Dump it Here

[moXJO]

I think that's only his US day trading strategy, all other trend system in cash?

The above is the only relevant thing in your post.
I'll write a book on: "when to stop trading and go on holiday". $50000 for you, it'll save you $310k in loses.

Let's not pretend that didn't look like doubling down. It's not his track record or saying "he sucks" that I'm interested in. I know he's skilled and been around a long time.
It's how and why these trades came about. And the reasoning behind continuing for so long.

 

[Skate]

You need different risk management rules to control portfolio losses

Anyway, I have incorporated another element of risk management into my system. The system will have a trailing stop which I have coded to have a maximum distance from the current market of a certain percentage. I’ve coded the stop-loss indicator to have an input for this value so I can set it to whatever I wish. The stop-loss indicator does not trail the market by this value, the percent value merely provides a limit. For example, in a long trade if the trail stop calculates a value that is 8% below the current close and the percent limit is set to 7.5% then the stop-loss indicator will print on the chart at 7.5% below the market for that period. This feature will give me good risk management at the trade level so that a single horrific trade can’t over influence the system effectiveness.

arguably the most important aspect of your investment success – proper risk management.

give Nick credit as a system trader for sticking to the system but I think that the risk management aspect of his system was flawed.

@DaveTrade first off let me congratulate you on your thread "the-trading-world-according-to-dave". Any thread or member who post educational information from their experience in the vein of helping others gets the big tick of approval from me. Also, I do enjoy reading what you have to say.

Risk Management
Dave, you have already made a post in this thread touching on "risk management" & said in another:

"The most important part of trading or investing is risk management, i.e. setting your level of exposure to risk. It can be done in a number of different ways, you can have exit levels in place to go in and out of the market as required or if want to hold a position it must be hedged. learning how to manage your risk is the number one key to success".

You have also remarked
"the most important aspect of your investment success – is proper risk management".
"I think that the risk management aspect of (Nick's) system was flawed.

Risk Management is not only an important subject but also an interesting read
I realise people point out the flaws of others for different reasons & in your case, it was from a genuine concern to help others by highlighting this aspect of trading. I, for one, would be very interested to read more about what you have to say on the subject.

I have a request
Would you be kind enough to do a detailed post on the subject of risk management & post it in this thread rather than your own for the benefit of those who check in here.

Skate.

 

[Skate]

no it is the heart issue that is the problem and the complication ( no shoulder reconstruction , because they are worried about the heart ) , and the various doctors seem to be happy despite the stats declining

@divs4ever, I have read previously where you mentioned that your health is a concern. Unfortunately, it's in our twilight years that we tend to fall apart. I've been told many times that my "Dump it here" thread is getting oversized & too big of a commitment to read touching on as many subjects about trading as I possibly can. I remember making a few posts about age-based trading decisions that I may repeat.

Investment decisions are normally based on your age
Humans have been on earth for around 100,000 years & of all the humans who have ever lived to age 65, half are alive today. Average global life expectancy has doubled in the past 100 years, & Australia is one of the longest-living nations. Once you retire at 65 all the current advice is to invest conservatively but if you’re planning on living for another 30 years investing conservatively may not be the best advice.

Official statistics underestimate longevity
Many of us think we’ll live as long as our grandparents or parents did, which is a major perception problem. We don’t realise how long we’re going to live and we consistently underestimate our remaining years. This is the very reason why trading conservatively may not be the smartest move.

Risk management
I say if "risk management" is part of your trading plan "Trade like there is no tomorrow" as one day you will be right.

Skate.

 

[Skate]

Verbal Diarrhea
I've broken one of my own rules about posting in other threads. I find posting here keeps me in check for the very reason this guy explains. But gee, it feels good to fu¢k with some people.



Summary
Without being checked, there are times when I lack a filter.

Skate.

 

[Skate]

Some traders lack discipline
They’ll watch a position get destroyed without doing anything about it. The more they lose the more likely they will to persist with it. Most traders believe the things that make them "feel good" & "disregard the things that make them feel bad" (confirmation bias). They listen to everyone & will invest with the thinnest of evidence. It’s not rational, that’s boarding on crazy.

When will the markets recover?
When all the scared money has left the building, with a lack of supply the "buyers will step back in”. Buyers will gradually return to the markets only after they perceive it to be safe to do so. It’s not "Rocket Science", it’s "Behavioural Science", predictable human behaviour of emotions. The objective of trading is to make a profit & to do this requires careful risk assessment, disciplined money management, & emotional control to execute a trading strategy flawlessly without hesitation. Sometimes we are our own worst enemy because we have a tendency to keep looking for confirmation after confirmation before ultimately making a decision.

