Sharefinder... should I or not?!

[R0n1n]

bonkerrs, to be honest only you can answer that question. I personally have been trading for just under a year and I have already withrawn some of the profits out of my account. I am only trading with 10k, and this is the money I was supposed to get training/books/software etc. But I chose to get Amibroker and couple of books and started to trade. One thing is for sure, the market is a better teacher than anybody else.

Also on the paper they gave me, it said you can try it for a month and if you don't like it you can get the money refunded, minus 100$ for admin fees.

The software is itself around $2000. There is an ongoing fees of $70/month for data download every day. This data is adjusted for splits etc, which is good.

If you want to see the paper, PM me and I will scan and send it to you.

Hope this helps.

 

[Look Left]

Hi Bonkerrs,
Leaving aside SPA and Sharefinder for the moment, let's pull out the calculator to answer your question:
If you have $30k, spend $2k on the software and leave aside $1k for the years data maintenance, you are left with $27k to invest. Now assume a conservative 15% profit you should be left with about $4k in your pocket before the tax man comes knocking. So depending on how the general market performs, you could do better or worse.

Rewarding yourself for a years good work is a great idea and psychologically beneficial. Just be careful, don't take too much which will remove the affects of compounding. Personally I wouldn't set a dollar profit target either, use a percentage of profits.

Again generally for all unleveraged trading, 30k is on the lower side of what you can reasonably start with. The facts is, with smaller portfolios you have to risk too much on each trade to offset the cost of brokerage. ie: A $3000 trade with $40 brokerage (in&out) must make a 1.3% profit to break even. So the beginner will often risk $6000 on one trade to halve this figure. The problem is, you have also increased the amount of drawdown your portfolio will experience from consecutive losses which makes it harder to achieve bigger $ profits in the future. This is the type of money management you need to learn and hard-wire into your memory. SPA will teach you some of this.

The data is provided by/through Sharefinder and is among the cleanest in Australia. Clean data is vital to technical trading and back testing.

Good luck!

 

[tech/a]

A few questions.

(1) Is this a singular methodology?
(2) What sort of initial capital is required to run the method effectively?
(3) What is the average holding period for both a winning and losing trade?
(4) What is the average winning trade size V the Average losing trade size?
(5) What is the methods longest losing streak?
(6) What is a common initial expected drawdown?
(7) What is the largest peak to valley drawdown?
(8) Does EVERY trade Need to be taken to run the system?
(9) If 10 of us start the method tommorow and follow it religiously will we all be trading the same portfolio?
(10) Are any or all variables optimised?
(11) Are the highest and lowest outlier moves removed from the results?
(12) If this is a software that allows your own system design using your own indicators (Or from what I can gather those that come with the software---Can you write your own?) does it portfolio test or simply test a methodology on singular stocks?
(13) Can you monte carlo test portfolios?

Just intersted.

 

[tech/a]

There is no real shroud of secrecy over the SIROC indicator either as it can be written in a number of ways.

Jose Silva discloses 2 here for free.In M/S format

http://www.metastocktools.com/MetaStock/Siroc.txt

 

[R0n1n]

There is no real shroud of secrecy over the SIROC indicator either as it can be written in a number of ways.

Jose Silva discloses 2 here for free.In M/S format

http://www.metastocktools.com/MetaStock/Siroc.txt

Tech is it good or just average ?

 

[tcoates]

Ronin,

What you get out of the SIROC would the same as per other indicators. (Speaking purely subjectively.) Also see posts at...

http://tradersconsortium.com/community/index.php?showtopic=517&pid=572&st=0&#entry572

I would add that sometimes simpler system is easier to process. And that comes from knowing the chart without all the bells and whistles attached. That is, price. volume and trends.

I am not for or against any system or indicator, just that sometimes, if I see a new indicator (pick any site you download these from) you need to ask youself - do I know how it works? do I know how to interpret the indicator? will the indicator work in the markets I trade? (Generally I will then throw it into the trash as it just makes the system more confusing.)

