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The (3. SMACD-Coloured Strategy) is adapted from a Smoothed MACD indicator
This hypothetical trading exercise is the third of three MACD trading strategies under review. This strategy is designed to trade 20 large ASX companies as of the 1st of June 2024.

The (SMACD-Coloured Portfolio) is diversified across 10 holdings, each allocated $10,000, capping the total of each strategy at $100,000. This ongoing exercise will provide a clear assessment of the relative merits of this trading strategy.















Skate.
 

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Disclaimer - This is a theoretical investment exercise
In this exercise, we put "Google (AI) Gemini" head-to-head with seasoned fund manager Dr. Don Hamson from Plato Investment Management. Both were tasked with providing their "top five growth and income stocks" for the next 12 months on the ASX.

21 Weeks into the exercise
Both contestants are experiencing some challenges at the moment.

First Place (-$695)
# Dr. Don Hamson (Expert) - BLUE line on the equity chart (2 winning positions)

Second Place (-$1,537)
# Google Gemini (AI) - RED line on the equity chart (3 winning positions)






Skate.
 
getting interesting now ..

now sure expecting a rally in November/December looks reasonable given the market history over the decades

can they recoup the current losses and even register capital gains by the years end ?
 

Objective
In this hypothetical investment exercise, we measure the performance of Australia's top 20 listed companies as of the 1st of May 2024. The aim is to explore the year-to-date returns of investing $100,000 ($5,000 in each of the 20 companies) from the 1st of July 2023, considering capital gains and dividends. The ASX20 index will be rebalanced annually to simplify the process. It's important to note that survivorship bias was introduced in the initial analysis. The primary goal is to demonstrate a streamlined approach for newcomers to participate in the markets with ease.

Exercise end date
The final post for this exercise will be presented on Sunday the 30th of June 2024.



Skate.
 
Enhancing Trading Chart Clarity
As someone who posts trading charts, I understand that it can sometimes be confusing for others to understand the displayed colours, lines, boxes, and overall information. Sometimes, the charts I've posted made perfect sense to me, but left others feeling mystified.

To address this, I've ensured that the charts I'm posting today have everything thoroughly explained so that the information is clear and understandable to everyone. Each chart includes a signal bar and a buy bar, as well as the specific conditions that triggered the signals. This means that once a signal is generated on the chart, the next bar should be used to execute a buy order.

Maintaining clarity when sharing trading charts displaying complex indicators that might appear bewildering into a narrative that allows traders to make informed trading decisions. Transforming what could be confusing visual data into a clear, step-by-step explanation will enable others to understand and potentially replicate the trading strategy.

Skate.
 



Sell MQG
A sell signal is generated when the (MACD-sv) value is less than a Lower Band and the (Yellow Dot Signal) is enabled. This is also considered a momentum crossover signal. Similarly, a sell signal can be generated when there is a change in the direction of the (MACD-sv) value enabling the (First Yellow Dot Signal) to be generated. Sell on the next bar after the signal bar is generated.



Skate.
 



Buy GMG
A buy signal is initiated when the Smoothed MACD line crosses "above" the signal line. Buy on the next bar after the signal bar.



Skate.
 


Sell QBE
A sell signal is generated when the Smoothed MACD line turns "red". Sell on the next bar after the signal bar.



Skate.
 
peter2 said:
I'm very disappointed with my performance this FY. If you can't beat buy and hold why bother?
Click to expand...

@peter2, I can understand your frustration with your trading performance this financial year. Comparing your trading results to a simple buy-and-hold strategy can be demoralising, especially when the markets have been volatile. However, I would encourage you to not be too hard on yourself.

Trading the ASX this past year has had its fair share of challenges. The markets have been turbulent, with many unexpected twists and turns. The fact that you've been able to keep your head above water is an accomplishment in itself. In a year like this, sometimes "good enough" really is "good enough". That said, I know the temptation to strive for better can be strong, especially when we set high expectations for ourselves.

Skate.
 
Professor, as usual powerful words of wisdom.
 
Thanks for the support, but we use benchmarks for a reason. That is, to assess our performance against holding cash or buying an index ETF and just holding on. I'm not being hard on myself by saying my performance shown in the Combo portfolio this FY has been poor. When we take on the responsibility of trading in a discretionary manner we must be honest when we fail to beat our benchmarks.

Sure it's been a difficult year for some. Those that bought an index ETF and just held it had a much easier year. Those that bought the US index ETF had a better than average year.

