text.

Dump it Here

Jump to new
THE SIXTH COMMANDMENT
The Fifth Commandment may in fact help you stick to the Sixth Commandment: “Don’t get giddy at the top,” because that is usually the time to be selling. If Bill O’Neil were given a choice of being able to use only one type of chart interval, he would pick weekly charts. At least this is what he once told us, and there is good reason for this. First of all, O’Neil shuns reacting to news and other noise, including unusual intraday price swings. Intraday charts to O’Neil are virtually useless. O’Neil is on the hunt for “big stocks” that are heavily trafficked in by institutional investors, who buy and sell their stock positions over a period of many weeks, sometimes even months, so their activities are not likely to be picked up by an intraday chart, and in most cases probably not by a daily chart either. For this reason, weekly charts are the preferred “visual tool of choice.”

Skate.
 
THE SEVENTH COMMANDMENT
Thus the Seventh Commandment is, “Use weekly charts first, and daily charts second. Ignore intraday charts.” Weekly charts eliminate a lot of the noise inherent in short term fluctuations while providing meaningful clues with respect to potential accumulation by institutional investors.

Skate.
 
THE EIGHTH COMMANDMENT
The use of weekly charts as one’s primary method of discerning accumulation in a particular stock is also in keeping with what we call the Big Stock Principle. Find a big stock and then find a way to own it in size.

Skate.
 
THE NINTH COMMANDMENT
Probably one of the most important rules that O’Neil taught us, and one which we have not always found it easy to abide by is the Ninth Commandment, “Be careful who you get into bed with.” O’Neil believes strongly that trust and integrity between two people are the most important variables in life and in business. When you do find people with whom you share deep integrity and trust, they become colleagues worth keeping.

Skate.
 
THE TENTH COMMANDMENT
One of O’Neil’s overwhelming traits is his intense dedication and passion for the markets, something that led us to postulate the Tenth and Final Commandment, “Always maintain insane focus.” Maintaining “insane focus” doesn’t mean becoming a workaholic, since this implies that one is simply a mindless slave to one’s job. What it means is finding one’s passions in life so that the “work” that we do as we express these passions of ours is never really work. Not everyone is lucky enough to work at what they love, but to O’Neil it was something to strive for in life, and maintaining insane focus is another way of saying that people should always seek and pursue their passions in life, one way or the other.

Skate.
 
We must thank Newt
@Newt suggested a great book to read a few posts back - "Trade Like an O'Neil Disciple: How We Made Over 18,000% in the Stock Market" It amazing when you re-read a book or re-read a post you tend to glean more from it the second or third time round. Newt, your post suggesting the book has given rise to a multitude of follow up posts from "Pocket Pivots" to a barrage of educational material. In saying this a "thank you is not enough"..



Skate.
 

I went looking for the book and found this PDF.
http://1.droppdf.com/files/crKL5/trade-like-an-o-neill-disciple-2010.pdf
 
Thanks Skate. I'm not a CANSLIM trader/investor, but the books by O'Neill and his "disciples" made sense, could be programmed and backtested (to a reasonable extent), and sounded "right". Perhaps its just a natural resonance with a style of trading that fits me, but think they're all worth buying and reading many times.

Have been fascintated actually by not only your comments, but your interpretation and programming of their work. Opinions and interpretations are good, but nothing beats cold hard data and backtests backing them (opinions) up - something that isn't always provided and should be a warning for scepticism when absent.

Suspect we'll have quite a few months now to reflect on what we wish to be in the markets when the time is right again.
 
Week 4 - Weekly update on my MAP paper trading portfolio.

What a roller coaster of a week it has been! Good thing about following a system is that I do not have to make any emotional decisions and sell when it asks me to.

I sold 2 postions last week APD and MNY.

This week's scan results:
BUYS:
No buys for this week

SELLS:
1 sell this week - NSR

This leaves my portfolio with just 1 open position, ELD.



 
I'm out of the bush in NZ catching up with the latest posts.
Thanks again to all the contributors.

It looks like it's been a bloodbath in the markets.
I had placed market sell orders on all my holdings before I left Australia knowing I wouldn't be able to actively manage my account while away.
I don't wish, pray or gamble when it comes to the markets so it was my only option.
It's nice when your trading plan keeps you out of a large drawdown.

I've got two weeks of self isolation to look forward to when I come home next week so there'll be plenty of time to study and plan for the next phase.
 

