Dump it Here

[Skate]

Hi Skate,

Thanks for a getting back to trading. Some of that other stuff is a little too esoteric for me.
And yes FY15-16 was a magic year for trend followers, I have my own hypothetical backtest to confirm this.

View attachment 91703
View attachment 91704
The bottom 2 graphs tell the story of cutting losses after giving the stock every chance of proving it's worth and letting winners run.

Cafeteria traders
Wyatt, I've read your posts with interest & yes your posts are slanted towards the facts & figures of trading. I'm trying to cater for a wide audience. I find most members on ASF are cafeteria traders, meaning they tend to pick & choose what appeals to them.

Why post crazy stuff I'm not interested in
If I may, the esoteric post I've made serve a purpose, I don't expect everyone to enjoy them but they do have an arching reason for the inclusion into this thread, it's just not evident to most at the moment, but there is a reason.

Still to come
I want to post on system design & explain it in such a way that it be universally applied to any charting program. I want to explain about a piece of A4 printer paper & tie that to trading.

Ideas
I have a million ideas & so little time to express them. Next I want to carry on a theme & finish giving a background history on traders who have had an influenced me, explaining why the top 3 strategies out of 6 good strategies made the cut being a part of my Hybrid strategy.

Charts
I've posted a few charts in their relevant thread & gave a perspective through the eyes of my Hybrid strategy. The charts will need no explanation & I'm posting them just for your benefit (hopefully others as well) as the charts will go along towards you understanding my system.

Skate.

 

[Skate]

SVW Seven Group Holdings Ltd

@Wyatt, from my perspective I would like to make a comment on this stock for you.

Disclaimer
I like the stock (SVW)Seven Group Holdings, this stock has been kind to me in the past, but it's in a no go zone for me at the moment, traders will continue to sell into any upswing (IMHO) meaning there will be no joy in this stock for me in the near future.



Skate.

 

[Skate]

@Wyatt I want to make a comment & have an input how I see this stock.
Bravura Solutions Ltd (BVS) has been good to me in the past, but its totally out of favour at the moment. The ROC indicator (the yellow ribbon at the bottom of the chart) is screaming at me to be cautious,very cautious as nobody is loving this stock at the moment. I'm posting the charts for an alternative perspective.

Out & back in
Notice my 'stale stop' kicked me out of the trade. Never be afraid to sell you can always buy it back again. (small commission charge) its no big deal.

Selling is easy
Selling is cheap and easy and can be undone in the blink of an eye.

A stumbling block
Too many seem to think that if they sell a stock, they are somehow prevented from buying it back again. Not so. For most traders, the biggest stumbling blocks to selling are mental.



Skate.

 

[explod]

Certainly not going to drop out of the sky. Volume (selling) has petered out and it's looking to rise. IMHO

 

[Skate]

@Wyatt, from my perspective I would like to make a comment on this stock for you. @peter2, made a comment that Hub24 Ltd (HUB) "Price has been range bound" & I would like to echo his statement.

Explanation
My ROC indicator (the yellow ribbon on the bottom of the chart keeps turning on & off) traders are very apprehensive about this stock, Traders are selling into any upward movement.



Skate.

 

[Skate]

Certainly not going to drop out of the sky. Volume (selling) has petered out and it's looking to rise. IMHO

We all have our own opinions
This is the great thing about traders, "we are all different".

I don't share you view
I don't happen to share your view at the moments and the crowd is agreeing with me at the moment. Traders will continue to sell into any upswing (IMHO) meaning there will be no joy in this stock for me in the near future.

Why do I think this way (my reason)
@explod, have a look at the pressure selling, you might just change your opinion. The charts needs no explanation as that charts paints a thousand words.



Skate.

 

[Skate]

@Wyatt, from my perspective I would like to make a comment on G8 Education Ltd (GEM) for you & to show you how my Hybrid strategy picked this move early.

Disclaimer
I'm on this move already.

The chart below explains my entry (my Hybrid system need to be on breakouts early)



Skate.

 

[Skate]

Hi Skate,

Thanks for a getting back to trading. Some of that other stuff is a little too esoteric for me.
And yes FY15-16 was a magic year for trend followers, I have my own hypothetical backtest to confirm this.

View attachment 91703
View attachment 91704
The bottom 2 graphs tell the story of cutting losses after giving the stock every chance of proving it's worth and letting winners run.

@Wyatt, would you please post the 2 graphs again, full size image instead of thumb nails, thumb nails are unreadable for me. I'm very interested in having a look at them.

Skate.

 

[ducati916]

We all have our own opinions
This is the great thing about traders, "we are all different".

I don't share you view
I don't happen to share your view at the moments and the crowd is agreeing with me at the moment. Traders will continue to sell into any upswing (IMHO) meaning there will be no joy in this stock for me in the near future.

