Dump it Here

Skate said:

No, it didn't fall on deaf earsI tried to code this into the Amibroker Exporation Analysis Filter, but my Norgate Silver Subscription level lacks the information

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You have the option to upgrade any time.

3% "premium" is an additional arbitrary variable you appear to have added. Why not just "market on open" trading a mostly fixed $ amount. This would of course require you to monitor market breadth prior to open, and ensure your order amount is likely to be filled.

Alternatively, a systematic analysis 0,1,2,3,4,5,6,7,8% etc. premium could be tested too.

Richard Dale said:

You have the option to upgrade any time.

3% "premium" is an additional arbitrary variable you appear to have added. Why not just "market on open" trading a mostly fixed $ amount. This would of course require you to monitor market breadth prior to open, and ensure your order amount is likely to be filled.

Alternatively, a systematic analysis 0,1,2,3,4,5,6,7,8% etc. premium could be tested too.

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@Richard Dale, you're right, I hard-coded a 3% premium into the algorithm. This percentage was chosen intentionally to balance two factors: (1) Ensuring the total premium and commissions don't exceed the max investment amount per security, and (2) Increasing the likelihood of getting trades filled at the opening price.

While systematic testing could yield improvements, I'm cautious about lowering the premium below 3%. In my experience, smaller premiums often lead to more unfilled orders at open. Also, increasing the premium reduces the number of shares purchased, which impacts the investment amount. The goal would be to fine-tune the percentage to the "Goldilocks zone" that maximises fill rates at the lowest premium cost.

Skate.

Richard Dale said:

Once again you have survivorship bias and lookahead bias occurring. Backtesting on the CURRENT constituents means you are ignoring any historical changes. Whilst 720 days doesn't seem that long, the last 2 years there have been 140 additions to the All Ordinaries index at different times and 136 removals. That's quite a turnover of constituents for an index that nominally has up to 500 constituents. Trying to make any sort of decisions about trading system's performance with using a survivorship bias data set along with look-ahead issues (pre-inclusion bias) is just nonsensical.

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Let's talk about backtesting
@Richard Dale makes excellent points about the issues of survivorship bias and look-ahead bias when backtesting. Using the current set of index constituents can absolutely create an unrealistic view of past performance by excluding symbols that have dropped out over time.

Ideally, backtests should use historical point-in-time universes that accurately reflect which symbols were available for trading on each date in the past. As Richard noted, indexes can have significant turnover in their constituents over time as companies get delisted, go bankrupt, get acquired, or drop in size and importance. A backtest using only current symbols ignores all that market reality.

In summary, survivorship bias makes the strategy look better than it would have been by removing failed symbols. It creates an unrealistic assumption that you could continuously trade the surviving symbols. To avoid survivorship bias, backtests should incorporate delistings and use point-in-time symbol universes. Walk-forward testing can also help expose when performance deteriorates as symbols exit the market. Accounting for survivorship bias is necessary for the realistic evaluation of a strategy's viability.

Skate.

Let's talk about Survivorship bias
Survivorship bias refers to the tendency for backtests or performance reports to exclude "dead" symbols that no longer trade or exist. This can artificially inflate results. I should also point out that backtesting on only the current index constituents fails to account for historical changes in the index over time. The index can have significant turnover, with many additions and removals that a backtest would miss as @Richard Dale has pointed out.

Some ways survivorship bias can affect backtest results
(1) Excluding stocks that went bankrupt, got delisted, or were acquired can remove many losing trades from the backtest - This skews the win rate higher.
(2) Poorly performing symbols that don't survive a full backtest period are excluded - This inflates metrics like total return and win rate.
(3) Sectors that have fallen out of favour and contain more dead symbols are underrepresented - This distorts sector allocations.
(4) The backtest assumes you could continuously trade all the symbols - In reality, the portfolio would shrink as symbols exited the market.
(5) Results can improve dramatically by excluding symbols with major losses - This improves returns.
(6) Trading costs get understated if volume and slippage from dead symbols are excluded.

Skate.

Backtesting is the start of a process
To avoid the issues I've highlighted above, "point-in-time historical constituent lists" should be used for backtesting. This accurately reflects which securities were available to trade on any given historical date. As @Richard Dale notes, services like Norgate Platinum provide these "point-in-time lists" to avoid survivorship and look-ahead biases. Using proper historical data is vital for evaluating a strategy's true viability.

Walk-forward testing
This process is also important to see how performance holds up over time. As the tradable universe changes with additions/removals, does the strategy still work well out-of-sample?

