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     cat_lady
Member
Username: cat_lady
Post Number: 95
Registered: 10-2006
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Votes: 0
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| | Saturday, January 13, 2007 - 12:07 pm: |  
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hi dug
hope you don't mind my setting up a new thread in your playroom but you made reference to wadda about the rule of 72 and how you'd elaborate if he came on down.
so what's your rule of 72?
cat lady
Without my morning coffee I might as well be a dog
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wadda
Member
Username: wadda
Post Number: 334
Registered: 10-2002
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Votes: 0
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| | Saturday, January 13, 2007 - 12:17 pm: |
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Hi cat lady,
at Dug's invitation I'll join y'all down here. the Rule of 72 is all to do with compounding interest:
http://en.wikipedia.org/wiki/Rule_of_72
Albert Einstein is credited with discovering the compound interest rule of 72. Referring to compound interest, Albert Einstein is quoted as saying:
"It is the greatest mathematical discovery of all time"
There's even a website completely devoted to it:
http://www.ruleof72.net/rule-of-72-learn.asp
Having said all that I am aware of this rule from accounting/maths (no I'm not an accountant!) but I would be interested to hear dug's practical application of this rule to trading.
waiting out.
wadda
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
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dug
Member
Username: dug
Post Number: 2023
Registered: 07-2005
Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 12:55 pm: |
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Greetings cat lady and thanks wadda for the links that no doubt explain the Basics,and Basis for d'Rule of 72 better than I.[You'll also find our chum Austin Donnelly rabbits about it,cat]
Anyway my adaption of this Rule to Trading goes like this-
You'll find the Accountancy types mostly use d'72 to explain Yearly Rates of Interest that enables the calculation of Years to double your Money[a worthwhile Ambition,right?]They,these Accountancy dolts,also apply it for Loans and to show how you pay back double plus over term of Loans.
The "trick" comes in when you substitute TIMES instead of years to the formula Ergo you divide 72 by the Interest/PERCENT gained and you come up with an answer expressed in TIMES needed to Compound your initial stake to Double.
Example-Gain 15%,roll over EVERY Time,Do 15% five,5,FIVE times and you will more than Double accumulate.
Take Note you have to roll over ya 15%,so start with $1000,make $150,Put $1150 into the next 15%er,etc blah.
So I hope you see that the Time[months/years]nexus is Irrelevant,instead it is the TIMES that the Rule of 72 calculates.
By this method,wadda one steps up from d'vegie maths method,you spoke of in DMX.To a vegie mathser 15x5=75%not 100+[double] but that's because they don't get d'Drift of percentage on profit previous and can be more interested in Drawing OUT than Accumulating,Achieving a GOAL.
One can use the 72 for overseeing on say a Monthly basis how one's Long Term holds are performing.That's Allan Hull territory,cat lady,the bloke who coined ROAR[rate of annual return]but I won't get into that at the moment.
Happy Trading.Either of you are most welcome to come here,put down your Actual Buys NOW or in the Future and just explain what ya reckon you're Doing.We are not interested in what you've held maybe for Donkeys[years],that's not much help,being told the wonders of say ZFX by pilgrims who bought at 2 BUCK$!!
anyway,later
regards,
jr
Dig for the sake of it.
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wadda
Member
Username: wadda
Post Number: 335
Registered: 10-2002
Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 02:59 pm: |
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Mmmmm I was thinking about this whist water skiing on the Brissy river...just got back in...
To help my vegie maths be enlightened:
Example:
Trade 1 ABC $1000 + 15% = $1150 2 weeks (for example)
Trade 2 DEF $1150 + 15% = $1323 2 weeks
Trade 3 GHI $1323 + 15% = $1521 2 weeks
Trade 4 JKL $1521 + 15% = $1749 2 weeks
Trade 5 MNO $1749 + 15% = $2011 2 weeks, money doubled!
Therefore a stock held for 10 weeks would need to rise 100% to equate to 5 consecutive trades each with a 15% gain.
