Dump it Here

[Newt]

I fully understand your view and am MUCH more comfortable trading a weekly system.One point which is system based and can swing me one way is the ramp -up speed:
if a weekly system increases exposure by 2 or 3 net positions a week.[.was the case for one of my earlier attempt], it takes 2 months to be fully exposed, during that time, the money/soldiers are not working ;-) and the peak trend benefit bypassed..first half 2019....
On the other end , if the exposure is quickly achieved, this does not matter anymore and weekly is much easier on mind/wallet.
It is clear you have a very good position scoring which allow you to sort the good from the bad of prolific selection..I have no such luck/expertise..maybe my efforts should go in a more open buy selection, with emphasis on the position scoring..that should allow me back in weekly.
We are always slave of our past experiences in today's decisions

Interesting point QF. Have to admit I almost had a choking fit early May when saw the Action Strategy enter pretty well 20 positions straight away.

I'll be B'ed if any of the strategies I've written manage to take up positions so aggressively. If you can demonstrate an edge than hats off for being able to exercise that edge so frequently and aggressively.

Not sure if the Action Strategy is a school of angry piranha or just a speeding Ducati??

 

[frugal.rock]

Not sure if the Action Strategy is a school of angry piranha or just a speeding Ducati??

It looks like a speeding Ducati...
with a Piranha fly screen...

 

[Skate]

Skate.

 

[Skate]

Skate.

 

[martyjames]

Nice work Skate. Are these sells 'inactivity' mainly ?

 

[over9k]

Sounds like skate's broadly doing what I do - buy a whole bunch and then torch the non-performers.

 

[Skate]

Nice work Skate. Are these sells 'inactivity' mainly ?

@martyjames, let me put something together in the next few post so you have a better understanding without telling you exactly why the position no longer meets our trading plan or trading strategy.

Sounds like skate's broadly doing what I do - buy a whole bunch and then torch the non-performers.

@over9k, that's a simple analogy but it doesn't hold water for the positions in bold.

The bolded securities are performers
Why sell [BFG] ?
Why sell [CDV] ?
Why sell [PRU] ?
Why sell [REX] ?



Why are we selling some of our best performers?
The Action strategy by-the-way does not have a "Take Profit Stop" - any guesses?

Skate.

 

[martyjames]

Hmmm.. BFG in particular looks very strong. Maybe its related to if stock hasnt reached x percent gain after so many bars dump it? I could understand that if there were a lot of new buy signals but there is only one IRI. Following with interest.

 

[Skate]

The "Action" strategy
The Action Strategy is simple in concept & design but the coding to generate the signals is very complex. The Action Strategy is a combination of discretionary ideas coded & used in a mechanical trading system. Strict money management, refined parameters, extremely sharp exit with additional filters the (strategy) grows an extra leg.

Before we exit we need a few confirmations
For the Action Strategy to exit a position we need a few confirmations that the momentum has slowed, stopped or reversed. The "exit confirmation" guarantees you will give back a proportion of your open profits. The exit strategy in our trading strategy uses a GTFO filter as well as three independent exit indicators being: (1) Variable Trailing Stop, (2) StaleStop & (3) Volatility Dependant Stop which is clever in design. The exit is the heart of the strategy trading such small positions driven by "volatility measures" taken from "other sources". All positions need to meet the conditions of our trading plan or they face the humiliation of being dropped from the team no matter how they are currently performing or how we think those positions will perform in the future.

Selling (it's not always pretty)
Some traders have a hard time knowing when to sell or sell successfully. Successful trading is largely the art of selling & determining when to cut losses or when to take profits is hard. Because it is so hard to determine, many just don’t do it or "do it in time". Traders need an edge to beat the markets & selling the losers whilst holding the winners can, in fact, be a simple edge, at other times selling the winners at the correct time can also add to the edge. It's important to remember that the "sentiment" of players creates momentum in both directions.

In a nutshell
Trading is about "knowing when to hold them & knowing when to fold them"

Trading is a simple endeavour
Trading a mechanical system can be a simple endeavour if you are disciplined at following the rules & sticking to your trading plan. When the appropriate signal shows up, place your order & carry on, it couldn't be any simpler. Trading small-dollar positions attract a high-cost of brokers commission & in our case is the killer trading this type of strategy. Never forget, trading is a game of probabilities. Stick to your trading plan & don’t violate it at any cost.

Skate.

 

[Skate]

Half the fun of trading is figuring out what others are doing & why
When information is supplied it helps you become a detective that adds value to your learning experience. I could go into depth & explain why each position is being sold in the Action Strategy this week but that's not the point.