Why do I think this way (my reason)
@explod, have a look at the pressure selling, you might just change your opinion. The charts needs no explanation as that charts paints a thousand words.

View attachment 91708

Skate.

I'm with explod on this one. It's a LONG. I'd buy it now, it's moving higher.

jog on
duc

 

[ducati916]

@Wyatt, from my perspective I would like to make a comment on this stock for you. @peter2, made a comment that Hub24 Ltd (HUB) "Price has been range bound" & I would like to echo his statement.

Explanation
My ROC indicator (the yellow ribbon on the bottom of the chart keeps turning on & off) traders are very apprehensive about this stock, Traders are selling into any upward movement.

View attachment 91707

Skate.

Agreed. Rangebound.

When is does eventually breakout, the move will likely be substantial.

jog on
duc

 

[Skate]

I'm with explod on this one. It's a LONG. I'd buy it now, it's moving higher.

jog on
duc

ducati916, that's the very reason we have a market, differing opinions.

It doesn't matter
Being right ceases to be right when the majority doesn't share your view. Meaning your view & my view doesn't matter, what does matter is that we hold the same view as the majority & trade accordingly.

Explanation (my reason for my views)
I gave a detailed post to explaining that traders are very apprehensive about this stock & traders are selling into any upward movement. There is limited momentum (IMHO) as indicated by the patchy (ROC) indicator, a momentum indicator. There are other stocks that represent better value to me than (HUB) at the moment.

Reason for your views
"I'd buy it now, it's moving higher"

Skate.

 

[Skate]

Agreed. Rangebound.

When is does eventually breakout, the move will likely be substantial.

jog on
duc

ducati916, made a great comment about 'Range-bound Stock' & what can happen (not always) when the stock eventually breakouts out of the range, saying that when it does breakout, (the move) will likely be substantial.

I've posted a chart to explain what ducati916 said in one sentence
I can talk about this chart with authority because I was on both moves. The stock was 'Price' bound for quite some time as highlighted by the boxing around a range of bars, each bar is 'one week'. The first attempted breakout failed, I was on that move early because of my strategy design.

The first breakout cost me money
I lost money on the first attempted breakout. Heck, no one knows if a breakout is going to be successful & that failed attempt cost me a few dollars. I got off the sucker quickly when the move failed.

It's a business
The cost of the failed attempt is the price of doing business, that's all.

Feels good
I was on the second attempt that turned out to be successful & profitable bagging 312% on my investment. Have a look at the (2) charts & read my comments on each. Looking at the charts you are looking at crowd behaviour, the crowd mentality.

This chart is to explain when the 'Price' is range-bound & what can come after.



The next charts explains the move
This is the same chart that shows a winning position. The first chart shows the 'Price' range-bound before the big move, I've explained I had two goes at profiting from this breakout, the first failed & I had to pay the cost to test the waters (The loss was the price I had to pay to have a go, a cost of doing business)

# I was lucky to be on the second move.

The move was on
I jumped on, made some money, then jumped back off. Surprise, surprise, it went back to being 'Price' bound again.

Nothing changed with the company other than its share price
The company didn't change but there were forces manipulating the price to make a play. When they make waves I catch the splashes. Well that's the plan at least.



Skate.

 

[Wyatt]

Still to come
I want to post on system design & explain it in such a way that it be universally applied to any charting program.

I look forward to your further ideas in this area as you clearly have lots to offer to this community.

@Wyatt, would you please post the 2 graphs again, full size image instead of thumb nails, thumb nails are unreadable for me. I'm very interested in having a look at them.

The monthly, as in traded only on the 1st trading day, (Willy1111's preferred timeframe) hypothetically went real well also during this period. Results below.

I have backtested which days in the month bring the best results and I can confirm, at least for myself and support the finding of others in this area, that the last and first few days of the month produce the highest CAGR.



So both of these backtests are for full exposure (Trendnomics style), Overall this does much better than using say a 150sma for a market filter. But makes it much harder to follow.

Skate, you have clearly done a lot of work on a custom market filter, I have thought long and hard on this issue and yet to reach a satisfactory outcome. So any assistance in this area would be a great help.

And for others, just because you can produce a few funky backtests, it does not mean success is guaranteed as @Skate has spoken about previously.

 

[Skate]

3 people had a hand in my system development.

I've posted about Richard Donchian in Post #1296. Now it's Nicolas Darvas turn to be talked about. Apologies for the lengthy post this time but this idea is the 'Ducks Guts' worthy of a more detailed explanation.

1. Richard Donchian (posted the article 27th January 2019 - Post #1296)
2. Nicolas Darvas
3. John Bollinger

Nicolas Darvas
“How I Made $2,000,000 in the Stock Market written by Nicolas Darvas. His book is compelling reading & one I highly recommend. His book tells the story of a highly successful dancer, who morphed into a very successful trader (by accident) after a less than spectacular start.