Skate.

 

[DaveTrade]

Would you be kind enough to do a detailed post on the subject of risk management & post it in this thread

Skate asked me to post something on ‘risk’ in his ‘Dump it here’ thread, well I had this subject in the back of my mind to post on anyway so I’m posting this in both threads. I can understand why I was asked to post this in ‘Dump it here’, the thread has a lot more people reading and commenting on topics and ‘risk’ is a topic that everyone has an opinion on.

From my life experience I’ve noticed that people vary greatly about how they assess risk in their lives. This variation can be extreme, some people find it hard to see risk while others see risk even when it’s not there. My guess is that anyone who has gone into trading and decided to keep going with it would have a risk assessment ability somewhere in the middle zone between these two extreams. All I can do is explain how I look at risk and how I manage it in a way that I’m comfortable with.

Skate has posted about the relationship between risk and age and I would like to say that I turn seventy this year and my tolerance for risk has changed from when I was a young man. Tolerance to risk implies that a person can see what risk is there and decides to take that risk with full knowledge of it.

I look at two types of risk, risk that I can control and risk that is out of my control. Most things that we do in our everyday lives have elements of both. I feel that I’m the type of person that is good at identifying risk and am able to remove it or reduce it to a level that I can live with. A good example of this is driving a car, I regard myself as a good driver because I have a good understanding of the risks involved and I know how to avoid nearly all of them, the outlier risk in driving is there but it’s about the same as the risk I have when going for a walk, so that’s just the default risk of living.

I do the same thing with the risk associated with trading, I identify each risk and adopt a procedure to remove or limit that risk.

In the past when I traded futures I was always aware of the risk of the market gapping over my stop-loss price, I tried to reduce it by staying out of markets that were too thin. This was not a very comprehensive way of addressing it and the presence of this risk weighed on my mind.

Now I’ve come back to trading after a long break and I decided to do it by changing everything about the way I trade, this decision was based on removing risk and finding consistency. In my mind these are two essential elements needed for long term success.

I like to look at risk by thinking about it as ‘how exposed I am’. There is broker risk, account risk, market risk and trading risk. Risk can be dealt with by spreading the risk, proportioning the risk and limiting the risk.

The trading risk of gapping past my stop that weighed on my mind in the past was something I had to remove this time around. I realised that the only way to achieve my goal was to learn to trade options. Options allowed me to have a ‘hard stop’ in the market thereby limiting my risk, giving me full control over this gapping risk that previously weighed on my mind. With options I am able to limit risk and achieve unlimited and leveraged profit potential.

The downside of my plan was the time and effort involved in reinventing the way I trade and learning options at the same time, but I’m a man with a mission. I want to be able to make a good profit from trading and be able to sleep at night while doing it.

Options also give me a number of different ways to use them for trading and my training is ongoing to work through these various applications of using them. When trading a directional move using options, the maximum that I can lose is the price that I pay for the options. This means that I have full control to define my maximum risk in the trade.

Options can also be used by stock traders to counter portfolio risk and lock in your portfolio profits. Stock traders can also use them to buy stock at a discount or create a regular income from stock they own.

The most important thing about managing trade risk is to have worked out exactly what you will do before entering the trade. Some traders put stops in the market when they enter a trade, some don’t, the important thing for both types of trader is to have the risk management for the trade pre-planned before entering the trade. By doing this it forces you to identify all the areas of risk in the trade and work out the best way to manage that risk without the pressure of a live trade.

 

[Skate]

@DaveTrade, what an excellent post, thank you. I’m positive your comments will encourage others to have their say. Sharing information is how we learn.

Skate.

 

[Newt]

Yep, thanks for sharing those insights DaveTrade
P.S. Guilty of missing your trading thread - will go looking....

 

[gartley]

Looks like we have completed an impulse down here and a multi week rally about to start

 

[Skate]

From my life experience I’ve noticed that people vary greatly about how they assess risk in their lives. This variation can be extreme, some people find it hard to see risk while others see risk even when it’s not there.

Everyone needs a trading plan
You know, @DaveTrade is absolutely correct when he says that people's risk assessment can vary greatly. When it comes to trading most trade with their financial future in mind. There are some traders who are extreme risk-takers without even knowing it. Those who don't practice good money management techniques also fall into this category.

