Dump it Here

[Linus van Pelt]

All trades are taken at the close of the market – difficult to achieve without good tools – ie automation.

I've only skimmed your logic, so if this comment is incorrect just ignore it...

But, if your system has backtested market on close (MOC) orders, and if you can pre-calculate what the price action must be to enter the trade on MOC orders, and your broker is Interactive Brokers (perhaps others?), and your exchange is US, then investigate IB's Market on Close order type.

Market-on-Close (MOC) Orders | Interactive Brokers LLC

A Market-on-Close order is a market order submitted to execute as close to the closing price as possible

www.interactivebrokers.com

Make sure you click on "View Supported Exchanges". MOC orders are not supported on the ASX .

You could try to simulate a MOC order by setting the Good After Time order property on the ASX, but it gets tricky in determining the date portion of the GAT property: are you running your code before midnight for tomorrow's orders, after midnight for tomorrow's (actually today's) orders, is tomorrow a weekend or holiday, etc, etc.

 

[Skate]

When the market changes you need to adapt, doing the same thing over & over & expecting different outcomes borders more on the hope side of trading.

Reading @ducati916 posts each morning is how I start my day keeping me on top of what's happened overnight. His post today was thought-provoking about how markets are constantly changing. This is something we all know but like most put little effort into combating. I believe making a direct reference to Duc's post & adding a few words would be a worthy addition to this thread.

Nothing stands still
How to adapt to the changing market environment & why we need to think a bit more about it. We all know the seasons change we dress accordingly. But when it comes to the “cyclical” or “secular” nature of the markets we expect as system traders that our strategies will work regardless. Pity fool us.

Where are we in the cycle?
Being able to answer this question correctly can be a huge advantage. Blindly incorporating a specific type of strategy at all times, regardless of the market conditions seems awfully difficult. If we can first identify what type of market environment we’re in, then we can pick & choose which tools & strategies best fit the cycle.

@Skate I was thinking along the lines of the bigger system picture, for example, if the system was designed to work in a trending up market then create an indicator to identify when an uptrend with the strength of trend required by the system is present and when the required conditions are not present then the system will stop trading until the right conditions return to the market.

@DaveTrade, hit the nail on the head
Trade only after identifying the strength of an uptrend & exit when the conditions aren't right.

The math behind how trends work
How are trends born, & how do they die? To trade successfully we first need to identify where we are in the cycle & then decide how to approach the market from there.

First, we need to answer a few questions
Are we in a high-volatility environment? Are we in a trending market environment? How do we know when a new bull market starts? How do we know when there is a new uptrend? The answer lies in the maths, numbers don't lie. This is why system trading is my method as all these questions can be precisely coded.

Skate.

 

[qldfrog]

Reading @ducati916 posts each morning is how I start my day keeping me on top of what's happened overnight.

I usually wake up before US closing time around 5AM qld time, look at the market in the US , look at the USD AUD trend then Mr Ducati posts if any and act then on my US portfolio..pure discretionary.
US trend usually indicates the trend for the ASX, with acknowledgement of theshe'll be right Australian psyche which allow you some nice positions in down trend and quick good sell on divested shares

 

[Skate]

Following trends, pursuing opportunities, & managing risk
Since COVID there hasn't been an appetite for risk among traders even more so this calendar year. Making a profit is becoming harder. Frankly, it doesn’t matter what motivates anyone to enter a position regardless of their trading style or selection method as there are always stocks trending higher.

Some "market conditions" make it harder to make a profit
In the current market conditions, trending companies are harder to find & harder to identify. On the flip side, the same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down & they are the ones to avoid, it goes without saying.

Skate.

 

[Skate]

Let's buy it because it's cheap
When a company's price falls it doesn't automatically mean it's good value, far from it. When companies go out of favour it is better to wait until the sentiment changes as fair value is set by others "moment-by-moment". Trading is so unpredictable & in the blink of an eye, one man's treasured stock can become trash. When this happens holding on to that position & waiting (praying) for a price reversal can be the undoing of any healthy portfolio.

Chart patterns
You can have a group of traders looking at the exact same chart patterns & most times they won't agree. System traders spend countless hours trying to remove that objectivity. The issue with system trading is that the data is constantly changing resulting in a poor strike rate, especially for my preferred method, trend trading. Trading systematically with the strike rate no better than a coin toss turns most off trading this way.

