Outliers---where true profit lies

[Trembling Hand]

Ah Tech/a!!

TH
There is nothing wrong with consistent profits but you have to admit that if you could be reasonably consistent hoping on potential outlier moves,that can be traded with relatively minimal risk and massive R/R potential---that you'd at least have some interest.

Maybe but maybe not. I can say with certainty there is not a day go by when I sell a 10 tick profit when there was 80 to be had. or pick the low for the day almost to the point but never hold it for long anyway. Yet I feel no need to change a thing. (well almost)

I have my own way of catching outlier days (which have been plentiful this yeah) that if I think you are ever receptive to another persons method I may share with you. :

 

[jonojpsg]

Ah Tech/a!!



Maybe but maybe not. I can say with certainty there is not a day go by when I sell a 10 tick profit when there was 80 to be had. or pick the low for the day almost to the point but never hold it for long anyway. Yet I feel no need to change a thing. (well almost)

I have my own way of catching outlier days (which have been plentiful this yeah) that if I think you are ever receptive to another persons method I may share with you. :

Hey TH, are you willing to share with the rest of us? Definitely interested

 

[Frank D]

I agree with TH on this one, but you have to separate the reasons why you are trading.

If I’m trading the SPI then all I’m concerned about is achieving my primary income targets for each day:- income and standard of living.

I’m not concerned about 100 point moves in the market, all I’m concerned is taking small chunks of 10-20-40 point moves, and over a course of the day that could be a number of times.


If you are trading on the side (another job) and/or don’t have to rely on these 'trades' (stocks/forex) to pay for your daily income targets, then sure hold the trades for the big moves.

 

[tech/a]

T/H and Frank.

Not disagreeing with either of you.

Ive presented the topic of Outliers with Stock in mind as this has been my interest over many years (Well one of them).
Haven't been involved in FX or Futures,but would like when I have time to investigate these as well.

Ive only ever found 3 ways to profit.
Have more winners than losers
Have much bigger accumulated winners than accumulated losses.
Or a combination of both.

Outliers can have a dramatic impact on the bottom line.
They can turn R/R on its head particularly if there is some consistency.
Most feel that its just pure luck and a fluke if you get on one and getting on multiple moves---well thats impossible.
I dont think so.

then sure hold the trades for the big moves.

This is how most veiw is the only way to "Fluke" an Outlier move.
To me holding and hoping is NOT the way to find or trade these!


Unfortunately I only know of one way.Hoping there may have been others.

But maybe if I share what I have found then more heads may toss up fresh ideas.

You wont get them all
You wont want them all as they dont fit with characteristics.
But you'll be able to get a fair share.
Anyway more later.

 

[wayneL]

..but you have to separate the reasons why you are trading.

If I’m trading the SPI then all I’m concerned about is achieving my primary income targets for each day:- income and standard of living.

I’m not concerned about 100 point moves in the market, all I’m concerned is taking small chunks of 10-20-40 point moves, and over a course of the day that could be a number of times.


If you are trading on the side (another job) and/or don’t have to rely on these 'trades' (stocks/forex) to pay for your daily income targets, then sure hold the trades for the big moves.

The discussion is at sixes and sevens; the pertinent sections in red.

Traders who need their profits to pay for groceries, the lease on the Porche and a bottle of Moet at the end of the week, aren't primarily concerned with outliers, it's about income.

Those who already have that covered with a day job and are trading for the purpose of building wealth, can wait for the fat tails.

Of course I've just paraphrased Frank, but maybe said a different way.

Of course there is nothing to stop the income trader doing both.

 

[theasxgorilla]

Most feel that its just pure luck and a fluke if you get on one and getting on multiple moves---well thats impossible.
I dont think so.

A skilled surfer can do more with poor conditions than a less skilled surfer. But no matter how skilled the surfer he can't make the conditions. Being in the right place at the right time plays a part. Call it luck, fluke, good timing, perseverance...whatever.

 

[jonojpsg]

A skilled surfer can do more with poor conditions than a less skilled surfer. But no matter how skilled the surfer he can't make the conditions. Being in the right place at the right time plays a part. Call it luck, fluke, good timing, perseverance...whatever.

Great analogy! Living in Tassie we know all about finding the right conditions for a surf - its an art form, especially finding the BIG ones! It's also about having the right information at your fingertips - which is exactly the same for getting on an outlier I would think. Knowing the fundamentals of companies, the trading data, the macro trends, etc. all these are necessary for getting on at just the right time

 

[peter2]

Outliers from a statistical aspect occur rarely and are only idenitied by looking at a batch of results. Trades with a huge profit also occur rarely but whether they are outliers depends on your trading strategy. If you target large wins then they are not outliers but happen as a consequence of your planning.

I believe tech/a is discussing whether it is possible to target large wins (using normal sized risk) rather than statistical outliers.

 

[tech/a]

A skilled surfer can do more with poor conditions than a less skilled surfer. But no matter how skilled the surfer he can't make the conditions. Being in the right place at the right time plays a part. Call it luck, fluke, good timing, perseverance...whatever.

Of course.
But if The surfer was alerted that a 6 ft swell was breaking RIGHT NOW then chances are he would be there.

Pete
Possibly.
I have called the person I wanted to speak to and have good and not so good news.(Cleared it with Joe also).
I'll write it up when I have some more time.

 

[cuttlefish]

I have called the person I wanted to speak to and have good and not so good news.(Cleared it with Joe also).
I'll write it up when I have some more time.

Well you've definitely got the curiousity up from my end ... don't leave us hanging too long please

 

[cuttlefish]

I'd hate to pollute a technical discussion with comments about fundamentals ... but in my view fundamentals are great for assessing whether a stock has the potential for a significant move.

