How have you improved this year.

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tbreak

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Post Number: 80
Registered: 06-2004

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Wednesday, December 13, 2006 - 10:30 pm:

I generally devote a year to work on an aspect of my trading.
This financial year it has been exits and with 6 months to go looking for some other concepts to consider for next year and how others have improved.

One thing I have found this year and has really worked well for me is to have a 5% stop base on a 2 day SMA. I take it from the bottom of the candle of each day. The trend lines are just for reference that the stop should not be lowered of course.

The chart has a 4.5% price envelop on a 2SMA. I get to 5% by adding commission to it.

day2

I am still working other aspects of my trailing stop. Another thing I like about this it's kind of rare you get stopped out for a full 5% unless the trade goes against you from the start. Generally if the price moves in my direction for 3 days I have got locked in profits or very close to it.

(Message edited by Tbreak on December 13, 2006)

(Message edited by Tbreak on December 13, 2006)

peterloh

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Thursday, December 14, 2006 - 07:32 am:

tbreak,

This has been a good year for me but not a superb year like other years.The reason is that I have not been able to pick the sector well which I believe is very critical.

I have concentrated too much on the rag trade and the building industries which had done their job well in the past.I tended to range trade more as I did not believe they are many gems left, so I range trade twice a year just trying to make 25-50% pa before interest cost.Only in the later part of the year that I before more diversified.The rise in interest rate also has a dampening effect on the sector that I picked to trade.

Textile - PBG did made 40% on a double trip.No longer in my portfolio, as according to the chart pattern, it has peaked.A cyclical share.

- JST Held from last year at $2.50 entry price, to have exited at near to $4.Enjoyed the CGT discount as over 1 year.Recent entry has not performed up to normal standard.Notice it is trying hard to move up from $3.60ish, exited most at very lean trimming.

- SFH currently is very under value, comparing with Noni, so there is room for improvement, at least 20%.Again the interest rate factor proves to be a temporary obstacle.Still holding, but most of the profit has been wiped off.Big mistake on this one, unless it takes off will have to switch soon.Did made some profit from short term trade of this one.

Currently, all three are at cyclically low, and a value share for contrarian trader/investor.This also applies to the building industry.

Building - Exited ABC with about 20% profit, ie for a 2 months trade.
- Exited GNS 4 months with zilc profit after 4 months except the 4% dividends.

- Exited CSR at small loss to make way for more profitable sector.

- Holding BLD, newly bought at $7.50, as believe it will only improve from here, also takeover target.

- Holding TIM, slightly below cost. great results, will improve more from here on.

- Exited WYL in a 2 months trade making 20%, profited from capital return and dividends payment.

Finance Sector - Exited HGI was a big mistake, although I called it well. zilc profit.Should have done it with MRL instead of HGI, wrong call - both have return of capital.In retrospect, would have done better, cost me 60% profit in 6 months.

- TWR very good call, bought it and traded it since 80c. Held 2nd time long term at $1.60. Bought double amount cum reconstruction which was a good call.Initially also got benefit from AUW shares, now TAL and TWR again which I am quite certain will go up from here as coming off very low base.TAL is a very good performer considering its size and a prime target to be taken over within a year. this also goes with TWR which now concentrate in NZ.Still looking good, share price has already double for old holding and new purchase bought recently cum rights and split is already up 15%.

Resource - KZL exited too early, traded it a number of times, best was trebling the share price for my long term holding.250% profit in 6 months.

NEW Exciting Sector.

Healthcare - HSP bought recently at $4.80 suggested as a good buy fundamentally. charts agreed ,so my switch from GNS.

Gaming Sector - TTS, new entry at $3.70, exited CSR for this,looks encouraging and very likely to take off from here, as good management from UTX helps.

Construction Sector. -TSE extremely good prospect and expect it to increase 50% within a year. Already sold some for some profit as very overweighted in it.Bought it at $8.50 cum rights at $7.50 2 for 7 and dividends already 15% plus lots more to come.Likely scenario, TSE may split its infrastructure into another company for fund management and the construction,service and maintenance company.Currently growing worldwide through acquisition, joint venture and organic growth. A laggard so far compare to UGL and WOR, but one from a low base with the best potential for growth. A long term holding, expecting to treble in 5 years.

Under consideration,PGL and SMX - technology sector.

Compare to other superb pick in past years like CTX at $1.80,CPU $1.80, UGL at $1,COA at 90c, OST at 90c etc, this has been a good year but not an excellent year as I believe the market is almost near the top and it takes extra effort to find a very good one.HSP,TTS and TSE are very good future prospect and for long term purposes.

ANY other worth looking at?Any contribution or suggestion will be gratefully accepted.

-------------------------------------------------
Disclaimer: Please note that comments made in this column is mainly for the interpretation of charts in technical analysis. It is not made in my professional capacity and should not be taken as advice.In my professional capacity I am only allowed to give advice on certain managed funds authorised by my license dealer.Any share discuss is for general interest and should not be relied on to make an investment decision.It is likely that I may own the shares that we discussed as a trade or as an investment. Please consult your stock broker or financial adviser in regard to your personal situation.

The views expressed here contain information derived from public available sources that has not been independently verified.No representation or warranty is made as to the accuracy, completeness or reliability of the information.Any forward looking information in this representation has been prepared on the basis of a number of assumptions which may prove to be incorrect.It should not be relied upon as a recommendation or forecast by the writer.

eric

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Post Number: 51
Registered: 09-2006

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Thursday, December 14, 2006 - 01:27 pm:

Tbreak, Thanks for your interesting post. A couple of questions. If I set the percentage of the envelope at 5%, I only get 2.5% either way. And how do then decide when to stop out, as the price never actually reaches the lower band.

