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


But it started so well
I've had another question - "the strategy started well but now it's losing money, is there something wrong with the strategy?"

The answer I gave was along these lines
A good strategy takes time to develop. Those new to trading are very concerned about finding a strategy that works quickly while at the same time quickly dismissing a good strategy that refuses to display early gains. At times, a strategy with a few simple trading rules has often become the foundation of a good strategy & the "Platinum Strategy" is no different.

Short term results
The measure of a strategy is not how it performs (either in the short or long term) but rather the consistency of returns. Shooting for the moon is not what a trader should be looking to achieve but rather build profits over time. Just by "not losing money" can be considered a good strategy. Capital preservation is the "game in town" when it comes to trading.

"The Platinum Strategy"
It's been tough trading recently. The "Backtest results" below on the left side are over an "11 month period" compared to the returns on the right are the results of one month.




Monthly returns


Skate.
 
As long as you avoid blood orange months
 
qldfrog said:
As long as you avoid blood orange months
Click to expand...

This is no coincidence, trading is always erratic
Most successful traders use a mechanical trading system a trading system automates the entire process of trading. Systematic trading makes it easier to trade consistently because there are a set of rules which specifically define what should be done. Despite the inner emotional struggles that might come from a long series of losses, trading is simply not left up to the judgment of the trader & by doing so trading will be more consistent.

If you have a mechanical trading system that works, you will follow it
If you know that your system makes money over the long run it is easier to take the signals & trade according to the system during periods of losses. If you are relying on your own judgment during trading you may find that you are fearful just when you should be bold & courageous when you should be cautious.

Skate.
 

Where else do I put my money?
With new money entering the markets @MovingAverage pointed out that this money is "pushing up valuations". With new money come “Overconfidence", the lack of attention to details, & sometimes invested or traded with excessive trust in the judgments of others. The current high prices are being sustained largely by enthusiasm (FOMO) rather than by consistent estimation of real value.

Today's investment culture
I believe there are millions of adults now entering the stock market as well as investing in crypto. They are trading as if the price level is simply going to keep rising at its current rate. Even though the stock market is higher than it has ever been, traders & investors behave as though it can never be too high, & it can never go down for long.

Why would they behave this way?
Their logic is apparently consistent with the media "free lunch theory", the theory of easy money. Now if researchers & media analysis are studying stock prices & confirming their value, why should they waste their time trying to figure out "what" is a reasonable price to pay? The media concentrates on trivial facts (having an answer for everything) that tend to be superficial at best. Whether the misconceptions are true or not - they don't really care.

Skate.
 
Trading Mistake
One trading mistake from my observation with forum members is that they seek shelter & comfort in the fact they bought their favourite shares at much lower prices than it is today. When there is a substantial fall in their favourite stock it clouds their judgment or their ongoing assessment of the holding. I'm just saying if one day the outlook for that holding deteriorates significantly, don't hide behind the fact you have been an investment or trading genius thus far. What comes next can easily take away "all the rewards" from being loyal to that stock in the past.

Another trading mistake
There are some mistakes that are often made by the less experienced trader & that is to "never sell" unless the share price recovers above the original purchase price. Why do they do it? - I'll tell you why, it's because they can't bring themself to sell at a loss.

Skate.
 
Training yourself to think clearly
Our values shift according to new information but when it comes to trading we tend to stay within our circle of comfort. Our brain tricks us into believing something different with those people who have "open minds" whilst those who have "closed minds" won't even consider it "even it's a good idea". This is the very reason "training yourself to think clearly" doesn't work for everyone.

Being receptive
There are some people who have open minds whereas "closed-minded" people have no degree of openness. But overall subtle conditional methods by repeating the "same message" can make a big difference over time.

Forming an opinion is important
A lot of our expectations affect the assumptions we use to shape our perception when it comes to trading. Our perception even shapes what we want to read & what we want to hear or learn. Our expectations, assumptions & perceptions shape the way we trade in ways that some will never understand. Our brain is constantly assessing & re-assessing only information that matches our (beliefs) & blocks out the rest. This is why when experienced traders take the time to express ideas (ideas from their trading experience) others are not accepting of those ideas. This non-acceptance is because the idea doesn't fall into line with what the reader believes or what they have previously read in a trading book.

Skate.
 
Just let your brain adjust to the “value” of what we see
I think we're too inconsistent on separating what's real & worthwhile when it comes to trading or learning from experience. Our expectations from trading can be something totally different from reality. Our mind disguises the truth & we only start to see "what's true" after we start trading. When you first start out trading the truth may be malleable at first but sets to concrete when "real dollars" are on the line.

You have to have (PHD) when it comes to trading
If you have a mechanical trading system that works, "confidence, consistency, & discipline" will flow naturally. This is the reason some traders are profitable than others. Persistence, Hard work & Determination (PHD) is certainly required to achieve a level of success from any trading system or strategy.