Getting the timing sorted out is another matter.

 

[awg]

I will be very interested when Tech posts his methodology.

Very many of the stocks that rise 100% have been small caps, or taken a very heavy fall.

In the limited testing I have done, my success has relied on picking one that had a rise approaching 100%.

 

[peter2]

Ha, tech/a you crack me up.
You are a natural showman. Just the hint of you possibly releasing some secret trading info is enough to start the Pavlovian response.

Take your time. We wouldn't want to see you breach copyright or someone's tightly held trading secrets. Whatever you do don't post the Holy Grail trading method! That would really piss me off. The whole trading education industry would shutdown overnight.
Even though Joe has OK'd it you should probably get the US Senate to vote on your motion. :

 

[MRC & Co]

I have my own way of catching outlier days (which have been plentiful this yeah) that if I think you are ever receptive to another persons method I may share with you. :

Yeh, this I would be interested in.

I guess it is taking most of the contracts off the table and trailing a couple for the rest of the day with a wide stop? But which days to do this and which to not? I wouldn't have the slightest. Only moves I can see are HUGE volume ones, where something is really going on, but it usually ends within an hour or two max with some MONSTOR squeezes amongst it.

 

[tech/a]

Ha, tech/a you crack me up.
You are a natural showman. Just the hint of you possibly releasing some secret trading info is enough to start the Pavlovian response.

Take your time. We wouldn't want to see you breach copyright or someone's tightly held trading secrets. Whatever you do don't post the Holy Grail trading method! That would really piss me off. The whole trading education industry would shutdown overnight.
Even though Joe has OK'd it you should probably get the US Senate to vote on your motion. :

Pete whilst I see where you get the idea from that's not my intention which will become clear I hope in the following.

All of these very quick aggressive moves all seem to have common characteristics.
(1) Large to massive increase in volume
(2) Large to massive increase in number of trades.
(3) Often gaps away from the previous days price close and often the high.
(4) They tend to break from long consolidations or from consolidations after an initial break.

Sure its easy to find them the next day but that's often to late.
Marketcast which used SBS signal had a capability of searching the whole of the ASX in real time returning this information in real time on a spread sheet which ranked highest to lowest.
You could refresh the page at the click of a mouse every 10 seconds or so if you wished.
It becomes very obvious very quickly which are moving up the spread sheet on each click.

It was a matter of then looking up the live chart (I used 5 min and daily for pattern) and placing the best low risk trade I could on the stock if it met the criteria.I then managed with the 5 min chart.Allowing 50% retracements of any move from a high.

Today's Phone call was to Scott the principal of http://www.markettools.com.au/
And long term programmer with Marketcast.
Marketcast ceased business sometime ago and with it went the ability to do these instant searches.
My question to Scott was if his software Prospecta could do it.

Unfortunately according to Scott---the Net and SBS work very differently so its not possible to do instantaneously with the net.
He has however offered to see if he can find a solution.

The only work around I have found is Just Data's snap shot downloads at 30 mins from open then every hour.
You could then search the criteria (All but number of trades---which is a bugga as this is important--you don't want a 30% move on high volume from 2 trades!).
I have Bodhi 5 now and am in the process of trialling the above idea for prospects.


There is more to the trade management than that above and I'm sure I and others could improve on how I pyramided aggressively and quite possibly exited.

The problem of course is that if you cant get on to these as early as the first hr or so chances are you'll have missed the best possible low risk entry.

Hope this generates some thought and discussion.

 

[MS+Tradesim]

Netquote provide the ability to do real time searches based on your criteria if you're prepared to pay $149/mth. I used it for some time when intra-day scalping years ago.

http://asx.netquote.com.au/equitypro.asp

 

[MRC & Co]

A skilled surfer can do more with poor conditions than a less skilled surfer. But no matter how skilled the surfer he can't make the conditions. Being in the right place at the right time plays a part. Call it luck, fluke, good timing, perseverance...whatever.

Yeh, that is a big part too.

There were some periods this year, where big guys were showing their size to try and desperately get in/out of positions. You only had to wait for size and frontrun it and you could have made money! Most of October comes to mind!

 

[Trembling Hand]

Tech I might be able to help you.

http://iguana2.com/spark

I beta tested this new software through the year. It has some very nice real time data scanning, what they call "Smartlists". From their web site,

Smartlists
With Smartlists you can filter the market to find trading opportunities that would normally go undetected in the broader market.

Some example Smartlists include


show stocks that are trading at their high/low for the day
show stocks that are currently trading above their VWAP
show stocks that have had the greatest price change over the last x minutes
show stocks that are in the mining sector and have issued news today
Smartlists update in real-time, with stocks being added to the lists when they meet the predetermined conditions and subsequently removed when they no longer do.

Have a look all you punters and tell them I sent you.

MR C will get to you Q's in another thread tomorrow. Its now Beer O'Clock.

 

[MRC & Co]

MR C will get to you Q's in another thread tomorrow. Its now Beer O'Clock.

ha ha, sweet as!

I remember you talking of trailing some contracts up on some of those HUGE moves back around October. I often think to myself, wish I just let a contract run today, but it never happens!

 

[Wysiwyg]

Spark Smartlist hmmm.

For years I have looked for a scanner that monitors the ASX constantly for any stock that meet predefined criteria.Software that runs in the background with a visual and audible alert to which particular stock has moved.

I used to trade live news which reeled in some good winners.Of course the best positions were taken leading up to the news and were promtly exited when fever set in.

I have always thought % moves would suffice as the main scan criteria.Followed by a discretionary perusal of reasoning -- either technical, fundamental or as yet undetermined -- before deciding on entry or not.

note : - this would be to make the most of those outliers by nabbing them in the early stage.