Eric

Time frame: as long as it takes

rockon

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Registered: 08-2003

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Thursday, December 14, 2006 - 05:04 pm:

Hello tbreak,

What a magic chart you posted, running from the bottom left of the computer screen up to the top right. What a shame your stop was triggered half way up.

Everyone plays with entry and exit criteria and what I have found is that for every "tweak" that I try, I am surprised at how close to a support or resistance line it is. In my book at least, they are the logical places to set stops, etc. I always end up drawing a line through whatever criteria I am using at the time.

I don't do a lot of back testing, so what I see on your chart may or may not be the norm, but it looks to me like you were stopped out at about $2.80 when there was a fairly solid support line at about $2.75.

Even Daryl Guppys' favourite, the 21 day EMA, would have kept you in this trade with a close below it triggering the stop, but not without a few nail-biting moments to get the heart pumping which goes to show you that there is no absolute right or wrong way to do this, but as long as YOU are happy with your method and it works more times than it doesn't work then do what my 94 year old Grandmother says and that is " If it feels good,DO IT"

Cheers....R

captain_chaza

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Post Number: 2317
Registered: 02-2003

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Thursday, December 14, 2006 - 05:42 pm:

Show me a Back Tester
and I will show you a FLOP!

Salute and Bon Appetit
Capn

"While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.

"I believe the future is only the past again, entered through another gate."
Sir Arthur Wing Pinero 1893

"There are two times in a man's life when he should not speculate: When he can't afford it, and when he can." Mark Twain, 1897

tbreak

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Thursday, December 14, 2006 - 06:15 pm:

There impressive numbers Peter, I would feel out of place to suggest anything to you.

Eric,

The Lower band is 5% from the centre line and the higher band is also 5% for the centre line, 10% in total from the lower band to the higher band.

How do then decide when to stop out, as the price never actually reaches the lower band?. Yes, the price might not touch the lower band. You get stop out by not lowering your stop if the lower band goes down. If you look at my first post again the lines across is where you keep your stop price even thou the lower band has dropped a little. You should see why I was stopped out in my first post.

I am still working other aspects of my trailing stop.
I kind of have 3 trading systems by just changing the way I do my trailing stop. It's not about changing from a trader to an investor. It's about looking what has happen with the stock in the past.

The entry always is the same a break of a pull back.

System 1. Trade to a 10% target. Sometimes I will hit it, the times I don't the lower band of 5% is always trying to reduce my loss. 3 days if the trade moves in my direction and I will be around break even and looking to lock in profits.

Trade duration around 5-10 days.

System 2.
As posted above 5% stop of the price envelop to let profits run a bit more.

Trade duration around 10-20 days.

System 3.

Once the lower band of 5% hits a 10 SMA of lows. I can use the 10 SMA of the lows as my trailing stop.

Trade duration can be 20 days plus.

I thought I had to develop 3 completely different trading systems for different times frames but because my buys points seem to be fair enough I need only change the type of stop. The buy setup is always the same.

The key for me has been the 5% stop on the lower band reducing my loss maybe locking in some profits before I decide how I want to let the trade run.

I am not suggesting having 3 trading systems but just suggesting the duration of how long a trade will last for can be based of the type of stop you have. If your buy points are fair enough and you want trades to last for a month or so I hope I am not out of line by saying examine the type of stop you have.

I must say I have had problems with the inital stop and letting profits turn into loses before. The 5% thing has help me address this deficiency in my trading.

How has anybody else change there system to address an area.

tbreak

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Thursday, December 14, 2006 - 06:22 pm:

Hi Captain,

Show me a Back Tester
and I will show you a FLOP!

You have got me curious to what you mean. I personally don't like computer back testing programs and could sort of agree with you there but I do try to examine my trading against myself looking for strengths and weaknesses.

ittrader

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Post Number: 57
Registered: 01-2003

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Saturday, February 03, 2007 - 06:48 pm:

Hi Tbreak

As the name suggests I trade using IT, and backtesting is the way I generate the rules, which I then supervise the computer implementing.

Look at backtesting as a form of simulation, as with flight simulation, to be effective it has to be done properly, but it can be done well.

Backtesting is just simulation for trading. There are a number of issues that must be considered otherwise the becktests fail due to a problem generally called curve fitting, however this too can be done and can provide reasonable returns, along with the simulations almost totally matching reality.

For better or worse the worlds funds are moving that way.

tbreak

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Sunday, February 04, 2007 - 05:57 pm:

I must admit I have not put much time into the finer points of backtesting programs.

canam

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Post Number: 25
Registered: 05-2006

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Friday, February 09, 2007 - 08:57 pm:

tbreak - I would not even contemplate trading a system that I haven't backtested! But then again, it could just be dumb luck that I take money from the market ;)

cc's "flop" - that would be the sound I make as I fall into bed with the complete comfort of knowing that my trading system(s) work and I have a stress free nights sleep - and have been for a number of years.

Going travelling o/s for 6 months in 7 weeks - and my mum will be managing the trading while I'm gone so I don't have to think about it and try to fit into various time frames. Yep, taking the PC over to her place, the download software is in "schedule" so all she has to do is run a scan any time after that happens, and then put the orders in.

Cheers
:-)

Profits are the bi-product of your system - Following your system is the goal!!

ittrader

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Saturday, February 10, 2007 - 02:21 pm:

Agree totally, and I do the same except replace "mother" with "wife" and add "on a regular time basis".

I can then generate new stratagies (backtested of course) while she simply follows the existing system.

canam

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Saturday, February 10, 2007 - 03:54 pm:

ittrader
Like your style :-)

I've tried the 'getting the gf involved' but to date no luck - oh well - she'll make a good travel companion anyway - LOL

Profits are the bi-product of your system - Following your system is the goal!!

captain_chaza

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Saturday, February 10, 2007 - 07:31 pm: