SEYKOTA's method?

Jack, I've been reading your posts and I am very interested in your trading methodology. Could you please explain four things:

1. Exit and entry money velocities.
2. The FTP - What day are you showing that on HOV?
3. DU - Is dry-up volume a specific percentage less than the 65-day moving average volume? Conversely, should I assume the FRV is anything greater than that DU volume
4. Cycles. Could you please explain how to determine the cycle of an equity. I assume you're doing something other than eyeballing it on the charts. Are you using a formula or a feature that's available in your charting program?

If you'd like respond on this thread or via PM, either way is fine. Thanks in advance.

Art

 

My preference is to respond in the forum. while it is true that 4 out of 5 poeple do not agree with my viepoint , the 1 in 5 that do make it worthwhile. sometimes with attachments I track the hits to see how long before the hits stop and the comment is retired.

These are good basic planning questions and well as being good for developing or iteratively refining a work in process.

I know I will tell you more than you want to know, but I feel sometimes I can be helpful in uncovering new ground to consider.

Here goes one Q at a time.

1. Exit and entry money velocities.

People stage through levels of efficiency in making money.

After a few stages of efficiency you get to improving your steady flow of profits. Actually you can look at a person's postings to see what stage he is currently at.

The earnings cycle of an investment is not constant. Use any absolute indicator to measure this (relative indicators do not have this capability).

This puts us at a place where we can watch an investment make money for us. I have a cut off ordinarily of stocks that are less than 3 beta to be on my tenured list.

Any investment cycle has a money velocity record from beginning to end. ?The main drift is that money velocity builds to a peak and then tapers off. If you have a method where you do a series of investments with a stream of money, you want to make changes in the investments in a manner to continually increase your money velocity. I do these streams. I keep 6 to 8 flowing ordinarily.

The observation you make is one where you have investmants and each has a money velocity. You also have potential investments coming up. I do an anticipation thing so I know an investment is coming up soon. At ET they do not have a place where people list what is coming up next. I asked recently and got an LOL answer from a turkey.

by ranking your money velocities of what you own and also ranking what is coming up, you can do fairly efficient swaps.

I was posting using NFI (Mr. Market and maybe TM) and HOV (my preferred similar alternative). the person bought as NFI was going into an inverted saucer. This is a money velocity time when a slowing occrrs and goes to 0 and proceeds to become negative. On the other hand HOV was going to begin a rapid high money velocity period.

the thing to do was to leave NFI and enter HOV. The two day difference so far is about 8%. to not swap from one to another is a "cost". The name given to that cost is "lost opportunity costs".

I design corporate systems for making money. My standard is to break records immediately. An underlying thing I look at is recovering (which is better than just eliminating "lost opportunity costs."

The money velocity exit and entry pairing is sort of obvious as a repair for engendering lost opportunity costs.

With the NFI/HOV example and thread, I received a shithead rating for my indecision to buy or short NFI. The turkey who gave me the rting says he doesn't know what the F--- I am talking about. He has certainlt convinced me he doesn't know what I am talking about.

Using money velocity swaps is a super tool for many subordinate reasons. first it makes you construct good lists of potential buys. second it keep you in a place of proper observation of your owned stocks. thirdly it shows you over and over that the protective trailing stops you maintain are much less profitable as exits than swapping out. You also quickly find out where to operate in any market vis a vis the priodicity of the market.

All in all it makes your use of the compound interest formula much more productive.

 

AZO (AutoZone) chart attached for your viewing pleasure

It looks great over the last 12 months or so, but take a look from beginning of Jan 02 to end of April 02. You've got 6 crossings of the slow MA by the fast MA, and only on the last crossing does the stock actually start to make a significant trend. How many traders do you think could have taken that sixth signal for a trade if they had lost money on the previous five trades. Howevever with a sensible trading plan (stop placement, position sizing, exit criteria etc.) MA crossovers can work.

Here is something about Seykota from Tharp's book.