Clear as mud
Looking at the charts some positions will be obvious why they are being sold, where other positions will be a little more obscure. All chartists make up stories (in their head) about what they see in the charts & then go on to believe the story because of their ingrained bias. Biases are mental blind spots, it takes special effort to avoid falling into their traps. Often, we realize our errors after the fact & usually it's too late.

Let's not leave out the members who like to look at charts
The "Charts" always tell a story even if at first it appears that they don't. As traders, we are always playing catch-up with new information. As systematic trend traders, we are searching for the probability of what will happen next, sometime in the future. Punting on those probabilities can be hazardous to your wealth & emotions. The times when you get it right, can compensate you for the cost of constantly having a go.

Do the charts tell a story for you?
The red & green lines are the support & resistance lines for the 10 & 50 weekly periods.

Looking at the chart of [BUB]
It should be oblivious why it's being cut from the team.




Now let's look at these charts
What do you see?
What is the story?
Why are the positions being sold?

PRU - Perseus Mining





REX - Regional Express





Looking at the chart of [BFG] it looks so good !!
Why is it being cut from the team?

BFG - Bell Financial Group Limited Ordinary


Hopefully
Some members may like to "express their opinion" on the charts above or why the positions below in the list are being axed from the team.

It pays to remember
There is no "right or wrong" answers in the "Dump it here" thread but a variety of opinions, one very good opinion has already expressed by @martyjames

Hmmm.. BFG in particular looks very strong.

Skate.

 

[ducati916]

Before we exit we need a few confirmations
For the Action Strategy to exit a position we need a few confirmations that the momentum has slowed, stopped or reversed. The "exit confirmation" guarantees you will give back a proportion of your open profits. The exit strategy in our trading strategy uses a GTFO filter as well as three independent exit indicators being: (1) Variable Trailing Stop, (2) StaleStop & (3) Volatility Dependant Stop which is clever in design. The exit is the heart of the strategy trading such small positions driven by "volatility measures" taken from "other sources". All positions need to meet the conditions of our trading plan or they face the humiliation of being dropped from the team no matter how they are currently performing or how we think those positions will perform in the future.

It is not:



A volatility based exit.

It is not the GTFO filter as this would mandate an exit from all positions.

Therefore it is a mixture (based on the charts) of the 2 remaining exit criteria.

jog on
duc

 

[CNHTractor]

Do the charts tell a story for you?
The red & green lines are the support & resistance lines for the 10 & 50 weekly periods.

Hi, I am trying to identify patterns. My first step has been to emulate the chart you have posted - I have plotted the ROC over 15 periods as maybe a clue to a stale stop, alas it hasn't assisted me.

It is not the GTFO filter as this would mandate an exit from all positions.

Noted!

 

[Saqeeb]

First of all I would like to apologize the followers of this thread and most importantly the members following the progress of my MAP paper trading portfolio for not posting updates last week. Life gets in the way and sometimes you do not find time to do the tasks that you need to do.

I am going to make two posts updating the progress of WEEK 19 and WEEK 20.

Week 19 update on my MAP paper trading portfolio.
This portfolio gained $807.00 for week 19 and the drawdown has now come down to -11.5% from -14% the previous week.

Week 19 buys:
SPT, RBL, OPC, NXT and AEF
As noted in my previous post CDV was not entered as this is one of my rules that I do not enter a position after a takeover offer.

Week 19 sells:
As noted in my previous post, PDN and DTL were sold.
***There was another position sold this week*** This position was MLX (reason for sell is below).

Lesson learnt:
I learnt that I must always also run my scans against a watchlist that lists my current holdings. This is because as if I am only scanning the universe that I trade, which is All Ordinaries in this case, and if there is a position I am holding that has beed dropped from this universe then a sell signal is not generated. This is a trading mistake that could cost me hugely if that position gets hammered before I realise.

Thankfully a) I made this mistake while I was still paper trading, b) I noticed it the same week.

This brings me to wonder if backtests results are also prone to this anomaly.

 

[Saqeeb]

Week 20 update on my MAP paper trading portfolio.
This portfolio gained $867.00 this week reducing the drawdown to -8.5% from -11.5% the previous week.

Next week's buys:
One buy signal for next week

Next week's sells:
No sells for next week

 

[martyjames]

Hmmm, i'm missing something here Skate. How do you define 'support & resistance lines for the 10 & 50 weekly periods'?
I always look at the next higher time frame to what im trading to determine S/R levels. In the example of BFG i would see around $1.50 as the next 'resistance' level.

