Dump it Here

[Skate]

This is how I trade
(CDD), was a position taken in August. In this case, a profit target stop took me out of the position. The PANDA Strategy got in on a confirmed trend & exited just at the right time.




Another Chart
(EGL) is another included in the Excel log of trades. Both trades were taken out by a "Take Profit Stop" which is always a healthy way to exit a position.



Summary
Trading this way is simply jumping on a confirmed trend & hope or wish or pray for the best. When you place a bet all you can do from here on is wait to execute a sell signal, which can come in many forms. I should also point out that if you look closely at the signals they are executed precisely. Other than those two moves you wouldn't want to be in this position at any other time. Trading this way, "doing this over & over" is boring but profitable.

Skate.

 

[ducati916]

The role the media plays in trading is actually an interesting topic
Even Twitter is now viewed as a defacto media outlet. Traders when they are trying to understand the markets turn to market commentators, & news outlets. We can all have an opinion about why the market moves as it does but media outlets are simply better at making all this stuff up. The story is packaged in such a way you tend to believe it as gospel.

Media outlets & commentators do this on a daily basis to keep readers
Every time there is a move in the markets, suddenly stories get published explaining the reason. As @Trendnomics eluded to these media outlets vary in their quality of information & there's nothing wrong with that. I find different media outlets have completely different objectives. As traders, we're trying to make money in the market while the media outlet is trying to get people to watch or read their content.

Skate.

The media is 1 arrow in the quiver. I have read the stories about traders trading in blackened rooms, ignoring all media, blah, blah.

In my opinion an error.

News flow interpretation is a skill, like any other. It can be learned and improved. Which is not to say that you rely on it 100%. News flow, gossip, commentary, etc are dots or footsteps in the snow. If/when you can join them, you can reach conclusions that are very informative, profitable.

WordPress.com

wordpress.com

As a cherry picked example:



This chap is THE Fed insider (works for WSJ) and is always the chap who 'leaks' the news that the Fed wishes to communicate.

Now this blog post was on Sunday 23. Markets have been rising all week on the back of (hopes) that the Fed this coming Monday will start to use 'pivot' language.



The other articles reinforced this view because the Treasury market was/is unstable.

Now while you may not have wanted to be long...you would not have been short.

jog on
duc

 

[rcw1]

What metrics drive a strategy & how do you learn which technical metrics to follow?
Well, that's the question we all ask ourselves as system traders at one stage or another. It's a human trait to see patterns when at times there are none. Manually assessing the markets take a great deal of time & skill. Using this method it's prone to misinterpretation at times. Not to mention it's extremely difficult & complicated trying to work out if there is a trend or a shift in market behaviour. Even slight shifts in sentiment, are hard to pick, even with hindsight.

The weight of the evidence
Using technical analysis with precise mathematical formulas, the strategy will pick even the slightest of moves.
Technical analysis is very much sentiment psychology driven. When trading trends it doesn't matter what you are trading. With technical analysis, you don't even need to know why there is a price movement rather understand why the signals are important & why they matter.

Skate.

Good morning Skate
For mine, you have covered off on several quality trading constructs. Know exactly what you are saying.

The good Dr Bourse provided rcw1 with some good learnings on TA and ADRs in Commsec Community. Whilst not proficient in TA, understand it, adds another string to the bow of decision making. So then:

What metrics drive a strategy & how do you learn which technical metrics to follow?

The question of all questions ha ha ha ha
rcw1 laughs as this does rcw1 head in ….

Keep it simple stupid - the KISS test … runs in conflict with the question. Learn to run them both parallel to create an evidence base, case by case, is how rcw1 manages this question… rightly or wrongly

The other risk mitigation technique, the rcw1 adopts re aforementioned, is not to hold for long, buy and sell same day if you can, take the profit and move on to the next lot of profit makers. Closely ‘watch the numbers’ , don’t diminish concentration by looking at too
many stocks and overly complicate process.

Not everyone’s cup of tea, yes, each to our own.