@Nina4 you are in good company, Marcus Padley back in 2007 cashed out his entire portfolio to save an impending argument with his wife of being "constantly on his phone" rather than engaging with his family. Surprisingly the GFC hit whilst he was enjoying his family vacation & cashing out prior made him look like a genius. It just goes to prove "Randomness" plays a big part in our lives.

Keep enjoying your NZ holiday & thanks for checking in.

Skate.
 
Nina4 said:
I've got two weeks of self isolation to look forward to when I come home next week so there'll be plenty of time to study and plan for the next phase.
Click to expand...

@Nina4 the current market downturn is the time for reflection, looking for ways to better prepare for the next major correction. Knowing we all have to do better next time round is the key to improvement. As a systematic trader, I rely entirely on technical analysis, I know nothing about companies, I'm not trading for dividends or franking credits - they are just the icing on the cake.

Saqeeb said:
What a roller coaster of a week it has been! Good thing about following a system is that I do not have to make any emotional decisions and sell when it asks me to.
Click to expand...

Self Belief in our Trading Strategy
Mechanical system traders have exactly the same ambition as discretionary traders, the ambition to buy positions that keep going up forever. The difference between systematic traders & discretionary traders is that we have (or should have) a trading plan that allows us to never miss a night’s sleep. A quality trading strategy should also incorporate a strong, reliable exit & as @Saqeeb has said "I do not have to make any emotional decisions and sell when it asks me to". Systematic trading eliminates the "discretionary decisions" process - sometimes making a judgements call is prone to have a high degree of failure because of the (50/50 - "80 rule") for those who understand.

Systematic Traders should be decisive
Systematic Traders should be unemotional & decisive in their actions. Mechanical system traders know from the moment they buy a position they have a system with a high probability of going up. It's not about predicting the future, no-one can do that but they can accept things do change & at times trading can go horribly wrong getting them into a pickle. The difference is that when they do they act, they don’t standby to see what will happen next, they follow their strategy, they see the market as a battlefield, a one on one fight. They know they are in a war with an emotional herd, unpredictable at times. Capital preservation, utilising a correctly timed "exit" wins the war.

As Nina has pointed out
Good traders constantly analyse, adapt, educate & improve - that's one of our strengths.

Skate.
 

Well today didn't go as expected
There are traders at the moment holding shares whilst the markets are in free fall. Some have outwardly justified that they are not worried by exclaiming they are in it for the long haul so they haven’t sold anything yet "even justifying" that it's too late to sell now (that was a week ago) while others have responded by declaring "I've held these positions this long I might as well keep holding them".

Fear is setting in
Those same traders are getting fearful if today selling is any indication as they are realising we may have another GFC style correction on our hands believing the bottom could still be a long way off. It appears some attitudes have shifted thinking it would be better to sell & come back in later, hopefully when the shares have sold down further, purchasing them cheaper sometime in the future.

I'm just expressing my opinion
Let's not get into a debate about fundamental traders verses technical traders but as a 100% tech guy these past few weeks highlights the shortcoming of a fundamentalist. Traders who use fundamental analysts are good at identifying companies with good management that make money (as well a myriad of other things) - they often get the “what to buy" part correct but they but they sometimes fall short getting the “when to buy” timing correct because they declare that you can’t time the market.

It's all about timing
Trading using technical analysis gets not only “what to buy" but also "when to buy”. Buying good companies at the wrong time or price can be a recipe for disaster & (IMHO) if you are not able to get the “when” correct (the timing) you can start off being behind the "eight ball" as you are simply relying on the hope that in the short term your analysis is borne out in the share price in the long term.

Skate.
 
The GTFO indicator
I recently posted about how the GTFO indicator works that may have been confusing to some. I've been using the GTFO indicator long before combining a StaleStop exit into the mix. The StaleStop exit came about because some positions were being held too long when momentum had slowed realising those funds could be deployed elsewhere. The GTFO is my get-out-of-Jail card & after re-reading my previous posts may have given some the wrong idea of its functionality.

It's a crude measure
The ROC filter of the GTFO indicator is tuned (optimised) to the XAO Index Filter "off period". The GTFO indicator is only deployed against individual positions. A mass exit of all positions is rare but the GTFO often kicks me out of individual positions over time.

When do I sell?
You first have to consider all your holdings as individual trades not as one portfolio because that’s what they are. Your portfolio is a collection of individual trades & every stock presents its own individual trading challenge, its own separate battle to fight. No trader is smart enough to make one decision that will be successful in exiting every position at the same time but the GTFO indicator has displayed that it has this ability twice now. It's important to remember that selling positions should be done on their own merits, the GTFO indicator activates a mass exit only when trading across the board goes pear shape.