Looks like we have completed an impulse down here and a multi week rally about to start

When trading is struggling
We tend to revisit the amount of risk we are personally holding whilst trying to assess market risk going forward.

A picture paints a thousand words
Looking at the chart @gartley just posted gives me some solace with his interpretation of what the ASX200 may do next. I should also say the ASX200 & the All Ordinaries tend to mimic each other.

Skate.

 

[Skate]

As traders, we are all different
There would be some traders who couldn't stomach the way I trade. I'm positive, I couldn't trade as some do, even if the way they trade is profitable. Trading is an individual endeavour driven by their level of experience, risk tolerance & the level of funds in their trading account.

Trading risk according to Howard Bandy
It's been a while since Howard Bandy has posted & it's understandable why he doesn't anymore as there were some that challenged his views instead of presenting their own. I should also say his views came from a deep level of experience. Howard made a post some time ago about how to reduce the risk when trading. I'll do a search & post it shortly instead of going from memory.

Skate.

 

[Skate]

Reducing risk according to Howard Bandy
Howard made a few suggestions on how to reduce the risk when trading:

(a) holding a position for a few days at most and
(b) Hold any longer than about three days increases risk considerably.

Skate.

 

[Skate]

Howard Bandy back in Dec 2016 made these comments
“Stocks have a tendency to revert to the mean and breakouts usually do not last very long. I estimate the risk of drawdown based on recent performance, then trade in such a way that I can manage drawdown. That is, holding a few days at most whether long or short. Again and again. The sweet spot is high accuracy and short holding period. Holding longer than about three days increases the risk considerably, as does accuracy below about 65%”

A short holding period is not for me
Trading over a period of a day or three is easier said than done. I prefer to trade weekly as the joy of trading a daily strategy has eluded me. It's not for the lack of trying it's more to do with the constant workload which is not for me.

Howard Bandy trades short term
Howard Bandy has confirmed that he trades this method successfully. Howard knows what he talking about, he's smarter than the average bunny. Does any member currently trade this way who would like to share their experience?

Skate.

 

[Skate]

Looks like we have completed an impulse down here and a multi week rally about to start

We all wish we had a crystal ball
I'm sure there will be some who will be totally blown away with @gartley recent chart he posted today of the ASX200 Index with his detailed price projection. There are those who will find his price projection interesting & wonder how he was able to make that projection. For those who are interested, you can refer to a couple of his previous "Dump it here" posts that he made back on the 24th & 25th of March 2020 just after the COVID-19 flash crash.

Hyperlinks
In these posts, @gartley explains in detail how to extrapolate price points into the future. The best part of the post other than an explanation of his methodology he "references" material for further research.

Dump it Here

Hello Skate, None of what I use is based on Ehlers work or indicators. This is something that I have been working on for 15 years originally based on the work of Hurst and James Maggio and has undergone a lot of trial and error. As mentioned to a reply in another thread about repainting. One...

www.aussiestockforums.com

Dump it Here

Hello Skate, None of what I use is based on Ehlers work or indicators. This is something that I have been working on for 15 years originally based on the work of Hurst and James Maggio and has undergone a lot of trial and error. As mentioned to a reply in another thread about repainting. One...

www.aussiestockforums.com

Stepping up to the plate
Each time we have had extreme market events Gartley has generously contributed to the "Dump it here" thread which has been appreciated.

Skate.

 

[gartley]

Whilst we still have lower projections for the ASX 200 at around 6200, this is the current one and it sort of lines up with the EW count. The lower projections are a problem because it suggests more downside ultimately until invalidated.

 

[gartley]

Also although the following chart does not offer very good resolution being a monthly chart, long term cycles suggest cycle point 14 is due soon. (use time axis only)

 

[Newt]

Everyone needs a trading plan
You know, @DaveTrade is absolutely correct when he says that people's risk assessment can vary greatly. When it comes to trading most trade with their financial future in mind. There are some traders who are extreme risk-takers without even knowing it. Those who don't practice good money management techniques also fall into this category.


Skate.

You only have to look out how many people still don't understand the mathematics of Covid infection, and vaccination value across the population versus the individual to see how poorly fundamentals of maths, science and risk are understood by many of the "Facebook scientific method" generation

Sorry for Covid rant. Back to trading......