In summary
Using accurate point-in-time constituent data and walk-forward testing helps expose any overfitting and ensures backtests reflect the market realities. Thanks again to Richard for the excellent points on avoiding bias and using appropriate backtesting data. Discussions like these help me improve my knowledge as well as my ability to provide thoughtful explanations to others.

Skate.

Richard Dale said:

You have the option to upgrade any time.

3% "premium" is an additional arbitrary variable you appear to have added. Why not just "market on open" trading a mostly fixed $ amount. This would of course require you to monitor market breadth prior to open, and ensure your order amount is likely to be filled.

Alternatively, a systematic analysis 0,1,2,3,4,5,6,7,8% etc. premium could be tested too.

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This is broker dependent if you want to put your order in and have them filled automatically..bell direct uses a formula that they actually refused to share to accept, or not ,an on open price above the last close..or below for sell...
So yes we miss the flying star if we do not want to be at the screen at open.
This indeed affect backtests a lot.
What I do is I usually compare a backtest on a previously traded period with my systems.
There are differences..and yes I am ok with this as long as I can understand why..often small issues of number of shares in packet as open price is unknown at order time, and missed trades as captain said.

Skate.

Fostering an understanding through open dialogue
I sincerely value the perspectives shared by others and the chance to broaden my understanding through diverse viewpoints. I acknowledge that engaging with certain individuals can be challenging and appear unproductive at times. Nevertheless, I firmly maintain that open and respectful dialogue plays a vital role in fostering mutual understanding. After all, as humans, we all have an innate desire to be heard and understood.

By sharing information that I have found helpful and inviting others to contribute, we create an environment where diverse viewpoints can enrich this thread. Even if we may not persuade the individual we are directly engaging with, there is a chance that others who observe the discussion may benefit and gain a broader understanding of the topic. It is through respectful and open dialogue that we can challenge our own beliefs, refine our points of view, and potentially find common ground.

Ultimately, my intention is to foster mutual understanding and contribute positively to every conversation. While I acknowledge the inherent challenges, I remain steadfast in the belief that engaging with others, even in the face of disagreements, can lead to growth and progress. In line with these principles, the "Dump it here" thread is fully committed to promoting a respectful exchange of ideas.

Skate.

Skate said:

"Trading for Beginners - Skate's Practical Guide to Profitable Trading"
A daily series of posts aimed at those just starting out on their trading journey.

50. There is good debt & bad debt
Even while debt can be a heavy financial burden, not all debt is the same. In fact, with good management, some debt may even be advantageous. Debt is a financial tool that can help you achieve your goals and generate wealth, however, not all debt is equal. Understanding the distinction between good and bad debt is essential for making sound financial decisions and achieving long-term financial security.

Good debt is debt used to invest in assets that will increase in value over time, such as a mortgage or a business loan. You can boost your long-term returns and financial outcomes by taking on debt to invest in a productive enterprise. A mortgage on a home, for example, may appreciate in value over time, increasing your nett worth and providing a return on investment when you eventually sell the property.

Bad debt, on the other hand, refers to loans taken out to buy assets or things that depreciate over time, such as a car or credit card debt. Borrowing money to purchase items that lose value over time can leave you with a large debt load and little to show for it. Bad debt often has higher interest rates than good debt, which can add to the financial strain over time.

When considering debt, it's critical to analyse the potential benefits and drawbacks and make decisions that line with your long-term financial goals and basic values. Prioritising good debt over bad debt is critical because good debt can improve your financial performance and progressively raise your financial security and wealth development.

It's true that a lot of people spend more time investigating a car purchase than they do preparing for a prosperous and financially free future. Unfortunately, not making plans for the future can leave us open to unforeseen circumstances and monetary difficulties.

Therefore, it’s critical to invest time and resources in financial planning and financial education in order to have the future you deserve. This includes making a budget, determining your long-term financial goals, and devising a strategy to attain them. By doing so you may develop a solid financial foundation and achieve long-term financial success by making informed financial decisions and managing your debt properly.

Skate.

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Hi Skate…,

Just reading back, I came across your post #8836, on page 442, dated 26 June 2023, which I totally agree with, and, for the benefit of beginners, thought I would add my version of Debt in support of your above post….



QUOTE - “Basically a High Debt/Equity Ratio needs to be investigated before anyone jumps to an incorrect assumption....

Debt can be a problem in some cases, But, for some stocks the "Excessive Debt" is Providing Positive Returns to Shareholders....