Writing it out helps me fully understand the concept applied to trading. Obviously some assumptions have been made and there will be higher transaction costs associated with the 5 trades compared to one. Additionally the above makes the assumption that the 5 consecutive trades are successful.
So Dug, philosophically your approach is based on money turnover (ie short term trades happy with lower relative % gains)as opposed to 'active investing' as Hull would put it. Interesting as I hadn't really thought about it that way - every time some esteemed author quotes a percentage gain they then tend to annualise it using 'vegie' maths.
Might have an afternoon nap on that...(I'm hurting from the skiing - self inflicted).
Cheers,
wadda
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
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dug
Member
Username: dug
Post Number: 2026
Registered: 07-2005
Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 03:46 pm: |
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Had my Days in d'Sun,
this is what I do 4Fun!!
wadda-drop the 2 weeks bit and think it's FIVE times in however much time it Actually takes,week,month Wadda if it takes a YEAR you still have Doubled ya Dosh!![cash]
So I did the calculate on your DMX play and I figured you had a Grand in Ploy.No wonder ya whinge about Brokerage!!
Have ya got 10 grand to play with,wadda?I noted ya had 10k# of PHK so ya must have more than at least 5gs.
Don't be ashamed or shy,wadda.We all only work with pittances compared to d'BigBoys.We all risk only our comfort level.It all comes down to how keen one is for Risk compared to how scared we're willing to get!!
I won't come d'Coach,wadda but the Percent of Brokerage should be under at least 3%,i work around $2grand parcels at least on $60 Buy/Sell Brokerage.Got some other adaptions but they are all what you've probably read in books.
My strength is in Application,wadda.ya gain it by DO,there's no backtest in existence that develops the Plan to DO!!
enuf from me.
Dig for the sake of it.
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wadda
Member
Username: wadda
Post Number: 336
Registered: 10-2002
Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 04:22 pm: |
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Dug,
I was just using the two weeks as an example as a comparison for us pilgrims between a high turnover compounding interest trade and the same term one trade - it's d'theory dug I was tryin' to express. More than happy with the concept that it is not time-based but multiple-based (turnover of cash).
I actually had all of $1720 in the DMX play and was only highlighting the brokerage before some other pilgrim did, in d'theoretical example dug. Brokerage is not an issue for me it is a fact...but some pilgrim readin' d'example would have jumped up and down shoutin' "but what about all da brokerage for the 5 trades". Rhetorical theory dug, em tasol.
No probs and I appreciate the tips of your adaption and it helps my understanding of the concept..which I am certainly partial to. Without stating my exact trading account (prefer not to on an open forum) I will get around to listing my current portfolio with y'all when time permits (I like the idea of posters being open with their trades - sorts the 'real traders' from the 'read the books and I'll get around to a dabble soon posters'). Those with vegie maths will then be able to figure out the $ involved (nothing spectacular certainly but enuf to hopefully make things work).
DMX was a toe in the water trade to assist in my system (ever evolving) confirmation tasol - hence risking at my current comfort level - had a few ill-disciplined losses that hurt a bit over the past few months so trading a little more cautiously.
Enjoy the day!
wadda
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
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dug
Member
Username: dug
Post Number: 2027
Registered: 07-2005
Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 05:26 pm: |
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Back from my nap and happy to find ya reply,wadda.
Are you Brisbane Born 'n'Bred? surely ya ain't some southern refugee but I guess you may have only stuck ya head up in the Expo,BrizVegas days.Anyhow,your attitude of damn d'Cost,Just wanna Get A HEAD,I can well relate to!
Didn't you say in DMX that ya made $140 on 12%?that calculates as 8 times $140=a Grand nix near two but we won't quibble.
Can I assume you put at least 3/5 ploys in play a week/month? I look forward to you opening your own thread in Starters Thread and reading ya lines,wadda.Tryhay will chat with ya but I give him a Hard enuf time with d'clipped spelling and such.You,wadda,don't have to go there,OK?You lack rhythm,wadda,it kinda mocks me,unnerstand?Wadda ya don't wanna go d'qed/jimmydean jive.[See General 4qed quip from a twerp.Wanna bet qed is Southern!!]