"Ed Seykota once told me that he taught a college course in trading (in the late 1970s) that lasted 10 weeks. He spent the first week of class teaching basic information about trading. He then spent another week teaching the class Donchin's 10 - 20 moving average crossover system. However, he needed the remaining 8 weeks of the class to convince people to use the system that he had taught - to get them to work on themselves enough to accept the losses that it (or any other good trading system) would generate."

 

The 28th.

The initial one for entering at the optimum was the 21 and 22nd.

For the swapout of VFI and into HOV it was the 28TH

All on the 30 min.

 

the question:

3. DU - Is dry-up volume a specific percentage less than the 65-day moving average volume? Conversely, should I assume the FRV is anything greater than that DU volume


DU is there to see on every stock. You look at formations of any sort that deal with the end of down trends for trading with a long bias. Do it for neutral bias twice as often.

You can see that the volume comes in for a landing like a glider or airplane. This value is assigned to the stock. It has several uses. The FRV is the daily BO volume right after the end of the DU period. FRV is usually 3 to 4 times the DU.

In a typical am, you will see the cummulative volume rising. On Qcharts you set up the "unusual" for volume and it tells you the decimal fraction of the 65 day av that is accummulating.
Now you have the data and the monitoring conveniences.

I have attached an assessment sheet that you can use to record stuff with respect to a prospective stock you might use to make money. Notice the DU volume is listed for use.

Here is how you monitor a stock with respect to volume that is going to start an investment cycle .

You are looking for the FRV to occur. First you must get DU though. The fact is that the DU will occur in the first 1 1/2 hours of the day when the day's volume will first have the FRV value.

This means we are in pro rata land using the "unusual" decimal fraction. You figure out in advance what the DU value is. It is a fraction of the 65 day average.

Why you do all of this is to pick off the entry between two times. The second time is "before the price rises" and the first time is "after DU is met within the first 1 1/2 hours of the day time" This is a window of opportunity.

All my SEC citations mistakenly given me (All were, of course retracted) result from using this window in multiple accounts at one or more brokerage firms, simultaneously.

I will name this window the "TA insider's trading simulated window" If turns out if you know a stock is going to go up before it does, and you act on that by buying, then you are an "insider trader". This definition is not correct but it is used by the SEC for people like me.

what makes this a powerful thing is that the transition from DU to FRV begins to happen before any price movement. In grad business schools students can reason their way through this in a short time once they see how powerful knowing this is for them. This turns out to be the neatest proof for why macro analysis techniques perform below the index performances.

When you go from micro to macro you are a cooked goose. If you can't get to micro you turn out to be a turkey.

I illustrated this stuff in real time for MR market and TM. You can see they are dumb fat and happy instead. TM refers to my comments as condescending.

What I do by answering your question is open a window of opportunity using a meachanical programmable technique that is anticipatory.

This is not a fuzzy window it turns out and it is not predicting.

by using volume as a leading indicator of price. You arrive in a non predictive setting where the leading indicator has performed. All you do after that is make money. you buy as the breakout arrives on the scene and what MR market looks for (momentum) then drives you investment ahead of the herd.

The assessment chart indicate that five prior flawless performances are use to get a "rank" for your stock. The units of "rank" are money velocity. If you can get a rank I can assure you you can get a high ROI on your capital.

QED.

It is my conclusion that anyone reading this stuff can at least tweek their present level of success a little here and there. And have a few more conscious ness building questions that pop up.

I tried to send the attachment nd i get fatal errors and it is too big.

all it is i a one page sheet with characters and boxes.

 

4. Cycles. Could you please explain how to determine the cycle of an equity. I assume you're doing something other than eyeballing it on the charts. Are you using a formula or a feature that's available in your charting program?

Yes to all parts of your Q.

The assessment sheet is a quicky eyeball thing. To get a name for the assessment sheet I go to my universe and to my universe add and delete effort.

Most people here have neat algorithms going and this stuff they just use to tweek their models.

I do score stocks using P, V and A/D in a binary manner. It is the smallest base I could find so as to not differentiate in the order of improtance any more than necessary. The P, V relation and the corollary give us the basic way to make money. The scoring simply expresses the relation and adds Accumulation/Distribution as another level of fineness.