Skate.
 
ducati916 said:
No one seems to have picked up on this point, maybe, irrelevant to mechanical systems traders. Over the past few months, the market has changed
Click to expand...
peter2 said:
I anticipate that trading conditions will continue to be frustrating for quite some time as the market participants work through the current crazy economic conditions.
Click to expand...
ducati916 said:
Bear markets, corrections are notorious for sneaking up on you from behind.
Click to expand...
Skate said:
Market change can be gradual due to a variety of market conditions. I've noted since (COVID) there has "not been" a gradual shift but more rapid price swings.
Click to expand...

Is there a place for value investing rather than trading at the moment?
Price fluctuations have only one significant meaning & I'm paraphrasing a quote from Benjamin Graham's book "The Intelligent Investor" published many moons ago. In one paragraph Graham talks about price fluctuations & the opportunity it affords. These price fluctuations provide an opportunity to "buy wisely" when prices "fall sharply" & to "sell wisely" when they "advance a great deal". Graham goes on to say "your worst enemy – is likely to be yourself", or something similar. (Food for thought)

Skate.
 
Trading is so complicated
They say, don't put all your eggs in one basket & I'm sure most on this forum splits their wealth into many baskets. But when it comes to trading or investing we tend to stay in our circle of comfort. There have been a few questions asked of me recently about increasing wealth. Is it better to invest or is it better to trade?

Life is just a series of answers to questions
With most questions, an answer is easy, but having that question revolve around money & logic leaves the room. To answer money questions the time frame you are talking about brings the answer sharply into focus.

Lest view trading versus investing
What's the difference, lets answer that one first. It really boils down to "timing the market" versus "time in the markets". Trading constantly buys & sells positions to keep a portfolio full, while an investor fills their portfolio with long-term positions. A trader buys & sells the fluctuations of the market while an investor holds through these fluctuations.

I've found most want answers, not an education
There is no quick & easy answer that suits all people but after explaining this it's normally followed up by - So what is better, tell me?

Skate.
 
Wealth creations takes time & effort
Unfortunately, wealth creation takes time to create (unless you win the lottery or have wealthy parents). It can be as simple as spending less than you earn & make the difference earn its keep. The normal response is that there is never any money left over. There is an easy answer to this - "make sure there is" (money left over) how you do it is up to you. Humans are ingenious when it comes to problem-solving. When we put our mind to it there are many clever & inventive ways to solve any issue.

Why be in a hurry
With time on your side, make additional personal non-concessional contributions to your Superannuation. Or, invest in good quality companies. With time on your side, you can use harness the power of history. Look at any quality stock over the last ten years & the equity curve will have minor fluctuation, that's a given but the right side of the equity curve will be higher than the left. That's history doing the work for you. That's called "time in the market".

No, I want to trade?
Okay, there is short-term trading, medium-term trading & long term-trading. Trading also revolves around "time & effort".

Skate.
 
Skate said:
I've found most want answers, not an education
There is no quick & easy answer that suits all people but after explaining this it's normally followed up by - So what is better, tell me?
Click to expand...
you could try an answer of , 'defining what your investment needs to for YOU '

personally i have a hard enough time trying to get the outcome I desire ( sure it is a quirky one , but realizing it had to be atypical was a BIG step forward , followed a smaller step that i would have to do most of it myself )

sometimes a good answer inspires the desire for education

cheers
 
Let's talk about time & effort when it comes to trading
Recently there has been plenty of talk about trading periodicity & which is better. Well, with trading it comes down to the time you have or the effort you want to put in. Learning to trade is time-consuming, to say the least, being able to trade profitably takes even longer.

Mechanical system trading
Why narrow it down to system trading? For one reason, it is quick, simple & with little effort, you can start trading straight away using commercially coded software. Starting from scratch it's a horrendous learning curve that many will simply not have the time to devote to this endeavour. To start trading straight away you only need 3 things & you are good to go.

(1) AmiBroker
(2) Norgate data
(3) Commercially code trading software

Skate.
 
divs4ever said:
personally i have a hard enough time trying to get the outcome
Click to expand...

Mechanical System Trading has been proven to work
So with that understanding, it doesn't work all the time. When there is a run of losing trades doubt creeps in. Watching your equity dissolve in front of your eyes is when "emotional trading" kicks in. This is why you need a trading strategy with an edge or in plain English, a strategy that makes more than it loses.

But what periodicity do I trade - you didn't say?
Well, that's a decision for you. Some like the thrill, some like the money, some just like the idea of being a trader. There are personal reasons when to trade & how often.

Skate.
 
Let's talk about commercially coded software
Recently I know there are those who have purchased professionally coded commercial software from "The Chartist" so I will use that for my "time & effort" example. As I've said with this type of professional software & Amibroker with Norgate Data you are good to go.

The Chartist Software
I prefer to talk about Nick's methodologies from his website & trading books. The idea I'll concentrate on is (a) Monthly Strategy, (b) Daily (BBO) Strategy, (c) Weekly (BBO) Strategy & (d) Weekly (WTT) Strategy. In the next post, I'll display the outcome @divs4ever mentioned. The Bollinger Band Breakout Strategy works well in all time frames so I'll post the "Daily & Weekly" for comparison.