Reviewing my trading actions (not ideas or opinions) throughout the year shows that I've made too many mistakes. Mistakes cost money or worse, miss out on good opportunities. My biggest mistake of the year was not re-buying DRO after seeing that my exit had been shown to be too early.



There were other mistakes throughout the year and they all add up to something significant.

I know we all make mistakes and I'm not being overly harsh of myself. I realise that mistakes are common, especially when I chose to use a discretionary trading style. I don't grade myself against perfection but I know what's good enough.

Should I consider another style? How about buy and hold? No way, I couldn't handle the large drawdowns.

How about using systems? I've considered this and tried a few times but I've realised that it requires a lot of work before I would be happy to allow trading systems to manage my money. I've estimated that I'd need about 8 -10 systems to capture most of the nuisances of price action just to go long. I know, start with one, perfect it, then another and so on. With my personality type I could get stuck down the analytical rabbit hole and never trade at all.
 
peter2 said:
I know we all make mistakes and I realise that mistakes are common
Click to expand...

@peter2, in hindsight, the decision to switch from trading to investing at the end of December was not one of my better moves. During the first half of the financial year, my trading strategy had been performing well, generating a 21.73% increase.

However, with just two weeks left in the year, I've now blown through nearly half of those open profits, resulting in a year-to-date return of 9.92%. While that performance is still better than a losing year, the results aren't quite as strong as I had initially hoped for.

That said, when you factor in the dividends and franking credits, the overall results are still quite pleasing, as those additional income streams have helped cushion the impact of the more recent investing losses.



Skate.
 


So is this 'strategy' ending on 30 June 2024?

Obviously the answer is yes.

So fairly pointless for me to continue the EWA strategy.

Rather, what I will do is demonstrate a strategy in the US that could be replicated (possibly) in Aus.

This is the same strategy that I would have implemented with EWA, but in the US it just provides so many more possibilities to structure the trade.





So you allocate a % of your $100K to stock, in this case QYLG which 50% hedges its position by selling covered Calls and BIL which is a short term Treasury paper.

Both provide a yield.

So in this instance I will go 20% QYLG and 80% BIL.

As I add to the QYLG position, I sell BIL to obtain the cash with which to fund that purchase. This way (obviously) you obtain a far better overall return.

I'll use Monday's closing prices as my start point.

jog on
duc
 
ducati916 said:
So is this 'strategy' ending on 30 June 2024?
Click to expand...

@ducati916, I don't have to end the investment strategy exercise on the 30th of June 2024. The original plan was to measure the performance of Australia's top 20 listed companies, considering both capital gains and dividends, over 12 months from the 1st of July 2023 to the 30th of June 2024.

While the year-long evaluation period will be complete at the end of this month, I don't have to end the exercise at this point. The data and insights gathered could still hold value, even if the tracking period is extended.

What are your thoughts on continuing this investment exercise?

Skate.
 

Reflecting on the Ups and Downs of Transitioning from Trading to Investing
In hindsight, what I neglected to mention in my previous post is that if I had stuck with my trading strategy instead of transitioning to investing, my returns would have likely more than doubled over the entire year. I should have simply walked away at that point, rather than continuing to keep records.

It's a similar feeling to getting off a good ride too early, only to watch it take off to the moon afterwards. Once you decide to exit a position or change your approach, it's often best to stick with that choice and not look back. But the reality is, we can't always resist the temptation to continue monitoring what could have been.

Skate.
 
Striking the Right Balance
Looking back, I may have provided a bit too much detailed information about my 3 MACD trading strategies on the top 20 ASX-listed companies. It's a fine line to walk between sharing enough information for others to follow along and potentially overwhelming others with displaying too much.

The choice to use the MACD indicator was primarily driven by its availability across most charting platforms, making it an accessible tool for this exercise. However, I recognise that relying solely on a single indicator like the MACD may not be the most robust or well-rounded trading approach.

Perhaps demonstrating three different MACD-based methods, rather than focusing on just one as originally planned, has added an unnecessary layer of complexity. While the goal was to showcase a simple, rules-based system of religiously following the signals, I want to ensure the educational value remains clear.

I appreciate any thoughts or suggestions on how to best structure this exercise to maximise its educational value or "keep the exercise" as is. My primary objective is to provide trading ideas, rather than simply displaying a high volume of data. Please let me know if you have any ideas on how I can refine the presentation.

Skate.
 


Ok, I can do either or even both. Only takes a few minutes each week. I'll do both, then there is actually 3 strategies of longer term trading/investing strategies available.

jog on
duc
 
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