How NOT to trade a speculative miner

BBand said:

I basically trade breakouts from stage 1, breakouts from stage 3,

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Can someone explain Stage breakouts?

Or perhaps a link / example

Thanx

clowboy said:

Can someone explain Stage breakouts?

Or perhaps a link / example

Thanx

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Ill give you an example that Weinstein wouldve put in his book.
TRO.
Simply outstanding.

(IMO) Both automated systems and discretionary work across the entire spectrum of tradable timeframes. I must admit, MichaelD, my tendency was similar to Tech/a...I would not think that trading micro-cap miners with a system was prudent...but I'm not saying, NO, or DON'T or CAN'T...I'm wondering HOW? I'll continue keeping an eye out for your posts, please keep going

In anycase, if systems trading doesn't work, how does one explain Ed Seykota? Yes, I've heard the one about needing a minimum bank to trade a system profitably. I'll defer to the great man himself on that one:

"Good money management is equity invariant."

The ASX Gorilla.

Thanx nizar,

Basically,
1 = new high
2= uptrending a bit + new high
3= New high lots of volume, outstanding breakout.

Might have to hunt down a book from this guy, is it interesting reading?

Nizar,

Incidentley did you trade TRO?

clowboy said:

Can someone explain Stage breakouts?

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Weinstein described shares as having 4 Stages;

Stage 1: Nothing much happening. Price bumbling along in a trading range.

Stage 2: Price in uptrend.

Stage 3: Price has stopped going up and is now bumbling along again in a trading range, not sure if it is going to go up or down.

Stage 4: Price in downtrend.


A big component of his trading methodology was figuring out what stage a share was in and trading it accordingly - he very much liked an entry on the first or second breakout from stage 1 to stage 2. i.e. nothing happening for a long time, and then something starts happening.

I've got to say that I'm also quite enamoured of his teachings, and have managed to prove that at least staging is of benefit on entry. I'm not yet convinced of the use of another of his pet likes, Relative Strength Comparison.

Weinstein's methods and Jesse Livermore's methods are extremely interesting and enlightening to study - the basic principles of trading would indeed appear to be timeless.



Tech,

I must say that I strongly disagree with your attack on BBand. Anyone who has been at this game for 10 years is likely to have something valuable to contribute - I'm interested in hearing about it.

MichaelD said:

Anyone who has been at this game for 10 years is likely to have something valuable to contribute - I'm interested in hearing about it.

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Great thread and discussion here guys. Agree with Michael, and i'm surprised too T/A that you don't have more time for Discret. traders. I think allot is said for a person who trades by feel. Curious as to the risk management at work here though. Also curious as to why you don't short?

Cheers,

Hi Michael (and Techa),
Michael, the only thing that I picked up from Weinstein was his definition of stage analysis.

My breakout systems were derived from my attraction to Bollinger Bands - I use the std dev to amplify their action.

Exits: I'm only in the trade for the initial move,if it does not perform from square one, I tend to exit and look for a stronger stock.

My trade exits: I use a 14 period ADX together with the parabolic SAR, when the ADX turns down and the SAR changes over thats it- out, if only one is actioned I stay with the trade

I may exit earlier if the MACD-H gives a bearish diversion - depending on the state of the general market.

I'm experimenting just now with the RSI and it looks very promising

Most people say that momentum indicators do not work in a trending market - that is definately not the case (no doubt Mr Know it all will say differently)

Michael, try experimenting with a 7 period RSI.
You will find certain levels correspond to an uptrend, a sideways market and a downtrend (the sideways levels being common to both the uptrend and downtrend)

You might find the rising levels of 40,and 60 of interest as entries and the falling levels of 40, 60 and 80 of interest as exits

Tech a: Your a legend in your own mind. LEAVE IT AT THAT - I wont even bother to reply!!
This is my last post

BBand said:

This is my last post

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That would be a shame.

Cheers,

CanOz said:

Also curious as to why you don't short?

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Not sure if this query is for me or for Tech/A. My short term system goes both long and short.


Here's some food for everyone's thought;

Diversified Buy and Hold (truthfully but glibly referred to as Buy and Pray) is a positive expectancy trading system. It has the characteristics required for positive expectancy, viz;

1. It lets the winners run
2. It cuts the losers short

The losers cannot go below zero.
The winners can go up infinitely.