And there are dozens of places where you can find the SIROC indicator, unless it has been tweaked somewhat, and there are places (sites) that have tweaked code.

Tim

 

[Look Left]

Hi Tech/a,
I'll try my best to answer these questions. They really are pushing my product knowledge and maybe the beginners as well! Some are a bit ambiguous so I've provided several answers. I'll base most answers on the public portfolio and my own back testing research. The previously posted portfolio chart should back up this information.

(1) Is this a singular methodology?

1. It is one trading system with money/risk management rules combined to create one methodology.
2. It operates on the ASX and JSE successfully.

(2) What sort of initial capital is required to run the method effectively?

1. As previously mentioned this is a fundamental risk question, not just confined to SPA. From other users experience I would suggest $30K to $50k minimum.

(3) What is the average holding period for both a winning and losing trade?

1. Winners 81 calendar days. Losers 36 calendar days.

(4) What is the average winning trade size V the Average losing trade size?

1. Trade Size as a statistic can only be used if every Buy is exactly the same. Not the case in SPA or most good methodology's.
3. The Win Rate is 42.6%. Typically 45 to 55%.
2. Average % Profit is 17.43%. Average % Loss is -7.71%. Hence the Expectancy or Average Return per Trade is 3.99%.

Note: For beginners, don't be shocked by the small Expectancy. It is NOT the return per annum, it is the return per trade. With many simultaneous and sequential trades the magic of compounding through diversification comes in affect. This is a big subject for beginners to understand so please don't jump to conclusions, ask me a question instead.

(5) What is the methods longest losing streak?

1. About 11 months during the 2002/2003 Bull market when the ASX fell. Eventually it rose to record a positive return against the XAO's negative return.

(6) What is a common initial expected drawdown?
(7) What is the largest peak to valley drawdown?

1. I'm not sure why you separated these? Again you can't talk dollars because everybody will have different portfolio values and therefore be risking different amounts in the market. The largest % drawdown that I've ever heard of was about 16% of the portfolios market value. The public portfolio has experienced 14.28%. Typical is closer to 12%.

(8) Does EVERY trade Need to be taken to run the system?

1. No. In fact you wouldn't have enough capital to cover every signal.

(9) If 10 of us start the method tomorrow and follow it religiously will we all be trading the same portfolio?

1. No. Because more than one signal may appear each day you may all start with different stocks. Even one single different trade will eventually mean that your portfolio will be very different. That is, one trade will close at a different time to the others and thus you will fill it with a completely new trade...and so on, and so on.

(10) Are any or all variables optimised?

1. The signals are not optimised, in the normally mis-understood sense, because over optimisation will ruin a trading system, making it unable to adapt to future market conditions.
2. The default signals have been chosen so that they produce optimal statistics for a medium term methodology. This refers to the risk/reward ratio, hold times, profit ratios, win rate etc...
3. Back testing using different parameters has proven the trading system to be very robust. No reasonable change caused the trading system to have a negative expectancy.

(11) Are the highest and lowest outlier moves removed from the results?

Gee wiz, pull out the statistics book.
1. This is not relevant to the public portfolio as it uses empiric data. The portfolio curve provides you with the key statistics. In this realm the expectancy and win rate statistics etc, just confirm the result matches the research.
2. An outlier will only have a considerable affect on small sample sets. Back testing is typically done on over 4000 trades to find the statistical edge. Portfolio back testing will then confirm that a subset also matches these results. To have any noticeable affect, you would need to remove the outer boxes of a histogram based on +/-3 standard deviations or less. Yes, it still has a positive expectancy!

(12) If this is a software that allows your own system design using your own indicators (Or from what I can gather those that come with the software---Can you write your own?) does it portfolio test or simply test a methodology on singular stocks?

1. The SPA methodology does not allow you to add your own indicators automatically.
2. The charting package, Market Master, allows you to write your own indicators for separate use.
3. SPA is not meant to be used on only ONE stock at ONE time. It covers a market or a subset of the market. The portfolio management tool allows you to test a collection of stocks or the entire market. You can back test a portfolio with or without money management rules or test the trading system alone.