I have a mate who fled hungry (Mick, was off to America till he saw a soldier mistreat another, he came to Australia instead)
Nicolas Darvas fled Hungary to go to Turkey in World War II, than migrated to the United States in 1951. Darvas first became interested in the stock market in 1952 when he received some mining stock in exchange for dancing in a Toronto nightclub. The stock trebled, with Darvas selling near the top.

Lesson learnt
He learned a valuable lesson when the stock subsequently crashed. Davas realised that knowledge and experience were the keys to success. He ignored everything he read but the stock prices. The movement of the stock price intrigued him.

Happier with his system
Darvas was happy with his profits, but nothing made him happier than when he followed the system he developed. His strategy made money in a very strong bull market & his method has shown to be effective in all market conditions.

No Index Filter
I don’t restrict his ideas by strangling it with an “Index Filter” I cut this strategy loose as the theory behind the system is sound. The other two strategies in the “Hybrid” system are strictly controlled by an Index Filter, they work on a set of different principle than the Darvas system.

Price action & volume
Darvas was essentially a technical analyst who used hand drawn charts. He watched price action & reaction as well as the volume & notated them on a weekly basis. He used a nightly telegram from his broker giving him the high, low and close prices of the stocks he was following. Darvas looked for stocks making a big advance on high volume. He bought when he believed that informed buyers were entering the market.

Large volume expansion & large increase in demand
Essentially his system involved noting a stock making a large volume expansion, which indicated a large increase in demand. If the stock then rose in price, indicating that buyers were in control, he would place an order and set his stoploss order. Darvas would establish a box around a trading range. (the Darvas Box System)

Get out quick
If the stock broke below the box, his stoploss order would be hit and he would take a small loss. If the stock broke out on the upside, he would buy more, (something I don’t do) especially if the breakout was accompanied by large volume.

Lock in profits
After a breakout Darvis would use a trailing stop loss to ensure that he locked in most of his profit, while giving the market sufficient room to make normal retracements without the stop being triggered.

What's a retracement ?
A retracement is a temporary reversal in the direction of a stock's price that goes against the prevailing trend.

He had a good idea
Nicolas Darvas, what a man, what an idea, what a system.

Original idea
I’ve maintained his original idea & made it my own with a completely different set of parameters after doing vigorous optimisation to get the parameters performing at their peak. To be fair to Nicholas Darvas, if Amibroker had been around back then, he would have done exactly what I have done to improve on his idea.

Skate.

 

[ducati916]

ducati916, that's the very reason we have a market, differing opinions.

1. It doesn't matter
Being right ceases to be right when the majority doesn't share your view. Meaning your view & my view doesn't matter, what does matter is that we hold the same view as the majority & trade accordingly.

2. Explanation (my reason for my views)
I gave a detailed post to explaining that traders are very apprehensive about this stock & traders are selling into any upward movement. There is limited momentum (IMHO) as indicated by the patchy (ROC) indicator, a momentum indicator. There are other stocks that represent better value to me than (HUB) at the moment.

3. Reason for your views
"I'd buy it now, it's moving higher"

Skate.

1. Correct.

2. Which is only an indicator. No more right/wrong than any other indicator.

3. My indicator says buy, its moving higher.

jog on
duc

 

[ducati916]

Original idea
I’ve maintained his original idea & made it my own with a completely different set of parameters after doing vigorous optimisation to get the parameters performing at their peak. To be fair to Nicholas Darvas, if Amibroker had been around back then, he would have done exactly what I have done to improve on his idea.

Skate.

Would it be analogous to define 'optimisation' with 'efficiency' in your system?

jog on
duc

 

[explod]

explod, after reading that exhaustive post, I failed to make the connection how "the-end-of-the-era-of-endings" article can be linked to any trading strategy let alone how you will link the article to your own intuitive approach to investing.

I'm intrigued, you have aroused my curiosity, I look forward with interest to your post.

Skate.

The article is complex but in fact portrays the modern evolution of thinking across our collective minds. What we have in "Dump it Here" is a community collective of share trading methods and experience.

Intuition has gradually become important on the realisation that it combines the shaping of my sub-conscience from my very first awareness as a child till the present. The shaping of how we act and think could go on and on as a length of a string. We can bounce back as we wish but "intuition" is a key tool that is well worth evaluation.

My first trade was on a Company called Exoil in 1968. They were searching for oil in an area south south west of Longreach in Queensland. I was shearing with a fellow who was into mining and fossicking who encouraged me to have a go. We met with some of the workers at the Lyceum Hotel (only very recently burnt down actually). The short of it, inside knowledge, got into it at 15 cents then a couple of months down the track we heard it was a dry hole and got out at 90 cents.