Enjoying the discussion as always.

cheers

 

[Skate]

My idea was to invest in a wide range of businesses that I have some degree of knowledge about, so I'm trying to invest on the basis of fundamentals as opposed to speculation. As such my first "filter" was going to be an intrinsic value calculation, the more mainstream of them (using average growth rate to extrapolate the free cash flow, discounting that and dividing by shares outstanding to get the intrinsic value per share) I thought that the free cash flow extrapolation method of calculating intrinsic value would be quite a strong tell of a companies health? Since it essentially represents profitability, so I guess one question is: Is it common to get extremely differing results in these calculations

@Lewie made a few points in his recent post giving me an opportunity "not to respond" but to make a few general comments as a system trader. I represent a trader travelling down the opposite path to Lewie but having the same end game in mind. Technical analysis is based on the psychology of buyers & sellers where Fundamental analysis is basically a background check of how a company has performed & operated in the past, using the past data to estimate future value.

Let's take Enron as an example
People bought Enron as it was a fundamentally good company & the fundamentals looked good. What I am trying to say is, fundamental analysis can fool you just as much as technical analysis can fool you. The story of Enron Corporation depicts a company that reached dramatic heights only to face the biggest fall from grace "ever" in the United States, disintegrated almost overnight fooling regulators for so long with fake holdings & off-the-books accounting.

"My idea was to invest in a wide range of businesses that I have some degree of knowledge about"
Revenue flow, for instance, you may think you know how Woolworths operates, because you buy your groceries there, but can you clearly articulate how one dollar of revenue flows through the business? The more you understand how a business operates, the more you'll find that you don't know, but in the process, you will become aware of other information, which further improves your understanding of the investment’s risk.

"I'm trying to invest on the basis of fundamentals"
What criteria should you use to pick a stock? Well, you can either use fundamental analysis (the study of balance sheets, PE ratio, P&L statements, also researching any known facts about the company & its managers, even the company’s historical performances) or you can use technical analysis (the study of charts) I prefer technical analysis as I believe all that is known about a company, has already been factored into the share price already. Human fragility such as greed & fear is what fuels the markets, it’s the very same reason why support and resistance areas are so important. Support and resistance is another way of saying - the top and bottom of a price range a direct correlation to traders sentiment about a companies share price. My post is an alternative view & not to be considered in any other way than that.

More to follow.

Skate.

 

[Skate]

Lewie said: "Calculating intrinsic value would be quite a strong tale of a companies health? Since it essentially represents profitability"
There are many ways to calculate intrinsic value but simply put "it reflects the actual worth of the business", the amount of money that can be crystalised if the whole business & all of its assets are sold off today & is not reflective of a share price evaluation. Most believe a stock's value is indicated by its share price but that only tells you a company's current value or its market value. The share price represents an agreed value of a buyer & a seller, nothing more & nothing less. If there are more buyers than sellers, the share price will climb & when there are more sellers than buyers the share price will fall. When this is in play the intrinsic value of a company becomes less relevant. Some revert to using other ways to value a company & one common way is to use a crude measure of a "Price/Earnings ratio" (P/E). I say "each to their own"

Focusing on valuations is the time-tested path to lousy returns
Valuations using the price/earnings ratios or other valuation metrics as in using "intrinsic value" in my opinion is terrible at timing the direction of the markets, in particular, early in the formation of a trend. Concentrating on valuations routinely misses the major moves in a bull market, but has merit investing over the long haul. Personally I want to trade the price differentials of a share price along the way.

Price/earnings ratio (P/E)
For those who are unfamiliar with a Price/Earnings ratio (P/E), it's simply a valuation metrics which divides a stock’s price by its per-share earnings. (P/E) is a measure to gauge if a company is under or overvalued. When stocks are perceived as under or overvalued, it's comparing the stock price to the companies’ underlying business values.

Some P/Es use past earnings
Others utilise projected future earnings or other valuation metrics, for example, some will use, “price to book” which in theory is what's left when a firm liquidates & repays all liabilities. While other valuations compare prices to sales of unlocked opportunities while others value in the short-term.

Market direction
I'm suggesting that you ignore all of these metrics for market direction as they simply don’t help. The recent COVID-19 price plunge didn’t happen because valuations were too high, or because the economy was shaky, it was all to do with market sentiment, the sentiment of the herd & nothing else.

Skate.

 

[qldfrog]

interested by PRU:
looking at the chart, this is what I see:

It is going to bounce and break that level (it tried to cross 3 times )next week
BUY BUY BUY ;-)

 

[qldfrog]

try again issues to upload

 

[Saqeeb]

interested by PRU:
looking at the chart, this is what I see:

It is going to bounce and break that level (it tried to cross 3 times )next week
BUY BUY BUY ;-)

As a chartist, yes, PRU is looking like it is ready to breakout and is screaming a buy.

In the context of Action Strategy, in my opinion, the volatility seems to have died down and I see this as the reason for the sell signal. This is only my opinion and I am still on my training wheels.