Remember there is "Good, Productive Debt" But there is also "Bad and Unproductive Debt", the trick is identifying what is OK relative to individual companies....



Say that Debt is helping provide a 2.5% Div Yield, …..Zero Debt they would also probably have a Zero Div Yield - so theoretically a bit more Productive Debt could increase that return substantially - This is where astute directors etc come to the fore - Good Financial Management will make a company greater - Bad Financial Management will send a company broke....

Have you researched the Company Directors and the Financial Team, what is their past record like???....Do they know what they are doing with the current ??% Debt/Equity Ratio???......How much is Short Term Debt, How much is Long Term Debt, What are the Loan Contract Details...are there Roll Over Provisions in the Contracts....What are the Loan % Rates, and are the Rates Competitive, or are they exorbitant????….Look at their Balance Sheet/Financial Position, Do they have money invested that could be used to repay the debts at a minutes notice????….. What are the Tax Implications with such a High Debt Load, Good or Bad????…. In the current interest rate environment, can higher Debt to Equity ratios be sustained.


Back in the Old Days punters like us only had those mythical % guidelines to help our decision making process - in today’s environment we have endless research resources at our fingertips.. The Old Rules like the ones people refer to are just that, "Old Rules".



Basically, the Debt to Equity Ratio (D/E Ratio) is explained as “to express all company liabilities as a % of Shareholders Equity” …..

I should also mention that there are NUMEROUS different ways to calculate the D/E Ratio…

Here are a few of the options :- ….

1. Total Liabilities/Shareholder Equity multiplied by 100 = Ratio %”....

2. Interest Bearing Debt/ Shareholder Equity multiplied by 100 = Ratio %....

3. Interest Bearing Debt minus Cash/ Shareholder Equity multiplied by 100 = Ratio %....

4. Shareholder Equity/Long Term Debt multiplied by 100 = Ratio %....

5. Long Term Debt plus Total Equity = Capitalisation THEN That capitalisation Total is used in the final calculation of:- Capitalisation/Long Term Debt multiplied by 100 = Ratio %....

6. Total Liabilities/Net Worth minus Intangible Assets…

7. Financial Debt/ Shareholder Funds minus Intangibles & Preference Capital…

And there are several more ways to calculate a D/E Ratio…

Some Analysts show their D/E Ratio as “Gearing or Leverage Ratios”…

Misinterpreting the D/E Ratio can be fatal to your profits – you may be missing out on a great trade because you used a D/E Ratio that was ridiculously high, when, with the correct calculation it was actually very low…

The bottom line as usual is DYOR…

Find out how your provider calculates their D/E Ratio, and then decide if that calculation is what you need to help in your analysis procedures” …. UNQUOTE..

@DrBourse, your contribution to this thread is highly valuable, as always. Your post sheds light on an important aspect. In the post you referenced I was highlighting how "Good Debt" can potentially lead to long-term wealth.

To recap, "good debt" refers to debt utilised for investments that have the potential to increase in value over time, thereby enhancing returns and overall financial outcomes. By strategically leveraging debt for productive investments, individuals can effectively increase their net worth.

# They say money can't buy you happiness, but what I do know is "it keeps my children close"

I should do a series of posts about happiness, some things as humans we all seek, but do we really know what it means and how to achieve it?

Skate.

The concept of happiness
As humans, we all desire happiness, but do we truly understand its meaning and how to attain it?

In our pursuit of happiness, we often find ourselves seeking external factors such as material possessions, achievements, or recognition. However, true happiness may lie in a deeper understanding of ourselves. It involves cultivating a sense of contentment, gratitude, and fulfillment that transcends fleeting moments of pleasure.

Throughout this series of what makes us happy, we can gain insights into the different paths that lead to genuine and lasting happiness. It is crucial to acknowledge that happiness can be subjective and unique to each individual. What brings joy and fulfillment to one person may not necessarily resonate with another. By embracing this diversity, we can foster a broader understanding of happiness and uncover a range of approaches that may resonate with different individuals.

What happiness means to me
Desiring "what I have".

Skate

As humans, we never stop thinking
I often reflect on what makes us happy and what is real happiness. I believe the true essence of happiness lies not in constantly seeking more, but in cultivating the ability to find joy in simplicity. In today's world, happiness and contentment seem scarce commodities.

True happiness is desiring what you have
Yes, the concept of true happiness often involves finding contentment and satisfaction with what one already possesses. Desiring what you have can be seen as a key component of experiencing genuine happiness. It means appreciating and valuing the present moment, the people in your life, and the things you have achieved or acquired. This mindset allows you to shift your focus from constantly chasing more or comparing yourself to others, and instead find fulfillment in the present and gratitude for what you already have. By cultivating a sense of appreciation for the blessings in your life, you can cultivate a deeper sense of happiness and contentment.