If you have a compelling need to be right rather than particularly profitable, then buy and hold will suffice.

(Personally, I'd rather be profitable than right.)

MichaelD said:

Not sure if this query is for me or for Tech/A. My short term system goes both long and short.

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It was actually for Bband.

Cheers,

BBand said:

This is my last post

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Thats a shame Peter. Butting of heads will occur from time to time. Chances are you would have gone on and made a further 1000 posts without a drama.

theasxgorilla said:

Thats a shame Peter. Butting of heads will occur from time to time. Chances are you would have gone on and made a further 1000 posts without a drama.

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Agree so much here....its these exchanges that keep this forum so addictive.

Keep in mind too, that some may have other things on thier mind at times. Acidic tones could be reflecting a lack of tolerence at times for opposite opinions, for whatever reasons.

Like 'market depth', they're are still plenty of us off screen watching and listening, waiting for the next post.

Cheers,

I wonder if you would still have made the post if you didnt lose money.

stoxclimber said:

I wonder if you would still have made the post if you didnt lose money.

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LOL! Guess we'll never know.

stoxclimber said:

I wonder if you would still have made the post if you didnt lose money.

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Just exactly what is that supoosed to mean?

clowboy said:

Nizar,

Incidentley did you trade TRO?

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Unfortunately No

Is there a scanner that scans the market for stage 1 stocks?

CanOz said:

Just exactly what is that supoosed to mean?

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Well he has posted this thread because he made some mistakes, and, as a result, lost money. I wonder if he would still have called it a mistake if he made money. Just food for thought.

Peter.

Your comments on systems trading were/are in most part purely wrong.
I havent attacked your way of trading, or you personally.

Perhaps its time for me to stop posting for a while.

HiTech A and Michael,
Techa - please do not stop posting, this is not my scene anyway

In the past I have seldom looked at Aussie forum sites, as I trade the ASX and did not want any outside influences to affect my analysis. What I do I take complete resposibility for (another well bandied around phrase)

I can scan the whole ASX for stocks that are of interest and it only takes a few minutes

I do not know the protocol for posting - it was all new to me - but one thing is for sure - I'll never put myself in that position again - I'm long past that confrontational stuff. I lasted two days-not much of a stayer!

The market has been good to me in the past and for the last few yearsI have been trading just as a hobby - no pressure, lifes pretty cool.

The golf course is a bit dried up just now, you can hardly tell the fairway from the bunkers - so the only good thing about that now is the 19th hole!!

So I have some spare time on my hands and thought I could possibly help some of our newer traders find their place in the pecking order and in that way give back a little of what the market has given me

Tech maybe there is blame on both sides - some of your comments were completely out of line and in my mind false or half truths - anybody with a modicom of trading knowledge would recognise that also - but thats all water below the bridge now - no hard feelings!

I do not know who you are, but obviously you are well known, going by the number of posts against your name - so you have a recognised track record, me, I do not even know how to post a chart.

It seems the in statement being bandied around just now is that the most important requirement to be a successful trader is psychology, which is peddled around by quess who - our psychological gurus, they must have something new to help sell their books. It used to be expectancy and money management - oh sorry, I believe its now called position sizing - what will the catch phrase be next year?

Dont get me wrong, I totally agree that psychology is very important - just not that important compared to having a good trading plan

If you want to read the best that I have come across regarding psychology, try reading Van Tharps "Peak Performance Course", it only costs around $1200 and well worth the money - have a look at his website



Michael,
Before signing off, I forgot to mention as an exit from my breakout trades, I also use a protect capital stop to trail price action - to ensure I do not give back too much profit if I am fortunate enough to encounter unsustainable price action

Also Michael - I try to capitalise on good trades by switching over to manage the trade on the weekly time frame if conditions on the weekly are right

If you check out the origin of the good strong trends on the weekly, then go to the corresponding point on the daily you'll see what I mean. Putting Bollinger Bands around price action first will help

By the way I think the most important part of a breakout is the actual lead up to it, the breakout simply confirms this action - and you can enter the trade while price is still "quiet", before it explodes out of the bands

I hope you all have a good day in the market

Now back to business - where did I put that golf bag

Sock it to them Tech A !