Hello everyone. After reviewing the many posts submitted to the Journal in my absence, I notice that many of the questions received excellent responses. The detail provided clearly indicates an extensive knowledge of The Hershey Equities System obtained from significant reading of the background material. I appreciate the efforts made by all. As a result, I have chosen only a few of the questions to respond to. Should anyone still have additional questions, feel free to post them. I cannot speak as to what the use of the above mentioned equations tells you, but your results tell me you have been using the SRVZ Equations. These equations, developed by SRVZ, mimic Jack's old equations used in a really old version of TC2000. I stopped posting the results of these scans some time ago. These 'SRVZ Equations are not the equations to which I referred you in a previous answer. Of course you remain free to continue using them if you wish, but I don't believe SRVZ even uses them anymore. As a result, I have stopped using the 'SRVZ Equations,' and have discontinued posting the results. When I post a specific time, I refer to Eastern Time. When using the "Dry Up Volume Range" Method (I currently post the results of this methodology daily), you may use any form of Dry Up Volume best suited to your trading style. I post the results using "Low Band" Dry Up from the Latest Hershey Chartscript posted on the Wealth-Lab.com web site. A possible trade signal occurs when actual volume exceeds the "Low Band" Dry Up Volume level prior to 11:30 AM. You may also use Average Dry Up Volume by 11:30 AM, or any Pro-rata form of Dry Up best suited to your needs - 25% by 10:00 AM, 50% by 10:30 AM, or 75% by 11:00 AM. hpeganz correctly describes the process I have used for removing stocks from our Final Universe List. Stocks that lose their rank often regain their rank in short order. As a result, I have only 'removed' stocks for failure to achieve rank at month's end. Tenured stocks (equities we have purchased previously and traded profitably in the past) can be kept regardless of rule violation. Jack Hershey often broke all rules when it came to his list of tenured stocks. You do not even need to keep a list of tenured stocks if such a thing suites you. Currently, we have several stocks that have lost their rank during the last week. If you decided to remove these stocks immediately upon rank failure, the world as we know it would not come to an immediate end. When you receive a volume signal, you check price, MACD and Stochastics immediately. If all three fall within desired parameters, you take the trade. If not, you take no action, and continue to monitor your list of stocks. As smtrader correctly observes, Jack Hershey has suggested avoiding trading stocks where a signal occurs due to 'large block trades.' I completely agree with Jack's assessment. As a result, I disregard any signal resulting from a large block trade - irrespective of Price Improvement, MACD or Stochastics. OF course, Your Mileage May Vary. +++++++++++++++++++++ The Jack Hershey Equities Method has many iterations. Several individuals trade a variety of methods all with the same underlying Hershey Premise - trade stocks with the highest money velocity at a point in time where we minimize risk. We have often discussed the evolution of the various methodologies in this thread. The methods employed by Ross differ from those used by Gallas2, and smtrader has explained how his methods differ from my own. Numerous additional examples also exist. Each individual trader employs the techniques and strategies best suited to their own trading style, and each has achieved a certain level of profitability. No "one true method" exists. Over time, this "collaborative iterative refinement" process has produced significant changes to my own trading style, and as a result, improved my profitability. I encourage the testing and analysis of all methods discussed in order to determine the best course of action. However, regardless of the style, method, or risk used, I strongly encourage multiple readings of the background material posted earlier in the thread. As always, I continue to welcome comments, questions and any input. - Spydertrader
2005-05-09, Monday - Lists Hershey Wealth-Lab Chartscript Culling Methodology Hershey Chartscript Scans / Qcharts Culling / Stocktables.com Sort Hot List DCAI ELOS FORD MCRI PARL SNDA TRGL USG XXIA Dry Up Stocks EXM EZPW MCRI SGTL SIGM SYNA TASR XXIA Hot List Stocks Scores EXM - 0 EZPW - 5 MCRI - 5 SGTL - 5 SIGM - 7 SYNA - 0 TASR - 5 XXIA - 5 Dry Up Stocks Scores DCAI - 7 ELOS - 2 FORD - 4 MCRI - 5 PARL - 0 SNDA - 7 TRGL - 7 USG - 7 XXIA - 5 Keep an Eye on These Stocks EZPW (Attached) TOPT, BCSI, COGT & JUPM fell from the Final Universe List due to Failure to Maintain Rank. However, I do not plan to remove them from the Final Universe List until the end of the month. Both BCSI & JUPM may actually regain their rank within the next few days. <img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=744115>
Over the weekend, I reviewed several of the posts made during my absence. As a result, I noticed a few of the questions might require additional commentary, and I have outlined my comments below. Not only does it make sense, but the entire system is based upon the anticipation of equities repeating their historical patterns. We look for stocks that cycle a minimum of 5 times over a six month period. We use volume as our guide to determine when to enter into a long position in anticipation of riding price up to an additional 20% gain. Jack often spoke of his tenured stock list as, "old trusted friends." He knew their cycles, and traded them accordingly. He described the money-making process and the profits resulting from trading these equities to be, "like taking water from a fountain." In previous posts, I have often described the accuracy in which SINA and SOHU progressed through their cycles. In the summer of 2002, these two equities provided gains well in excess of 20%. Would you be so quick to toss out stocks that yielded 35% gains or more - simply because they lost their rank? Of course, as with any portion of the Hershey Methodology, you should use or discard any portion which you feel fails to assist you in your trading. I have presented several iterations throughout the Journal (as have others), and encourage you to determine for yourself which methods prove most effective. Often, a stock which loses its rank on one day, regains ranked status within a few days. Similarly, an equity might fall below the average daily volume minimum for a few days, only