(13) Can you monte carlo test portfolios?

1. No

 

[Look Left]

Just a correction to my previous post:

3. The Win Rate is 42.6%. Typically 45 to 55%.
2. Average % Profit is 17.43%. Average % Loss is -7.71%. Hence the Expectancy or Average Return per Trade is 3.99%.

2. The Win Rate is 42.97%. Typically 45 to 55%.
3. Average % Profit is 19.16%. Average % Loss is -7.65%. Hence the Expectancy or Average Return per Trade is 4.93%.

 

[bonkerrs]

Good reading Tech/a and LookLeft. Some questions/answers flew straight over my head but others made sense (I would have asked the same things too, yeah right!)

Lookleft - Your knowledge of the Sharefinder software sounds above and beyond that of a normal user's. Any chance you're an employee, have a hand in the developement or are affiliated with Sharefinder? Please don't be offended, I'm just amazed at your intimate knowledge of the program.

 

[Look Left]

Hi Bonkerrs,
Pleased you're enjoying the post!

I'm not offended by your question at all. I'll answer like always, straight down the line. I'm not an employee of Sharefinder nor am I an affiliate. I am a primary Beta tester(volunteer) for their portfolio management software, Trademaster. This means I understand how the money/risk management side works, same applies to any long term user. I have had absolutely nothing to do with the trading system at any time. This was around before I started using it. You will find me as a normal joe bloe contributor on the Sharefinder forum, just look for the Avatar.

Apart from my passionate interest/occupation as a share trader, my intimate knowledge of the product comes from the unique environment that Sharefinder as a company has created. The long time and more interested customers have developed into a community that is very supportive of each other, that includes the company. We openly share research ideas and results in an effort to educate everyone. All this has been nurtured by Sharefinders extreme openness and transparency along with the willingness to spend one on one time with customers. I've spent many hours talking through trading problems with Gary Stone, as have others from beginner to expert.

I hope you decide to take the leap!
Cheers!

 

[tech/a]

So basically the Conditions used in the formulation of the method/system are set--I gather you can alter the variables but not the Conditions.
For arguements sake and as an example only----the buy conditions maybe an RSI cross and an M/A cross both conditions can have altered variables I presume.
This way you can choose the system you use from the universe of conditions and set your parameters.

IF NOT
Then I presume the parameters and possibly variables are set and the only manipulation you have with the method is by altering the Money management.
IE alter position sizing,Stops,Risk,possibly leverage and re investment stratagy?

OR
something else in configuration.------?

 

[Look Left]

Tech/a,
Your first presumption is pretty close.

Restating for clarity:
The "Conditions" used in the formulation of the signals are set. You can alter the variables but not the conditions.

 

[tech/a]

OK.
This would then make it similar to Advanced Gets Off the shelf in house systems.There are basically 4 inbuilt within the software with the ability to do what Sharefinder does.
Bit more that Sharefinder though.

The disadvantage in my view with both or anything like these is statistical significance in testing.
We as users dont have the ability to run multiple Portfolio tests via Monte Carlo.(For those unfamiliar with Monte Carlo Analysis it is like giving your system to 20000 or so people and telling them to go off and follow it and report back to you in 10 yrs.)
Often systems with less than statistical significance will return a % of unprofitable portfolios.
The resultant NUMBERS or as I call it "Blueprint" of your system isnt comprehensive and as such you cannot be sure if they are indeed accurate.

However like all systems if trading falls outside of those statistics you have.
ie Drawdown,string of losses---then STOP.

My conclusion---not only with sharefinder but as a balanced view.

There are some very good "Canned" methods out there but not methods that I personally would invest large sums of money in.
The A/GET methods are Technically sound and from my use 70-80% profitable,but lack the statistics I require,as such they only make up a small % of my trading.