Simplicity has been proven to work
Having a simple entry works most of the time but even the simplest entry condition is dependent on filters. For starters, selecting the right filter for the job is hard enough but the filters you do choose need to identify companies that exhibit bullish momentum, high liquidity & relative strength as we are only after the best of the best, no matter the trading environment.

Skate.

 

[eskys]

It seems to me there is a disconnect between VIX and market fundamentals, Skate. This has made it more difficult for me to gauge, whatever the cause may be........what is in favour today can quickly change without warning tomorrow. Once the cogs in my head become disconnected and misaligned, I find it difficult to trade even though I think I've identified sectors/stocks that are moving up. Today, it seems consumer staples, gold and black gold are stumbling blocks in my head. Lithium on the other hand, is doing the opposite but for how long? For the life of me, I can't help myself into getting in.........hope others are doing better

 

[eskys]

Skate, what does your system tell you about BHP today? Is it trending up or will it turn? Iron ore was up last night.

 

[Skate]

Skate, what does your system tell you about BHP today? Is it trending up or will it turn? Iron ore was up last night.

@eskys please keep in mind there is a difference between "trading" BHP to "investing" in BHP. Trading is all about jumping on a confirmed trend & hopefully jumping off before the masses. Investing is simply longer-term trading. Investing for whatever reason can be done anytime because the hold period is longer. This longer hold period will be your edge.

This is a daily trading chart
I've already explained what the coloured price bars mean but you should take more notice of the yellow ribbon if you are an investor. The yellow ribbon indicates when the security (BHP) in this case is "unloved".




This is a weekly trading chart
Look at the yellow ribbon to establish when it is unloved, off the boil, simply out of favour, or not wanted during the yellow period.




This is a monthly trading chart
It's been a while since BHP has been desirable. As I said before trading is "timing the markets" whereas investing is "time in the markets".




Summary
There was a great Q&A recently conducted & was an eye opener on what is in the pipeline & their thoughts on M&A. I was surprised "Potash" could be online one year earlier than expected 2026 back from 2027.

https://edge.media-server.com/mmc/p/q39yugir

Skate.

 

[eskys]

Thank you, Skate. Yes, I remember what you posted before, but was thinking if the colour ribbons are still the same on your system today.
You've answered my question, much appreciate that.

 

[qldfrog]

@eskys please keep in mind there is a difference between "trading" BHP to "investing" in BHP. Trading is all about jumping on a confirmed trend & hopefully jumping off before the masses. Investing is simply longer-term trading. Investing for whatever reason can be done anytime because the hold period is longer. This longer hold period will be your edge.

This is a daily trading chart
I've already explained what the coloured price bars mean but you should take more notice of the yellow ribbon if you are an investor. The yellow ribbon indicates when the security (BHP) in this case is "unloved".

View attachment 146581


This is a weekly trading chart
Look at the yellow ribbon to establish when it is unloved, off the boil, simply out of favour, or not wanted during the yellow period.

View attachment 146582


This is a monthly trading chart
It's been a while since BHP has been desirable. As I said before trading is "timing the markets" whereas investing is "time in the markets".

View attachment 146583


Summary
There was a great Q&A recently conducted & was an eye opener on what is in the pipeline & their thoughts on M&A. I was surprised "Potash" could be online one year earlier than expected 2026 back from 2027.

https://edge.media-server.com/mmc/p/q39yugir

Skate.

ah Canadian potash, was supposed to be next big golden goose when I was there in 2008?yeap 14y ago got some colleagues who left Australia to go there..
yeap by the time, they are on line and producing, price will have crashed and BHP latest management guru will divest to focus on "whatever"..the usual BHP story
as these fertilizers are polluting or extracted from Fist nation cultural heritage or whatever the woke story of the day
Do i detect some resentment here?

 

[ducati916]

So BHP



Its books are probably clean at least.

Generally speaking, you buy cyclical resource stocks when their PE's are high anticipating the turn in profitability. Not when their PE's are low.

The Central Banks, to tame inflation are creating a recession. The problem is that they will actually create a liquidity event. Everything gets sold.