Dig for the sake of it.
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007
Member
Username: 007
Post Number: 377
Registered: 05-2005Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 05:31 pm: |
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Duggy,
$60 buy/sell is way to high for $2,000 parcels. Have you tried http://www.netwealth.com.au? They're the cheapest I've come across so far. $17.99 buy/sell or $35.98 round trip for orders under $5,000. Less than $20 buy/sell for trades under 10 grand. Makes a big difference for small parcels and short-term trades.
Regards
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wadda
Member
Username: wadda
Post Number: 337
Registered: 10-2002
Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 09:59 pm: |
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Yeh Dug...not to get too pedantic but the DMX trade was $210 trade profit minus $66 (Commsec/AOT $33 a side) = $144. (2000 DMX @ 86, out @ 96.5).
Thanks 007 for the Netwealth link - my quick scan of the website didn't seem to find anything about contingent/stop loss orders, do they have this?
Dug I've been sorta active over the last several weeks as I've been on holidays, gotta go back to the real job next week and intend to really only trade more on a weekly timeframe - you know make the D's on the weekend and monitor EOD during the week...all I can afford to do timewise (and keepin' the missus off my back).
As for my origins I pretty much have lived/worked in every state with my career so can speak mexican when required (diplomacy does get you places sometimes!), however if you really want to know, and I'm sure it'll amuse you, I was born in AYR, NQ, but did all my schooling in Kingaroy (yep went to school with the Bjelke-Petersen kids, they were a few years ahead of me)...so I'm pretty much through and through a Queenslander. Does that give me enough street cred in your books?
Now that I've let that out of the bag I guess I won't be getting too many responses to my future posts from other non-QLD posters...though the Sandgropers have always been pretty cool with the parochial concept.
Cheers,
wadda
"Buy low, sell high is a cliche, not a blueprint for action. It blinds investors to the professionals' approach of buying high and selling higher." Stan Weinstein
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007
Member
Username: 007
Post Number: 378
Registered: 05-2005Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 11:07 pm: |
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Hi wadda, hopefully duggy and cat lady will forgive me for the slight (major?) sidetrack. Unfortunately, netwealth doesnt provide any of the above, I guess that's why they're the cheapest. You'd have to be the kind of trader that doesn't mind sitting in front of the screens all day executing orders manually, or placing orders via mobile phone if your entry/exit prices get hit while away from home.
Have been trying to provide another link to an oz online broker selector which you might've found useful but my post kept getting knocked back (wasn't allowed to include the name of the website in my post).
Wish I could've helped ease your burden, doesn't always work as planned though unfortunately, hey.
Regards
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007
Member
Username: 007
Post Number: 379
Registered: 05-2005Rating: N/A
Votes: 0
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| | Saturday, January 13, 2007 - 11:42 pm: |
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Wadda, just performed a quick comparison. The cheapest online broker I came across that accepts online stop loss orders is CommSec (Share trades internet preferred*). $19.95 for trades up to 10 grand (excluding additional facility fees, also competitive I'd imagine). There's a subscription fee of $77 (not sure if this is "one-time" or not).
Might want to look into it further if you're not already with them.
Hope this helps.
Regards
(Message edited by 007 on January 14, 2007)
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wadda
Member
Username: wadda
Post Number: 338
Registered: 10-2002
Rating: N/A
Votes: 0
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| | Sunday, January 14, 2007 - 09:41 am: |
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Thanks for the attempts 007, as it turns out I'm already with Commsec by default. What I mean by that is that like any good thing I was with AOT Online who established the WebIress trading platform and had some pretty good personalised service...as they were doing too well they were bought out by Commsec some time ago and you guessed it the personalised service evaporated. I am, however, a Commsec "preferred customer" which means I only have to wait 15 mins on hold to get through as opposed to 30 mins...and pay a premium for the webiress platform of course!
So currently I trade shares with Commsec and CFDs with IG Markets and GreenCFD (who have just changed their name to City Index).
Thanks again for the attempt.
Regards,
wadda
"Buy low, sell high is a cliche, not a | |