You can of course design and trade your own method and buy say Amibroker or Metastock and couple it with TRADESIM. All for around $3500.You then have endless testing capability only limited by your programming skills or you could do as I have done with more complex ideas and seek out and hire coding geniuses.You'll then have a full set of "Numbers" which in my experience are invaluable.
TechTrader is worth watching as its been traded through all periods for 4.5 nearly 5 yrs and has remained within its "BLUEPRINT".
Although I personally have closed all my LONGTERM portfolio's some very similar to techtrader----T/T will run its full course on "The Chartist"---a great learning experience for all,myself included.

http://www.thechartist.com.au/forum/ubbthreads.php?ubb=postlist&Board=53&page=1 For those interested.

You could follow a hybrid of a method like T/T which some have.Thats pretty cheap.

You could follow a proven educator and designer/trader of systems like Nick Radge who has 4 fully operational trading methods updated regularly as part of his Chartist Programme.At around $800 a year thats cheap in my view.
From Longterm SMSF holders to his Growth + method showing over 100% returns in less than a year---for those more risk tollerant.

Or you could do as I have and done the LOT!

 

[Gaz]

This thread has come to my attention so I would like to make a contribution to assist those that read it to learn a little more about mechnical trading and it's ongoing benefits. Look Left has mentioned my name - Gary Stone. I founded ShareFinder in 1994, designed SPA3 in the mid 1990's and it has been going strongly ever since.

Before adding my 2 cents worth I would like to say that there are many many of our customers that could have answered all the questions on this thread in the same way that Look Left did, particularly all the questions on the SPA3 EDGE (% winners, % losers etc). And that is because the info that he provided, our customers learn as a natural part of their ongoing use of the SPA3 system. You can't use the system and not know this stuff! I'll go a step further, you can't become a profitable trader on an ongoping basis and not know this stuff. At some stage it must become a part of who you are.

1. On backtesting SPA. All the parameters (or degrees of freedom) can be altered to any combination that you wish. We haven't tested EVERY combination - there would be many 1000's, but stepping through the parameters from one extereme to the other for medium term trading, the expectancy is positive over many 1000's of trades through up and down market conditions. The results of this research are published for our customers to study.

This is before money management is applied, ie the raw edge. Money management is applied when portfolios are constructed. This has been tested by contructing many historical backtesting portfolios. However, we don't need to rely on testing as much anymore (although we still do conduct ongoing reseasrch) because the SPA3 methodology has now been out there for 9 years used by traders from all walks of life and we now have plenty of live execution results over many years to base known outcomes on, including my own. And what we know is that SPA3 traders are handsomely outperforming the market indices and the best managed funds, even the small boutiques.

What this tells us is that the CONCEPTS used by the system are robust and not dependent on specific parameters. When building trading systems it is the CONCEPTS used that are important, not the indicators or their settings. The indicators and settings are merely tools and don't play as an important role in successful trading as many on this Forum would believe.

All our SPA3 customers have the tools to do the testing that I describe above and as Look Left has pointed out. Few do because there is no real need to, to be profitable. However, doing so will increase understanding and trust. Also, some of our customers want to trade a variation of the standard parameters and settings - they have the choice and they chose to.

So you can alter a lot more than just the money management.


2. In his postings Look Left has described the real holy grail to active investment, and no, it is not SPA3, although SPA3 definitely facilitates the process as any mechanical methodology that works should. Some of you may have picked it up, most won't.

You can't make money in the market by being a spectator. 100% of the trades you do not take will not make you a profit. At some stage you have to put a stake in the ground and stand for something knowing that when you engage, you won't be right the majority of the time.

How much testing and testing must you do to be sure, to be sure, to be sure.....? The fact is that you will never be sure. "You don't need to know what will happen next to make money in the market." You see, "anything can happen'. Trading is about feeling certain about your future outcomes in an environment of uncertainty. A paradox? Certainly. Just how do you achieve such a feeling? By gaining confidence and trust in how you engage. Confidence is thinking about what you want to happen. If you don't, you won't execute.

So are you going to trust you own discretion and intuition when you engage the market or are you going to trust research that has emanated from market price action? You see, your discretion and intuition have evolved through your experiences in society and business. Unfortunately, although they may hold you in good stead in that environment, they don't translate into the environment of the market. A different paradigm is required.

