alichambers
48 posts
msg #43261
- Ignore alichambers |
4/28/2006 6:48:54 AM
Gents (and ladies?),
Then penny dropped with trading with me the other day. I thought I'd let you all know.
When I first started out I was in the mindset of looking for the "Holy Grail" - ie. finding a filter that would regularly perform well. Unfortunately I didn't find it - and I was continuing to lose money.
Luckily, I spoke with a full time trader and he gave me some great advice. The trick is to make steady profits with a tried and tested system, especially one that can be BACKTESTED.
This is the key. Find a financial instrument (stocks, forex, whatever) and select a number of items to "watch". Backtest your strategy on each of those items, and if those items produce sure wins over a period of time, stick with them. You'll also be able to get a feel for cashflow - ie. when you're in profit and out. Randomly scanning the market for "new untested" items (eg- stocks) is like gambling - it may work, but then it may not. And remember - in gambling, the house always wins in the long run.
So I repeat ... BACKTEST is the key.
This will take a lot of stress out of the trading. If things go bad (eg- whipsaws), just sit tight AND DON'T ALTER YOUR STRATEGY. You know it will come good in the end if you've run a decent backtest.
I've moved over to Forex for the time being (see my other post) ... but my full time trader friend has a list of 50-100 stocks he watches daily for his entry points.
Of course, unpredictable things can happen. But a decent backtest will allow for these.
I hope this helps,
Alex
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dkatz
64 posts
msg #43264
- Ignore dkatz |
4/28/2006 9:38:32 AM
question -- how can anyone monitor 50 to 100 stocks real-time for entry points? I have a hard time with 5 to 10. Does he use some kind of "alert" signal? Which brings up a general question for all -- do you use alerts to let you know when a cross-over takes place? If so, what trading platform are you using, is it effective?
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alichambers
48 posts
msg #43266
- Ignore alichambers |
4/28/2006 10:56:50 AM
My system is EOD. I don't believe in spending all day glued to a computer screen day trading. Life is too short. And as Jesse Livermore so wisely said:
"...the big money is made in the big moves, not the small fluctuations..."
For 50-100 stocks it works like this:
1. Create a watchlist of stocks that fit your system (ie. have been backtested)
2. Each day update your prices in your charting software and look for entry signals/exit signals
3. Update your orders accordingly
To select new stocks, you need to know your system and choose accordingly. For example, if you look for double moving-average crossovers you want stocks that trend well, and with minimal sideways movement (to avoid periods of whipsawing).
So you might use SF to find stocks that each year have a high 2* the low. Just a start. Then backtest each stock.
Your entry and exit points depend on your system - fibonacci, MA, inside bar, channel breakouts, whatever.
If anyone is interested in looking at stock systems, give me an email at:
dralexchambers[at]yahoo[dot]com
Cheers,
Alex
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guru_trader
485 posts
msg #43351
- Ignore guru_trader |
4/29/2006 9:53:35 PM
Why don't you just present your "stock systems" here on this forum?
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alichambers
48 posts
msg #43367
- Ignore alichambers |
4/30/2006 5:29:59 PM
My system isn't fully developed yet. And besides it's on the forex not stocks. However, when it is developed and fully backtested I shall keep you all posted.
I created this post not to enlighten you all with another filter. There's already enough of these here - some seem very credible indeed.
My post was designed to explain a fundamental shift in thinking I had - from "gambling" and hoping to sure fire regular profits from a backtested system.
If you are interested in the monitoring of 50 stocks or so I mentioned, I can post a link to a system I have bought from the full time trader who helped me greatly in this mindset shift. His system is not rocket science but is definately credible. He uses DMI signals and MA on his watch list of stocks. I highly recommend his system - especially for the support he provides.
I myself am developing a variant of the system. I love tinkering and have the entrepreneurial bug - but that's just me.
Alex
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