When those fracking companies arose a few years back in the US there was a lot of excitement, they began at a few cents and rose very quickly only to in almost all cases collapse. I feel they are trying to do it here in the southern part of our continent but remember as a kid how the explorations proved a lot of the Western District area pretty devoid. So advancing from Exoil I have learnt that companies are now created for the initiators to take the money from the uninformed. They are just rackets in my view. However my interest in mining has never waned. Have never had an interest in the commercial side, banks etc., and, as you all know I love gold.

I'm going to have to rest for a bit but to leave some thought in the meantime; my trading is based more on my feeling (which is intuition) towards the fundamentals (which includes integrity) but yes consider charts as part of entry and exits. However I studied charting widely and under many Guru's, just realised now that I've thrown Daryle Morley's (Herald Sun Daytrader) handbook out which was given to us at a two day instruction seminar some 15 years or so back. Lunch.

 

[Skate]

Would it be analogous to define 'optimisation' with 'efficiency' in your system?

jog on
duc

You are on the money
Yes, that's a good description "efficiency". When optimising I looking for a compromise, I'm not looking for the best results, I'm looking for "Out of Sample Data" & its sweet spot. Out of Sample results are the results worth taking notice of.

It's all about impact
I'm not over optimising the system but I'm getting the bests parameters that has the biggest overall impact on the system development.

Not that simple
Its not one pass over 25 years of historical data it's not that simple.

Skate.

 

[Skate]

The article is complex but in fact portrays the modern evolution of thinking across our collective minds. What we have in "Dump it Here" is a community collective of share trading methods and experience.

Intuition has gradually become important on the realisation that it combines the shaping of my sub-conscience from my very first awareness as a child till the present. The shaping of how we act and think could go on and on as a length of a string. We can bounce back as we wish but "intuition" is a key tool that is well worth evaluation.

My first trade was on a Company called Exoil in 1968. They were searching for oil in an area south south west of Longreach in Queensland. I was shearing with a fellow who was into mining and fossicking who encouraged me to have a go. We met with some of the workers at the Lyceum Hotel (only very recently burnt down actually). The short of it, inside knowledge, got into it at 15 cents then a couple of months down the track we heard it was a dry hole and got out at 90 cents.

When those fracking companies arose a few years back in the US there was a lot of excitement, they began at a few cents and rose very quickly only to in almost all cases collapse. I feel they are trying to do it here in the southern part of our continent but remember as a kid how the explorations proved a lot of the Western District area pretty devoid. So advancing from Exoil I have learnt that companies are now created for the initiators to take the money from the uninformed. They are just rackets in my view. However my interest in mining has never waned. Have never had an interest in the commercial side, banks etc., and, as you all know I love gold.

I'm going to have to rest for a bit but to leave some thought in the meantime; my trading is based more on my feeling (which is intuition) towards the fundamentals (which includes integrity) but yes consider charts as part of entry and exits. However I studied charting widely and under many Guru's, just realised now that I've thrown Daryle Morley's (Herald Sun Daytrader) handbook out which was given to us at a two day instruction seminar some 15 years or so back. Lunch.

explod, you have raised a great point by saying "Intuition has gradually become important on the realisation that it combines the shaping of my sub-conscience from my very first awareness as a child till the present"

Shaping your sub-conscience (conditioning, that dirty word again)
I've made the eBook so others can read it at their leisure & more than once. reading the eBook more than once I call that conditioning. If you read the eBook once or read my words once there is no value, reading them more than once is when the magic starts to happen.

I want to give you an example
It's similar to how we learnt our multiplication tables when were children, we were conditioned to repetitively sing our tables, that how we learnt to memorize them. That memory is now in our Lizard brain, it's the very reason we don't have to think when someone asks you "What's 3X5", we answer 15 without thinking.

It's hectic in here sometimes
Don't worry, if you can't keep up with my pace, I'll make another eBook combining all my posts. @Joe Blow knows what I'm up to & I'm sure he will accommodate the updated eBook when it arrives, but till than I have lots to get off my chest & put into words, & I'll 'Dump it here' for others to read.

Just when you think no one is reading (I look at the stats)


Skate.

 

[ducati916]

You are on the money
Yes, that's a good description "efficiency". When optimising I looking for a compromise, I'm not looking for the best results, I'm looking for "Out of Sample Data" & its sweet spot. Out of Sample results are the results worth taking notice of.

It's all about impact
I'm not over optimising the system but I'm getting the bests parameters that has the biggest overall impact on the system development.

Not that simple
Its not one pass over 25 years of historical data it's not that simple.

Skate.

So did you use the 2008/2009 period as an out of sample data set or as an in sample data set?

My issue [which may not exist] is that when seeking to build efficiency into a system [any system] that system has no redundancies with which to weather a storm [financial] as seems to afflict markets on a rather regular basis.

Efficiency, cuts all redundancies, as redundancies cost money [and hence reduce] efficiency.

jog on
duc