Here's another paradox. To feel certain about future outcomes requires that you put the outcome out of your mind. How do you do that? Become process bound and think is terms of probabilities.... The human mind is wired to think in raw frequencies rather than probabilities. It is no wonder that people have immense difficulty comprehending what an edge is in the market and what it can produce in the way of profits. "Only x% winners, how can you possibly make money with that??" Add to this other biases we all have like the need to be right (or not wrong) and recency bias which, by association, makes recent outcomes greatly affect current execution, and it is no wonder that the majority will strggle and strain with their trading endeavours. Trading a mechanical system trains you how to think in terms of probabilities.



3. Is SPA3 the best mechanical system around? Absolutely not. Define the best. Do you need the best to make money in the market? If your quest is the best then you may experience a massive opportunity cost searching for the best when you could have engaged the market and started the journey. The first step in everything you have done in life started with a mechanical step. Trading is no different. Those that try to sprint before thay have crawled pay the price.

SPA3 is a robust, rigorous, structured, process-orientated methodology that deleivers profits and teaches people to be traders, that is, execute trades in the environment of the market.

You see, carpenters think in terms of hammers and nails, market analysers in terms of analysis. Traders trade. They engage the environment of the market. They don't second guess their process through additional anaysis, they execute.



4. A correction to one R0n1n's postings. The return is not 67% p.a, it is 27% compounded return p.a. His 67% return would refer to the 65.7% return that one of the publicly traded portfolios achieved in the 2006/2007 FY. The other returned 58% in the same FY. This was in a "28% market" environment. We have had many SPA3 customers reporting around these sorts of returns, some above the 65.7% and others below the 58%.



5. By the way, I know Nick Radge fairly well. We have had many face to face and telephone conversations over the years. I think that it would be fair to say that we share similar beliefs about the market, trading and some of the players in the industry. I have always recommended his work to those that have asked me about it. There are many right ways to engage the market but there are many many more wrong ways to do it.

I trust that this has been helpful to those that frequent this Forum.

On the journey
Gary

 

[transportable]

Sharefinder

Hello every one I am a new trader and am a little overwhelmed by the information available on share trading. What I need is a starting point.
I haven't found anything at a reasonable price that tells me how to search on a system (the pragmatics).
I thought I could start with a designed trading system and learn as I go.
Does this sound feasible?

I have a friend who uses SPA 3 from Sharefinder as their system.
Has anyone heard of this system and what opinions are out there about this system.

Thanks Transporable

 

[professor_frink]

Re: Sharefinder

Hello every one I am a new trader and am a little overwhelmed by the information available on share trading. What I need is a starting point.
I haven't found anything at a reasonable price that tells me how to search on a system (the pragmatics).
I thought I could start with a designed trading system and learn as I go.
Does this sound feasible?

I have a friend who uses SPA 3 from Sharefinder as their system.
Has anyone heard of this system and what opinions are out there about this system.

Thanks Transporable

Hi transportable, welcome to ASF

I've merged your thread into the existing sharefinder thread. You should be able to find some info out above.

In the future it would be appreciated if you could not post the same question multiple times in different sections of ASF.

Cheers

 

[Kash Kosmo]

Are there any users of this Share Finder SPA3 mechanical trading system
I need a review from a real world user
I am contemplating on purchasing this system or subscribing to the chartist
I have had a demo of SPA3 but still doing research on the chartist

Just need some forum guidance
Think SMSF as that's its intended use

KK

 

[The_Snowman]

Long time no interest in this product; I will doing a demo sometime in the next 2 weeks, might report back here, time permitting

 

[Bluboy1969]

How are people doing with SPA these days. Did some of the crew above eventually get in and start with it, I have heard about it for the last couple of years but with Super being left in the hands of Buy and Hold funds, I felt that it may be time to take my Super into my own hands.
How has your success been.
Look forward to hearing back if this thread still runs...
Cheers
Greg