If you like it now, you should love it at a 65% discount.

jog on
duc

 

[eskys]

Hi ducati, BHP was up last night in the UK, +2.9%. Iron ore was up 3% last night US.

You mean it will drop 65% from today's price? That's gonna be a big drop if that's what you mean, and difficult for me to get my head around that at this stage......I don't have iron ore but don't want to miss the boat either..........so confused.........

 

[qldfrog]

Hi ducati, BHP was up last night in the UK, +2.9%. Iron ore was up 3% last night US.

You mean it will drop 65% from today's price? That's gonna be a big drop if that's what you mean, and difficult for me to get my head around that at this stage......I don't have iron ore but don't want to miss the boat either..........so confused.........

16$ 6y ago and it had S32 and petrol then, it is not hard to fanthom how it can crash..even wo a depression
was at $45aud in 2007..

 

[ducati916]

Hi ducati, BHP was up last night in the UK, +2.9%. Iron ore was up 3% last night US.

You mean it will drop 65% from today's price? That's gonna be a big drop if that's what you mean, and difficult for me to get my head around that at this stage......I don't have iron ore but don't want to miss the boat either..........so confused.........

As a stock, commodity producer I like it. It's financials look pretty good. It's located in the right part of the world. From all of those points of view it is a buy. Normally I would say its valuation, being cyclical is a little high, but commodities will be in a bull market for a while, so no real issues there.

The problem is not a problem with BHP per se.: it is a problem with rising rates worldwide and the level of debt worldwide. The rising rates will at some point, probably not too far away, trigger another liquidity crisis. In a liquidity crisis, everything gets sold.

Typically the drawdown is anywhere from 30% - 50%+ and it is fast.

So if you like it here, you'll love it at $20 or less. Assuming they can maintain the dividend, you'll be looking at 25% yield +/-.

The real issue is that you "don't want to miss the boat".

Ask yourself this:

If interest rates are rising and the US 10yr is the benchmark, then, what is the discounted price? It is lower.

Never have markets risen into a rising rates environment.



Credit spreads are still (historically) low. But interest rates are still low. That is changing with every hike. When they go, they go fast almost overnight.

Real bear markets start slow and progressively get worse:



So although you think that you are running out of time to catch the 'lows', actually, you have plenty of time.

The 1940's had QE, although it was not called QE. Nothing new there. The difference is that each crisis has come faster on the heels of the previous crisis and there has been no time to work off the debt incurred at a sovereign level. Secondly, markets in the 1940's were at near historical lows. Currently we are only 15% or so off all time highs.



Once the liquidity crisis hits, the Fed will pivot. No doubt. QE will be turned back on with a vengeance. The question is then whether fiat actually survives that onslaught.

jog on
duc

 

[eskys]

Good morning ducati, I agree with what you said, and, I appreciate that. Such a lot of wisdom and knowledge.

Market fundamentals are different to TA....what's trending. The market might go down more from here as you've pointed out. But what happens between now and then? Do we wait for that to happen? We don't stop work because it's a rainy day.........we adapt, plan and work our way around inclement weather, so we should around the market. I see you are an intelligent person from what Skate posted quoting you.

It's clear to me that I am short sighted, with a short memory. My goal is to identify trending sectors and pick stocks within that and try to trade them on a daily basis..........call me an opportunist if you like. I'm also a scaredy cat.......a protectionist.....always too scared to venture into new territories, and will by pass through different venues. Eg, I like lithium but will try to get into proven companies with diversified minerals, just to be safe.........investing and trading to me is all about safety, got to be a calculated risk.

Have a great weekend, ducati, everyone.

Frog, you have a memory as long as an elephant's, ) ........see you around

 

[Telamelo]

Good morning ducati, I agree with what you said, and, I appreciate that. Such a lot of wisdom and knowledge.

Market fundamentals are different to TA....what's trending. The market might go down more from here as you've pointed out. But what happens between now and then? Do we wait for that to happen? We don't stop work because it's a rainy day.........we adapt, plan and work our way around inclement weather, so we should around the market. I see you are an intelligent person from what Skate posted quoting you.