Skate.

Happiness is embracing life's speedbumps
Life's journey is paved with both smooth paths and unexpected hurdles. Embracing this truth allows us to navigate the challenges with resilience and grace. By acknowledging that setbacks are a natural part of life, we can approach them with a sense of acceptance, knowing that they contribute to our growth and add depth to our experiences.

Managing frustration through acceptance
The key to maintaining a sense of peace lies in acceptance. Acceptance means making the best of every situation that comes our way. Life is full of challenges, and it is through these challenges that our lives become truly meaningful. Without them, we wouldn't have the opportunity to grow into the individuals we are today.

Skate.

Happiness comes from recognising the limits under our control
Much of life is beyond our control. However, we have the power to shape our emotional well-being by adjusting our expectations. It is crucial not to tether our happiness to circumstances we cannot influence. We are all temporary passengers on this unique and personal journey called life, an experience we get to have only once. Accepting that there will be obstacles along the way is an inherent part of this journey.

On reflection, being a beginner's thread relating to all things trading I may just change course to relate happiness to trading.

Skate.

Happiness goes beyond mere momentary pleasure
Having an excess of money has the ability to create an extraordinary quality of life and the ability to live life on our own terms. While various factors contribute to our overall well-being, achieving financial independence plays a pivotal role in shaping our mental health, relationships, and overall fulfillment. It is essential to recognise that mastering the game of money, relationships, and finding fulfillment is indispensable for living an extraordinary life.

Financial independence serves as a cornerstone for a fulfilling life
It allows us to have greater control over our choices and decisions, enabling us to pursue our passions and aspirations. When we have a firm grasp of our financial situation, we can alleviate the stress and anxiety associated with money. This, in turn, positively affects our mental well-being, enhancing our overall happiness.

Skate.

Financial independence influences our relationships
It provides us with the freedom to spend quality time with loved ones, create lasting memories, and nurture deeper connections. Financial stability can alleviate financial strains within relationships and foster an environment of shared goals, trust, and mutual support. However, it is important to recognise that money alone does not guarantee happiness.

Financial stability truly enhances our quality of life
Pursuing personal growth, finding meaning in our pursuits, and nurturing our passions contribute to a sense of fulfillment that complements financial independence. By mastering the game of money, through trading, we can unlock the potential for an extraordinary life. It is a continuous journey of learning and growth, understanding the interplay between these elements as we strive for financial independence, tailored to our unique desires and aspirations.

Enough said!

Skate.

A Day of reflection?

UMike said:

A Day of reflection?

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@UMike, you are correct, today is a day of reflection
It began with @DrBourse's post about debt and the importance of calculating the Debt-to-Equity (D/E) ratio. As someone who engages in trading that requires only a few minutes per week, I find myself with ample time to ponder and reflect on various matters.

The "Dump it here" thread provides me with a platform to articulate my thoughts, with the belief that they might be of value to others. Even if my reflections don't resonate with everyone, this thread serves as a record of the thoughts that were evoked in me at that specific moment in time.

When others contribute their thoughts and perspectives through this thread, it offers me an opportunity to engage in a meaningful exchange. I appreciate the chance to respond and provide my own alternative view. It's important to note that while I may not hold the definitive perspective on the matter being discussed, I believe that offering alternative viewpoints enriches the overall conversation.

The beauty of this thread lies in its ability to foster diverse perspectives and encourage open dialogue. It allows us to challenge our own beliefs, consider alternative perspectives, and ultimately expand our understanding. I embrace this platform as a space for reflection, where I can share my thoughts and engage in meaningful discussions. It is through these exchanges that we collectively grow and gain new insights, broadening our understanding of the world around us.

Skate.

Skate said:

@UMike, you are correct, today is a day of reflection
...

Skate.

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UMike said:

A Day of reflection?

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Good afternoon
rcw1 saw his reflection in the mirror this morning and couldn't quite get over how good looking he was... ha ha ha ha ha
Then rcw1 woke up ha ha ha h aha

Have a very nice reflective day, what's left of it.

Kind regards
rcw1

What a day
My dog ate all the Scrabble pieces and he was starting to choke so I rushed him to the vet and they put him on a drip.

Just got off the phone with the vet enquiring how my dog was doing - he said there is "no word yet"

Skate.