Have a very nice weekend skate. Tis that other passion for rcw1 today, horse racing. Oh the joy of it. Funnily use the same processes to choose the right horse …. Good thing don’t put rcw1 house on a horse ? ha ha ha

Kind regards
rcw1

 

[ducati916]

1. What metrics drive a strategy & how do you learn which technical metrics to follow?
Well, that's the question we all ask ourselves as system traders at one stage or another. It's a human trait to see patterns when at times there are none. Manually assessing the markets take a great deal of time & skill. Using this method it's prone to misinterpretation at times. Not to mention it's extremely difficult & complicated trying to work out if there is a trend or a shift in market behaviour. Even slight shifts in sentiment, are hard to pick, even with hindsight.

2. The weight of the evidence
Using technical analysis with precise mathematical formulas, the strategy will pick even the slightest of moves.
Technical analysis is very much sentiment psychology driven. When trading trends it doesn't matter what you are trading. With technical analysis, you don't even need to know why there is a price movement rather understand why the signals are important & why they matter.

Skate.

1. In the 'Way of the Turtle' Mr Faith spends some time discussing random entries/selections. Which many years ago had me thinking. I like trading 'random' as without any expectations, bias, or needs, trading becomes effortless. When you modify random, with the ability to place many bets through time, you have the foundations of a very low risk, yet profitable system. The low risk allows significant higher leverage than might otherwise be comfortable or prudent.

2. I suspect you mean 'quantitative analysis' as technical analysis (apart from if you include money management) has nothing remotely mathematical about it.

Technicals, I agree are largely sentiment based, voodoo even if you include in there Gann and other systems based on planetary movements etc. That being said, I do use charts, technical indicators to look at what others are looking at. They are also useful in the US because the US is a market maker system and heavily manipulated by the MMs. There are various ways of seeing their trades in the market to 'divine' their intentions.

jog on
duc

 

[Willzy]

Hi all, It’s the end of another month, though I’d post a quick update on the basicRSI system I’ve been trading on MSFT.




The system has plodded along not doing a whole lot TBH, of concern though is the CAR25 metric fell below zero. For this reason I have disabled the strategy and will continue to monitor and see if it recovers moving forward. I’ve found a couple of other stocks to trade this strategy with in the mean time though, hopefully they perform better moving forward.

I gave up on the concept of using Larry Connors TPS strategy on stocks, I was only trading LONG positions and I wasn’t using the SMA200 Filter. This was just a quick experiment to see if it was worth pursuing.

Not to be deterred though I went back to Larry’s book and decided to see how his original strategy, has performed since its publication ( circa 2008 ) and more recently given the market turmoil of the last 12 months. Larry’s original strategy trades ETF’s only and trades both the long and short sides of the market. QQQ was by far the best performer, but SPY wasn’t terrible and XLV and few others performed very well too.

QQQ backtest




SPY backtest



XLV backtest



I decided to give this strategy a go with some cash $$$ trading the QQQs to see how we go, not too much as I’m still testing the waters with it… At the end of the day, these strategies dont produce massive returns, but the equity curves seem to be moving in the right direction (not an easy feat these days).

If anyone wants to follow along with a demo account, I’ve coded up the system for Metatrader4 and Metatrader5 – they’ve been added to the store and you can use them on a demo account for free.

I'll keep posting updates if people are interested.

Cheers!

 

[Skate]

I'll keep posting updates if people are interested

Kudos @Willzy for developing your own system
I enjoyed reviewing the trading stats of your trading method. I've been thinking about your "detailed post" most of the day for a few ideas on how others could go about formulating a strategy as you have.

How do we go about formulating a strategy?
To be profitable in this game only one thing matters & that is to understand "why markets trend" the way they do. Trading is complex, so how do we go about seeing the market without the complexity?

Skate.

 

[Skate]

Here’s a fun fact
Most traders don't trade with their "serious money". Serious money is always allocated to "dividend-earning investment”. Meaning, most who have serious money will select an investment strategy over a "trading strategy" every day of the week. Admittedly investing can be seen as a long-term trade but that’s where the similarity ends.

Investing allows you to ride the emotional rollercoaster
Doing so allowing "Father-time" to do all the heavy lifting whereas trading relies on timing the market with precision. Timing the markets admittedly is much harder to do. When investing, "timing of the purchase" becomes less of an issue. If you can pull it off (trading rather than investing) you will have the ability to upscale the "profit factor" by multiples.

Skate.

 

[Skate]

Buying a strategy is a starting point
But here’s the kicker. You’ll never hear that their system will only work well when the market is in an uptrend. They don't make you aware of this fact because if they did, you wouldn't buy their system. You can take this to the bank, "any trend trading system" will work in an uptrend.