1. Monthly Momentum Strategy
2. Daily Bollinger Band Breakout Strategy (Daily BBO)
3. Weekly Bollinger Band Breakout Strategy (Weekly BBO)
4. Weekend Trend Trader (WTT)

But, is there a difference when it comes to profits?
I'll let you decide as I'll post up the last 365 days of Backtests. Why, so there is no fudging the results, that are very current. I'll start the backtest on the 12th December 2020 to today the 12th December 2021. (being Fridays end of close)

Skate.
 
Last edited:
Let's talk about trading a Monthly Strategy
There are a few trading "The Chartist" Monthly Momentum Strategy. The results look pleasing & it's perfect for those who want to trade using it with their "Self Managed Superannuation Fund" (SMSF) as @Warr87 & @Cam019 has recently been posting about. Cudo's to them as IMO it's a perfect strategy to do the job. The "Monthly Momentum Strategy" trades infrequently once a month. Trading only a couple of dozen times (22) a year - meaning the commission is reasonable.

Disclaimer
The backtest results are from my version of the "Monthly Momentum Strategy". The results aren't too shabby & the drawdown is quite respectable. Exposure is high giving the comfort of being fully invested most of the time. Daily & weekly price volatility is a thing of the past that allows you to weather the mental stress other periodicities tend to excite.

The backtest period
From the 12th December 2020 to today the 12th December 2021. (being Fridays end of close). As you can see, this period the last (365-days) was a great time to trade. The "Buy & Hold" annual return was 11.86%.



Skate.
 
Let's talk about trading a Daily Strategy
Thinking about it, I should have posted the daily strategy first & worked my way up to the Monthly Strategy. Well, what is done is done. There have been a few trading "The Chartist" Daily Bollinger Band Breakout Strategy (BBO) or commonly called their (Growth Portfolio). I'll post the Daily results first & as this strategy is rather unique in being robust over different time frames. Minor coding is all that is required to bring this strategy to life.

I'll post the "Weekly Version" of the (BBO) as well
There is a difference in the number of trades resulting in a higher commission charge but at times the "security" one feels getting out sooner rather than later might be the decider whether you trade the (BBO) as a weekly or Daily Strategy.

Disclaimer
The backtest results are from my version of the "Daily Bollinger Band Breakout Strategy". The results aren't too shabby & the drawdown is in line with most trend trading strategies.

"Time & effort" example
(244) round trips indicate the amount of time is needed to trade this strategy compared to (22) trades with the Monthly Strategy.

The backtest period
From the 12th December 2020 to today the 12th December 2021. (being Fridays end of close). As you can see, this period the last (365-days) was a great time to trade. The "Buy & Hold" annual return was 11.12%.





# The weekly version of the (BBO) strategy will be next.

Skate.
 
Let's talk about trading a (BBO) Weekly Strategy
Whether you trade the "Bollinger Band Breakout Strategy" as a Daily or as a Weekly strategy, it involves only minor coding to bring the Daily (BBO) Strategy to life.

The "Weekly Version" of the (BBO)
There is a difference in the number of trades resulting in a lower commission charge (62-trades versus 244-trades for the Daily version). It also allows you to ride out the daily price fluctuations without panicking. This feeling of not responding to every daily price move might be the decider whether you trade the (BBO) as a weekly.

Disclaimer
The backtest results are from my version of the "Weekly Bollinger Band Breakout Strategy". The results aren't too shabby & the drawdown is lower than most trend trading strategies as I incorporate the Bollinger Bands as an additional exit strategy.

"Time & effort" example
(62) round trips indicate that there is less amount of "time & effort" needed to trade the weekly version of the (BBO) strategy compared to (244) trades when trading the same strategy on a daily periodicity.

The backtest period
From the 12th December 2020 to today the 12th December 2021. (being Fridays end of close). As you can see, this period the last (365-days) was a great time to trade. The "Buy & Hold" annual return was 10.87%.



Skate.
 
The "Weekly Version" of the (WTT)
There is much that has been written about the "Weekend Trend Trader" & from memory, there is also a book devoted to the strategy. The (WTT) strategy is a simple 20-period breakout system well in tune with a variety of market conditions. Trend trading has proven itself as a way to trade. Nick's idea is to buy high & sell even higher.

Disclaimer
The backtest results are from my version of the "Weekend Trend Trader Strategy". The results aren't too shabby & the drawdown is lower than most trend trading strategies but higher than the Bollinger Bands with its additional exit strategy.

"Time & effort" example
(88) round trips indicate that there is a little more "time & effort" needed to trade the weekly version of the (WTT) Strategy compared to the (BBO) strategy of only (62) trades.

The backtest period
From the 12th December 2020 to today the 12th December 2021. (being Fridays end of close). As you can see, this period the last (365-days) was a great time to trade. The "Buy & Hold" annual return was 10.87%.



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

Similar threads

R
My strategy/plan going forward
Replies
19
Views
1K
divs4ever
Very nice Rain here today
4 5 6
Replies
105
Views
5K
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
21K
Smurf1976
November 2024 DDD
2 3
Replies
53
Views
6K
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...