Well, a lot to unpack here, but best it's clarified accurately...
The MAH entry depicted herein is incorrect, which suggests the assumptions/backtests provided are also incorrect.
I do not use ATR as a volatility filter. Probably too simple for todays markets. Try:
Volatility = 100 * StdDev(log(C/C[1]),n) * Sqr(x) < y
The trailing stop highlighted herein is also incorrect. As per the original rules, the trailing stop is a 2-speed ratchet, i.e. wide when the trend is up, and tightens when the broader trend changes. It's a very simple mechanism, read, robust. It allows outlier trends to be ridden - when they come along.
However, the next big hurdle is knowing when trading conditions are unsuitable for this strategy. Recognising these conditions is crucial to avoid potential losses and ensure the strategy is only applied in favourable market environments.
Yeah. Big no, no here. It is absolulety not "crucial" to avoid losses. Indeed, losses are a part of the game and until that's accepted by the trader, then the Beginners Cycle will prevail - exactly as has been occuring in this thread over the years. No expert investor/trader, including Buffett, Simons, Dennis, Echkardt, Bacon, Kovner etc, change their strategy when things get tough. They all suffer losses. They all have drawdowns. They all stick with their strategies and ensure. Only amateurs try to avoid the enivitable losses and drawdowns.
Trading / investing is remarkably simple:
Success = a simple strategy applied for the long term
Easily said, but difficult to implement due to the Beginners Cycle.
My tweaked up version of the Weekend Trader Trader was adjusted in April 2020. It has not been optimised or adjusted since. I use a systematic way to adjust or "tune" my strategies. Listen to the various podcasts by Jerry Parker and read between the lines. He gives all the answers.
Since April 2020 my tweaked up WTT has had a CAGR of 20.5% vs the XSOA benchmark of 9%, Yes, it had a drawdown during 2022/23, but as per above, its a simple and robust strategy which has beeen applied on a consistent basis. Amateurs give it away when things get uncomfortable and go looking elsewhere. Classic Beginners Cycle.
The Beginners Cycle tends to come from a subconscious untrusted strategy. I've written extensively about it for 20+ years, so no need to go into it again.
A simple system applied for the long term folks. That's all you need...
Weekend Trend Trader Tweaks
Before @Richard Dale jumps in - I’ll make a disclaimer. The charts and backtest uploaded are for 12 months from May 15, 2023, to May 16, 2024. Are they accurate? Most likely not, but for the exercise, it’s a comparison between the original parameters and tweaked parameters.
@Nick Radge thank you for your detailed post.
However, the next big hurdle is knowing when trading conditions are unsuitable for this WTT strategy. Recognising these conditions is crucial to avoid potential losses and ensure the strategy is only applied in favourable market environments.
Yeah. Big no, no here. It is absolulety not "crucial" to avoid losses. Indeed, losses are a part of the game. Only amateurs try to avoid the enivitable losses and drawdowns.
I think that many people would find that this exercise would give them good feedback on the market, I will follow with interest. There are some indications that we are entering into the early stages of a long running bull market.I’m a Guaranteed Winner
After speaking to a family friend, he mentioned putting $100,000 in a 12-month term deposit on the 7th of October, securing 4.75%. Given the current market turmoil and the risk of losing some of his money, he felt this was his best option. He believed that trading and investing were akin to gambling and asked what I would have done in his situation.
I explained that I would have traded 10 investment-grade stocks
Investment-grade stocks are large companies whose management is committed to ensuring the share price increases over time. I suggested 10 companies that met my criteria, which I will follow from Monday, the 7th of October, over the next 12 months to compare and contrast our decisions on how to handle $100,000:
ALL.AX
COH.AX
CPU.AX
CSL.AX
FMG.AX
GMG.AX
MQG.AX
REA.AX
REH.AX
SHL.AX
Summary
Long story short, seven of my 10-position portfolio are currently trending. I know it’s possible to start trading during an ongoing trend, and many traders do so successfully. Starting to trade during an ongoing trend can be effective if you carefully analyse the market and manage your risks, and that is what I’m going to do.
Skate.
I think that many people would find that this exercise would give them good feedback on the market, I will follow with interest. There are some indications that we are entering into the early stages of a long running bull market.
I've been in this awkward " advisory " situation myself and found it best to keep my big mouth shut .After speaking to a family friend, he mentioned putting $100,000 in a 12-month term deposit on the 7th of October, securing 4.75%. Given the current market turmoil and the risk of losing some of his money, he felt this was his best option. He believed that trading and investing were akin to gambling and asked what I would have done in his situation.
this formula reminds me to an article that has been published many many years ( I believe TASC) and the author is Markos Katsanos
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