If you learn how to code your own stuff, your trading will improve dramatically
Doing it for yourself, rather than buying a ready-made system off the shelf will allow you to have a better understanding of "trend indicators" & how to take advantage of them or simply how to use them. It might come as a surprise but most starting out on their trading journey don't understand how trends really work, & how they impact a system, both during development & trading.

Skate.

 

[Skate]

What works?
I get my share private messages & they revolve around trying to find a system that works. They are especially concerned about entries. They want to hit the entry as close to the turning point of a trend as possible. The reality is, it really doesn't matter much what you are using for entry conditions as long as you are entering in the direction of the trend. When you tell them this fact, it dampens their enthusiasm because they have this notion that there is a magical solution waiting to be discovered, which there isn't.

A few simple trend indicators are all you need to see when to enter a trade
Entries during trends are a no-brainer. Once you have an entry, the problem becomes one of having an exit strategy combined with money management. It all sounds simple but putting it into practice is where the difficulty starts.

Skate.

 

[Skate]

To start the process of systems development
It all starts with baby steps. Throw a few trend indicators on a chart & see how they perform when the market is in an uptrend. The issue I find is most "new to system trading" is that they will fall into the trap of backtesting across a broad range of market conditions (don't do this). The reason most will fall into this trap is that they have heard this is the way to test systems. It pays to remember this one fact "When the market isn't cooperating," nothing works well when you are trend trading.

You can believe this or not
A trailing stop is your last line of defense. You should always develop an exit strategy that works separately from a trailing stop. Exit strategies are too numerous to discuss in a single post but a search will bring up many variations that I use. However, in saying this, there is no such thing as the "best exit" because the timing of the exit is always compromised to some extent. There are exits that work for your style of trading & there are others that won’t.

Skate.

 

[Skate]

The misconception about trading
We all think we know how trading works but do we really? With education, it allows you to start understanding how trading actually works. Understanding how the market moves will allow you to change what you are doing according to market conditions. When that's the case, trading will be easier & a bit more profitable.

First, you have to accept - "good enough is good enough"
The first thing you need to understand is that you can't maximise everything. So don't even try. It took me a long time to figure this out, "if you are comfortable with the strategy" you can trade it, & you'll learn to improve it over time. Having a half-decent strategy, that you understand will give you the confidence to trade it. This means that you'll be less likely to throw this strategy out because trading a system like this "won’t" mess with your emotions.

Skate.

 

[Skate]

Trends are everything when it comes to trading
First, how do we go about figuring out if there is a trend? There are several ways to do this & they're all easy. On a weekly chart, you can use a 10 & 40-week moving average. When the index, the "All Ordinaries" is above the 10-week moving average the market is in an uptrend. When the index is in between the 10 & 40-week moving average, it's normally whipping around consolidating, & screwing you out of money. That's what it's doing.

How do we pick a downtrend?
As a rule of thumb when the closing price is below the 40-week moving average it's in a downtrend. That's an easy explanation, a starting point on how to define things.

Okay, now we know how to determine the trend, what comes next?
It's as easy as sticking a couple of trend indicators on a chart & see how they look "but" only when the market is in a definitive uptrend. At any other time, other than an uptrend the indicator will become less than useful. Use the same trend indicator formula as "on your chart" for the entry condition. Don't worry at this stage about exits, that will come later. If the trend indicator returns a reasonable amount of money, then you're in business, you have a base to work with.

Skate.

 

[Skate]

Next, develop your exits (this is the most important part of your strategy)
Exits need to fit your risk tolerance more than entries. This means, how much are you prepared to lose without cracking it? What I mean by that is too many people look at what makes the most money & then they can't trade it because the drawdowns, & trade frequency, cause them a great deal of anxiety.

Pick exit strategies that you are comfortable with & look at them on a chart
If you feel good about what you are seeing, put them in the backtest. If the backtest results are reasonable even if they're less profitable you're in business.

Skate.

 

[Skate]

If you’re going to trade a trend strategy
Only trade the system when the market is in an uptrend (this is a no-brainer) because if it performs during up-trends, then you've got yourself a handy trend trading strategy. If you test your strategy when the markets are in a downtrend, & it performs poorly, this is a sure indication that you’re on the money.

