Yes, if it drops more than 3% in the following day. 1% of the total capital. The worst case will be that you have 11% of the capital for one stock, of course, it is not likely. For this thread, I use EOD data so that people can keep track on them easily.
Only on the first day or any time it drops 3% from the entry or any day that it drops 3% from the prior day? If you add to a position do you sell the whole position after 11 days or is the added portion treated like a new position? I hope that makes sense
Thanks for the questions to help me explain the procedure. Let us first discuss the situation when the stock is picked by the system again the following day. If it drops 3%+ from your previous entry point, you add it as a NEW position and sell it after 11 days. If it drops less than 1% from your previous day's entry point, you do not add a position. If it ups 1%+, you add a new position. If the stock is picked on the 3rd day or after, you will enter a new position no matter how much change it has from your previous entry points. Again, treat this position as a new one and sell it after 11 days. The 3% rule is arbitrary; it intends to avoid hold one stock with 10%+ of your capital. The overall performance is not sensitive to the rule when you have 1000+ trades per year.
More questions. Will the system be long and short at the same time. All the picks so far have been long but I imagine it must be easy to find many stocks oversold in this rising market. What would make you go short? where do you trade for $3 per trade? I use IB $5 for 100 shares.
Mostly not short/long at the same time, longs are biased. Months of Jan, May, Aug, Oct-Dec are mainly for long, some other months are for shorts. All are dependent on market condition (using my own indicator). Lowtrades.com, RML and others offer $3/per trade. Izone for $5/trade. You can ask lower commission fee if you are large-volume trader. For this system, it does need super fast execution. A few minutes delay in execution will not lead too much difference in the results after 1000+ trades per year and 11 days holding period.
Any hint as to how you pick your stocks? There does not seem to be any common thread. Off topic : you seem to have done a lot of back testing. If you have a set up for back testing I have a fairly simple system I wouldn't mind having back tested.
All I can say is based on probability. PM me your system. If it is simple, I can get back to you over the weekend.
Boght long positions on 1/12/2006. Symbol Share Price NTMD 900 12.88 FRNT 1500 7.77 DESC 1300 8.89 CELL 600 19.79 SFCC 600 18.14 LPNT 300 30.01 I will send the list for tommorow later.