When do you get out of the markets completely?
Half the reason traders have trouble getting out of the markets "in one go" is because it’s close to impossible in making a "grand deliberation" when the market are in free fall. Occasional those few "up days" when the market are in free fall only adds confusion to the mix. My GTFO is a rough & crude measure but somehow seems to work well for me - the StaleStop combined with the GTFO indicator works hand-in-glove complimenting each other. The GTFO/StaleStop indicator combined into my looping variable trailing stop certainly adds value to my strategies.

Skate.
 

1. I think that this simply reflects a misconception with regard to FA. Intelligent FA also incorporates timing into both purchase and sales. Also, I think nowadays, FA will also incorporate charts into their thinking. It is more that the chart only forms a variable in the overall analysis rather than the final arbiter.

2. What we are actually discussing are 'drawdowns'. Mechanical systems have drawdowns. Any and all trading methodologies encounter drawdowns. What is important is whether the 'system/strategy' is profitable over time, not whether it experiences drawdowns.

The more interesting variable is investment of available funds. From following this thread, it is fairly clear that mechanical traders are looking to keep close to 100% invested, recycling funds as exits are hit. In this way a return is being earned on total capital.

Clearly in a market wide turndown, for mechanical based systems, 100% exits are required, otherwise you are stuck and the entire system grinds to a halt. Obviously the sooner you exit, the better.

This is contrasted with the FA approach where less than 100% would be invested. You hold dry powder. This reduces returns when markets trend for long periods in one direction as you will not have all funds invested. However, in market dislocations as we have currently, it allows for investment of those funds at attractive pricing.

Further, that 'cash' (held by FA) need not be idle. Numerous Options strategies are available against held positions which generate attractive returns (because of the heavy leverage in Options) and provides an answer to the TA chaps who advocate 100% funds in the market as equity positions.

Various trading strategies are not necessarily better/worse, they are simply different. The difference is to allow for differences in emotional makeup and approach. There is no one size fits all in trading/investment.

jog on
duc
 
Am I meant to get outraged?

Tax deductible iceberg experience?
More than 100 Australian doctors, dentists and nurses taking part in a health convention on board a cruise ship are stranded off the coast of Chile.
Click to expand...

Coronavirus, almost as big a bitch as karma.
 
bigdog said:
“I don’t think we’re going to be able to trust movements in the market for some time,” said Tom Martin, senior portfolio manager with Globalt Investments.
Click to expand...

What a worrying comment
After reading the comment made by Tom Martin in @bigdog "nyse-dow-jones-finished-today-at" thread totally summed it up for me. Systematic trend traders rely heavily on technical analysis to pick the "price movements" & in trading those price movements profitably it's dependent on the consistency of those signals. Until the erratic behaviour, the "wild gyrations" of the markets cease I will be not be able to recommence trading.

Skate.
 

@frugal.rock has highlighted one of my concerns "knowing when" is the optimal time to "hop off" a position as quick as a "jack rabbit" so it's timely I make a post "chunked into bite sized paragraphs of course" to answer my rhetorical question.

I'm torn
Like most, I've been soul searching looking for improvement in timing the exit a little better. I don't know if I'm disappointed or happy that "at-this-stage" I can't find any improvements, there is nothing that could have caught the rapid fall in the markets any sooner than the indicators I currently have. In hindsight making a "discretionary call" at the first sign of trouble or trading a daily system would have saved a few dollars but in the scheme of things the saving would have been negligible.

How to minimise losses
System trading is not about making easy money - it's about tilting the odds of success in your favour by minimizing losses. You will still need to enter positions at the right time but your exit serves a dual purpose of limiting losses whilst at the same time providing a mechanism to take profits "short circuiting" your emotion. If you execute your exits diligently you will find each position will be sold on its own merits without having to make some impossible call to exit all your positions at once.

Skate.
 
You must log in or register to reply here.

Similar threads

R
My strategy/plan going forward
Replies
13
Views
833
RbNEO
R
Very nice Rain here today
3 4 5
Replies
85
Views
4K
farmerge
  • Poll
Financial Independence (Home Ownership, Super, Long Retirement) not possible for wage earners: What do we need and how do we get it?
11 12 13
Replies
258
Views
20K
Smurf1976
November 2024 DDD
2 3
Replies
53
Views
5K
ducati916
Ozempic: Magic Pill or Devils Bargain?
Replies
10
Views
2K
sptrawler
Menu
Log in
Register
Cookies are required to use this site. You must accept them to continue using the site. Learn more...