 

[qldfrog]

You only have to look out how many people still don't understand the mathematics of Covid infection, and vaccination value across the population versus the individual to see how poorly fundamentals of maths, science and risk are understood by many of the "Facebook scientific method" generation

Sorry for Covid rant. Back to trading......

I would use the same example to share how propaganda can deform a truth "vaccine protects the population" and use it with a non vaccine aka covid.
Or use selected numbers to hide mountains.
If you do not do your own research and blindly trust vested interests, be it your health or your money...you are screwed
Similarly you see:
it is time in the market, not timing the market bla bla etc which lead to investors going nowhere for10 to 15y..cause they are in for the long term...
Sadly, in totalitarian regimes,even own research and knowledge is not enough as free will is blocked: mandatory super, bank account restrictions,rules on crypto or mandated jabs.
Destroying the Darwinian advantage....

 

[Skate]

Sorry for Covid rant. Back to trading......

@Newt no apologies are necessary. As @qldfrog has posted a COVID story, so will I as this thread is not only about trading. There are some that enjoy the banter.

The "Dump it here" thread was originally for those who wanted to have their say
Getting something off your chest at times can be liberating. Reading a post always stimulates a memory for me & I guess it is similar for others as well. Banter or a free-flowing exchange can be at times a bonding experience by being able to contribute to the conversation.

The COVID-19 pandemic
At times when you read something, it automatically makes you want to contribute. A memory can float to the surface, like a simple meal I had back in 2016 at the iconic "Jumbo Floating restaurant". I was shocked to learn that whilst it was being relocated from Aberdeen Harbour "Hong Kong's Jumbo Floating Restaurant" capsized & sank to the bottom of the South China Sea less than a week ago whilst being towed away from the city. The pandemic forced the closure of this famous restaurant that never recovered & never reopened.

The story & short video can be found here

Hong Kong's famous Jumbo Floating Restaurant leaves long-time home for new secret location

Hong Kong’s iconic Jumbo Floating Restaurant sailed away from its long-time home in Aberdeen Harbour after talks to save the tourist attraction failed.

www.usatoday.com

At least I have the memory
Unfortunately, the floating restaurant is now 1,000 meters underwater which will make it extremely difficult to carry out a salvage operation of this beautiful restaurant.

Skate.

 

[ducati916]

Howard Bandy back in Dec 2016 made these comments
“Stocks have a tendency to revert to the mean and breakouts usually do not last very long. I estimate the risk of drawdown based on recent performance, then trade in such a way that I can manage drawdown. That is, holding a few days at most whether long or short. Again and again. The sweet spot is high accuracy and short holding period. Holding longer than about three days increases the risk considerably, as does accuracy below about 65%”

A short holding period is not for me
Trading over a period of a day or three is easier said than done. I prefer to trade weekly as the joy of trading a daily strategy has eluded me. It's not for the lack of trying it's more to do with the constant workload which is not for me.

Howard Bandy trades short term
Howard Bandy has confirmed that he trades this method successfully. Howard knows what he talking about, he's smarter than the average bunny. Does any member currently trade this way who would like to share their experience?

Skate.

Given that markets are fractal, it should be as easy to catch a trend in any time frame as any other.

I have found that this is not a true statement for most. The reason could be that it revolves around the amount of noise (defined as meaningless price movement) that require a decision to be made. The shorter the time frame, the greater the number of decisions that are required to be made in a given space of time. Humans are not particularly good at making many decisions under pressure, day in, day out.

Stretching the time frame reduces the number of decisions in any given time period as the noise is reduced.

Reducing the decisions made, almost invariably means cutting the decisions that are required to be made around cutting losses and/or closing out winners at profit targets.

Unless you have a high success rate in stock selection, the winner's % gains are not much higher than your losses and you will struggle to be profitable. You need probably an 80% hit rate of winners to make shorter term trading work.

Changing the subject slightly:

The big issue that seems to effect negative results on mechanical trend trading systems are the transition points of bull markets to bear markets. Which is pretty much where we have been since January this year. This seems to be reflected in re-entries into stock selections that were exited at some point and the bounce higher is interpreted as the resumption of the trend, rather than a 'new' counter-trend movement, ie. a bear trend.

Mechanical systems should eventually transition (historically speaking) into the truism: there is always a bull market somewhere. That is to say, certain industries will profit in a bear market and trend higher. These stocks will be scanned for, found and selected, thereby improving performance of the system.

There is of course more to it. But as this post is getting a bit long, that can wait for another day.

jog on
duc