Now, think about this
Why would anyone want to trade during a downtrend? But there are many who do. I'm sure there would be some traders who would take this risk without knowing the down risk associated with doing so, Then there would be others who just have a death wish.

Skate.

 

[Skate]

There are some better strategies better than others
You may find some systems, works better than others but that’s not the point. Constantly searching for something better will drive you to distraction Once you have a strategy that feels comfortable to trade, that’s the one to stick with.

Swapping from one strategy to the next
Changing or swapping a strategy isn't encouraged as you will quickly realise the results of swapping one strategy for another will be marginal at best. Most times there will be little or no improvement at all, resulting in you starting the whole process over again. All I'm saying, from my experience it's better to stay with the devil you know & try for improvements.

When you test a strategy, test it again & again
If you take your trend strategy & backtest it when the market is in a downtrend, it's going to look very, very bad, & it should. If it didn't, it wouldn't work in an uptrend so don't struggle trying to fix something that's not broken.

Skate.

 

[Skate]

Before I step off my soapbox
Any half-decent trend indicator will work when the market is trending, so you don't have to worry about the perfect setup, you simply take the trades when the trend indicator tells you to take them. Trading a trend strategy in this way you're only going to make some money. You will, however, recognise that almost every indicator is right "part of the time".

It's your job to figure out which indicator to use
Use the indicators that you understand or simply use the indicator that you “like”. Backtesting will let you know when the indicator is likely to be right. You will also understand which market conditions will cause your favourite indicator to decline or increase its predictive abilities. Having this understanding will allow you to adjust it to the market bias.

I’ll conclude on this point
“Money management & a solid exit strategy is everything” when it comes to being profitable in this game. And finally, it is “not possible” to maximise or minimse everything regardless of how much you learn. Just don't be a perfectionist.

Stepping down off my soapbox

Skate.

 

[Gringotts Bank]

Before I step off my soapbox
Any half-decent trend indicator will work when the market is trending, so you don't have to worry about the perfect setup, you simply take the trades when the trend indicator tells you to take them. Trading a trend strategy in this way you're only going to make some money. You will, however, recognise that almost every indicator is right "part of the time".

It's your job to figure out which indicator to use
Use the indicators that you understand or simply use the indicator that you “like”. Backtesting will let you know when the indicator is likely to be right. You will also understand which market conditions will cause your favourite indicator to decline or increase its predictive abilities. Having this understanding will allow you to adjust it to the market bias.

I’ll conclude on this point
“Money management & a solid exit strategy is everything” when it comes to being profitable in this game. And finally, it is “not possible” to maximise or minimse everything regardless of how much you learn. Just don't be a perfectionist.

Stepping down off my soapbox
View attachment 148630
Skate.

“Money management & a solid exit strategy is everything”

More on this please?

 

[Captain_Chaza]

“Money management & a solid exit strategy is everything”

More on this please?

"We All Learn The Hard Way"
Unfortunately
"There is No Other Way"

 

[Skate]

“Money management & a solid exit strategy is everything”

More on this please?

It appears @Captain_Chaza gave you a quick & dirty answer without wasting words.

"We All Learn The Hard Way"
Unfortunately
"There is No Other Way"

I don't want to be rude
But with one-liners, I feel like responding "like for like" as far as "more on this please" I should respond by saying, "I've covered your questions many times previously, don't be lazy "do" a keyword search" before asking a simple repetitive question.

@Gringotts Bank, I'm surprised you have asked such a basic question
I have made over 140 posts on this subject alone & detailed exactly how I pyramid into positions taking advantage of every dollar accumulated or lost. The next bet is mathematically coded from the balance of my trading funds.

Skate.

 

[Skate]

For everyone else (less experienced)
I make a few general comments concerning "Money Management". Concerning a solid exit strategy, I have detailed that also in just as many posts. Today I even mentioned that a "Trailing Stop" is an exit of last resort. I've posted about my various exits & my GTFO filter. All it requires is searching a few keywords posted by "Skate".

It's frustrating & time-consuming
To answer questions I've already made multiple posts on. It's the one-liner that gets to me the most with the answer requiring a detailed answer.

Parameters & settings
Also, I should say money management & parameter setting give any strategy a fighting chance. A Stale Stop, Trailing Stop & TakeProfit Stop sharply applied allows money management setting to do its thing & that is to manage the size of the next bet.

Skate.