I think I’m coming around to the idea that I feel most comfortable buying stocks that are in an uptrend, with good relative strength, preferably in leading sectors, that have pulled back to a key moving average on decreasing volume.
You don't speak of most important area of trading, risk management. Entering is 1% of my trading plan.
Disagree completely. Risk management can be encoded in static rules that don't change over time. An edge in entries and exits is absolutely vital and should make up 95% of the time allocated to becoming and maintaining profitable. Risk management is vital but its the absolute simplest and easiest part. Risk a management is akin to a functional internet connection. It's vital but you set it up once and it then works (most all of the time when done right). You modify it ever so slightly afterwards.
Your strategy is good when the market is in bull mode, for bear mode reverse everything: "I think I’m coming around to the idea that I feel most comfortable shorting stocks that are in a downtrend, with poor relative strength, preferably in the weakest sectors, that have rallied back to a key moving average on decreasing volume"
That’s not an edge. Those are tactics. A strategy: “High momentum stocks should outperform the market, I want to own those” A tactic: “I buy stocks in uptrends because those tend to persist” An edge: “Stocks that have had low institutional ownership and that have recently beat and raised guidance tend to have the greatest persistence of momentum. I’ve found a unique way to track institutional ownership that improves selection by 35%”
An edge is anything that gives you a better than random chance of catching a price move. The higher the chance above random the better the edge is.
I believe Reward to Risk is key. Anything that can improve it is welcome “Enter as close as danger point” “The trend is your friend” “Cut your loss short” “Let your profit run” “It’s a bull market” Not diversifying too much, Betting big on the best occasions. If a trade can’t make your whole year Or if it can do too much damage then avoid. I don’t believe edge do exist in the long run, Every situation is unique … I mean … Breaking the bank of england (Soros), Isn’t something you can tell has an edge. It’s a once in a lifetime opportunity. These are the best trades ever. Statistics is for sellside. Real trader don’t track this shit. Only funds do so for client gratification.
I concur with this. 95-99% of my trading is about getting good entries, as judged by any metric of effort/difficulty or time spent, on an ongoing basis or over the past years. The percentage has actually gone up over time: as you suggest, risk-management protocols are pretty much timeless once they're in place, but by definition one needs to keep finding new entries day after day as long as one is a trader. Risk management is totally downstream from the entry signal. Good signaling lets you confidently "cut losers quickly" without also cutting your winners. It lets you use smaller stops and thus larger position sizes. Both of these drive up your profit factor and gain to pain, so on top of larger position sizes for the same dollar risk, you also can take on more dollar risk per trade for the same max expected drawdown. The PnL from a set of good signals is robust across a wide range of trade management approaches and methods, but there's no risk or trade management in the world which can make a set of shitty signals profitable.
Hello KGTrader4, I do not currently have a trading Edge at the moment. But I really need a similar edge below to make some serious money. Listen from 15:44 to 16:28 Until then, I have to keep on clicking the buy, sell, back test button and studying the charts until I get a confirmed/verified Edge.