So the cycle goes through 8 stages numbered 7 through 0 where the cycle counts down 7,6,5,4 for the up trend and peaks and goes 3,2,1,0, for the down trend. by letting increasin P and V be 1's and A be 1, I have a scoring system. This makes decreasing P and V and D a score of 0. The way the scores fit onto the cycle is counting backwards.

This does not work for everyone. People vary in lots of ways. My view is that it is a nifty way to make money all the time.

Here is what happens if you score. You know where you are in the cycle. You know what is next. And you know how fast the cycle is going. This is an advantage to some people and bullshit to others. Collectively people have named it for me. It is called getting tomorrow's newspaper today. You could write a TV serial using that title I bet.

Okay. Since we have a P, V relationship , we automatically have the maths to describe it. I generatd 7 equations for that prior to Y2K for TC2000 users. They dumped the ver 3.0 at y2k and you can't put the equations in their new data selling support system.

I am not a macro guy . I know macro approach doom you mathematically and financially. You need a micro universe.

The micro universe will be very very responsive to statistical success. There is a fork in the road somewhere. Phd's in math do not get to a neat place it turns out.

So the good news is that we can gt super and small universes that make terrific money velocity by "sorting".

I sort so I get certain scores form very very high quality stocks only. High quality means low risk.

My sort is a list who length I control by QA. The top is 7's the middle is 1's and the bottom is 0's. It is a little frightening to be me.

So there are some at the top that are picking up money velocity. The bottom part is stocks that are going to Break Out and the middle is stocks that are falling to the bottom.

It is like two lovers in slo mo running across a swiss pasture with flowers. I just watch my list get to KISS trading time.

So everhing is available to everyone.

you sort by restricting the list using QA. You rank the list by......ahhhhh...the daily % the volume has increased.

Naturally FRV is at the top and DU is at the bottom. The stocks of very high quality dance around on the list by going up a little and then retracing to the bottom.

My journal has some pics and charts that tell all about the above.

The easy place to sort is stocktables.com. USE EPS and RS percentiles to get QA, and sort by increasing vol. Bingo. In 1957 I did it by hand after I pencilledin the charts on my master graph. LOL..imagine having to do life manually.

But I can say I did lookover the possibilites.

I notice I doubled my performance 8 times over the years.

So yes, I use eyeball, formulae, and features. Now you can.

Google the formulae. They are there and someone told ET where they are a while back. And they were correct.

People who have canned this stuff as software get nominal returns of 11.1% every 6.6 days on average as beginners using their stuff.

I jave to admit you have little excuse for not being a millionaire in a while. Your Q's certainly just knock my socks off. I wish I were as smart as you.

 

I enjoyed reading your post. All that you say about the processes is correct.

As a rocket scientist with my heavy duty duct tape, I sit there looking for the rocket to form. Tardily, I slip a market order in knowing that the trend is underway sufficiently by MACD's perky divergence. I am behind the beat when I enter. I know which way the trend is going as an aspect of the market order. I am a beginner here. The deal is that I may not fully trade the market at all ever. if the rocket poops out I am doing my exercises. everyday I do flat or wash trades as beginner exercises. These two efforts: making rocket money and flat exiting on flaws, turn me into a person who has an emotional makeup that is very very kewl.

When I move to the iceberg life, I still do the high velocity earnings of rockets and I also just let my money ride as the STOC dissappears under the duct tape (20/80 variety). I have learned to go to slower fractals to find a trend band that is full of bars too. This is definitely more of the same market type entries which lag a flawless trend starting.

So I am not predicting for icebergs or rockets. I am a lagger because i have to wait until the indicators come across for me. Price is already ahead of the indicators.

When i get to expert, unmentioned here, then I am stpping into anticipation land duriong the "change" phase of the market as differentiated from the "continuation" phase.

So what it comes down to is this. Prediction is guessing and betting on the guess. The market entries are not bets. The reason is that the looking ahead is not part of he picture. instad os making a guess, I am "in reaction" to lagging signals and trying to catch up and enter the defacto established trend. At that entry moment I begin to look for flaws which come under the heading of "what wasn't that?" as I compare my sequences to the unfolding market sequence.

Thanks for your specific focussed Q's.