It's clear to me that I am short sighted, with a short memory. My goal is to identify trending sectors and pick stocks within that and try to trade them on a daily basis..........call me an opportunist if you like. I'm also a scaredy cat.......a protectionist.....always too scared to venture into new territories, and will by pass through different venues. Eg, I like lithium but will try to get into proven companies with diversified minerals, just to be safe.........investing and trading to me is all about safety, got to be a calculated risk.

Have a great weekend, ducati, everyone.

Frog, you have a memory as long as an elephant's, ) ........see you around

Hi @eskys RE: "My goal is to identify trending sectors & pick stocks within that & try to trade them on a daily basis......call me an opportunist if you like".

Looks like I'm not the only one then lol join the "opportunistic club".

Is there a thread on ASF for sharing daily trading opportunities? as keen to know & get involved with other like minded trader's here... thanks

 

[Skate]

call me an opportunist if you like. I'm also a scaredy cat.......a protectionist.....always too scared to venture into new territories, and will by pass through different venues

It's not easy
Profiting from the stock market is exceedingly difficult to do consistently over a long period because the market is always irrational, for the simple reason it's a "reflection" of all the "emotions" of the participants. The market moves in a manner that has little appreciation for what we might think. When the markets react in a certain way I'm so glad I have a suite of tools that gives me a fighting chance when the unforeseen happens.

Some traders don't minimise their risk well enough
To minimise your risk you need to learn how to sell quickly & decisively at the first sign of trouble. In fact, @eskys I’ll go so far as to claim that a smart scaredy-cat like yourself who runs & hides when the going gets tough generally produces better results than the brave souls who are proud of their ability to suffer great monetary pains while they wait for their convictions to be rewarded as one Twitter poster is currently doing.

The markets have a habit of making you look "good" as well as "bad"
No matter how good "you think" your trading strategies are the markets ultimately decide. One respectable trader who reports his trading results on his Twitter feed has reported his losses so far this year to the tune of ( -$840,941 - Ouch!! ) while he waits for his convictions to be rewarded. You have to start to think about what hope is there for us when a trader of his caliber is struggling.

Skate.

 

[Willzy]

Quick System Update....

Rough couple of weeks for both the basic_RSI and connorsTPS on MSFT.



I'm leaning towards just sticking with my basic_RSI system, it produces a better return for the same amount of capital and risk. I think scaling into a position makes the equity curve smoother but ultimately it means your first entry was too early and you only commit your funds totally to the trade occasionally.

BASIC RSI ConnorsTPS


Cheers

 

[Skate]

I really like the illusive idea of long-term investing. There is something attractive about the idea of finding undervalued/unloved companies and buying them low and selling them high once they appreciate in value and become overvalued.

Inspiration for another series of posts
I'm constantly amazed that some people throw thousands of dollars at the markets with zero education, money they have worked hard for only to read that in a few short years they have managed to lose most of their nest egg through investing. The reason we invest is to grow our nest egg over time, not the reverse.

Only invest with the money that's idle & you can afford to lose
This should be the number one rule never to be violated. Investing for me is a side hustle & it is the equivalent of watching paint dry. When it comes to investing it is preferable to have money sitting idle looking for a good home. Money that has no effect on your ongoing lifestyle.

Investing can sometimes be a little easier to mentally handle than trading
When there is a burn in the markets that's the time to invest rather than trade. Applying funds in this manner is purely to make a profit over a 3-5 year period or for no other reason than to enjoy the spending power of the dividends. Opportunities like these don't come around all that often.

Skate.

 

[Skate]

COV19 has hit but the company can still keep trading, which can't be said of a lot of businesses. Trade to the end of March has so far been unaffected, but the next few months are uncertain.

COVID gave an opportunity
On the 27th of March 2020, I made a post about the advantages of investing. At the time I reported that I had invested $800k equally in 4 positions ANZ, BHP, CBA & MQG. I still hold all these positions to this day. @Smurf1976 calls it investing in "beaten up large caps" which is a good analogy.

My thinking at the time
The logic behind that investment was simple. If those 4 positions can reclaim their former glory over the next 2 years with dividends along the way they have the potential to represent a good risk/reward investment.

It's been two & a half years
I'm thinking it would be a handy exercise to revisit that investment package. I'm lucky in this short period, the capital gains & dividends have been a wealth builder to a degree & it acknowledges that the decision at the time did have merit.

Skate.