to rise above the minimum a week later. In both these examples, we still had high quality stocks. They just didn't meet our minimum requirement over a certain period of time. As the 200,000 share minimum reflects a "trading account size" parameter, rather than a "system" parameter, it seems silly to disregard a possible equity simply because it temporarily falls below an arbitrary standard (some individuals DO trade equities below this level of volume using smaller account sizes). Over time, the Final Universe List expands and contracts based on daily additions and monthly deletions. Current market conditions have had the effect of reducing our Final Universe List to 23 stocks. At one time last year, I had 73 stocks in the list. Ideally, we would hold our long positions (assuming price continues to increase) until volume reached Peak Levels. Jack used 6 to 8 day hold periods. I use 10% gain or a period of 4 days. We may or may not continue to see increasing volume as we progress through the cycle. If you correlate score to a particular point on the equity price curve, as well as, read up on Jack's Jokari window, you'll notice the relationship between price and volume that remains the driving force behind this methodology. Again, I encourage multiple readings of the background material posted earlier in this thread in order to gain a detailed understanding of the underlying principles behind The Hershey Equities Trading System. Detailed explanations on how to create the three lists of sevens - ones - zeros, has been provided beginning with the second post of this Journal. In addition, inandlong's thread (linked in the background material) describes the process in its entirety. According to my tests, the Master List Templates shared by G33M4K, work quite effectively as an automation tool for list culling. G33M4K has provided numerous versions of his template, and different versions automate different functions. I suggest reviewing the journal in its entirety, first as a review of methodology, and second, as a means to obtain the correct tool for list culling. Again, I have answered these questions in great detail in previous posts. I understand the length of the journal creates a small challenge for locating key items of interest. However, you do have the advantage of having everything located in one place. I encourage you to review the Journal entries to locate this information. Once entering into a long position, we look for volume to exceed FRV levels by EOD. If volume exceeds these levels, we hold overnight. Over the last seven months, I have experimented with exits based on MACD and / or Stochastics with mixed results. Again, I have detailed the results of these experiments in previous posts. I encourage active participation in the Journal by all interested individuals, and appreciate any contributions. However, many of the questions posted above require so little effort to locate the answers, one wonders why the need to ask the questions exist. A few of the answers to these questions could have been located by reviewing the second post to this Journal. Simply reading through the entire Journal without gaining any knowledge fails to improve one's understanding of the principles behind the methods or the methodology itself. I encourage you to slow down, re-read the materials provided and gain an improved understanding before moving forward. Failure to do so may significantly increase your risk of ruin. I hope you find the above information useful. - Spydertrader
Hello Spydertrader, at first I would like to thank you for the detailed answers and your patience cordially. Of course I understand your request to read the journal in detail. I assure you that I have read it completely once by now what has taken me three complete days time. I will of course work through it intensively at least another time in near future. I appreciate your effort greatly and can do nothing more than say "thank you" again at this moment. ########## After reviewing last week's signals I saw that I left out one positive trade on the short side: On May 3, there was a signal in ELOS, sorry, didn't see that on that day. Friday, I took a trade in TASR, which resulted in a loss of 20 cents or 300 $. After the positive trade, I can "afford" it. The second trade on Friday, PACT, ended with a profit of 17 cents, but I didn't take it (I know I should have!). None of the two stocks reached FRV by the end of the day. CU Odelys
@Spydertrader Well, I don't even dare asking still another question... May I? Does a "tenured" stock lose its tenured status after a losing trade? And does a stock get the status "tenured" only on a winning long trade? I assume both yes... Sorry for still being active and interested...
I encourage you to ask questions where the information available seems unclear or when you encounter difficulty understanding a certain concept. At the same time, I advise applying a small modicum of effort towards seeking answers to questions involving methodology - especially when those answers reside among the pages of this Journal. I don't advise you to re-read the Journal based on any mythical aversion to answering questions. Quite the contrary. I encourage you to re-read the Journal (and background material) in order for you to gain a detailed understanding of the theory behind the methodology. When fully armed with this knowledge, a fundamental change occurs with respect to how you view the markets in general, and Jack Hershey's Methods in specific. How one chooses to utilize a list of "Tenured Stocks" remains a matter of personal choice. What one trader uses for a requirement may sound ridiculous to another. For me, an equity receives "Tenured Status" after a profitable trade (on the long side only) and loses such status after the occurrence of a "Failed / False Breakout" (FBO). I do not use "losing trades" as a rationale for removing the tenured status of a stock because losing trades may result from several sources unrelated to the stock's performance. By example, a loss resulting from my own failure to follow the system rules indicates a problem with my discipline, rather than, a failure of that particular equity to cycle properly. In addition, even tenured stocks fail to perform over time due to lack of "Smart Money" interest or other factors necessitating their removal from The List of Tenured Stocks. While I have no "hard and fast" rule for this, I occasionally simply "sweep the list clean" and begin anew. Usually this occurs after a tenured stock fails to cycle even once in a six month period, but can occur earlier. The theory behind "sweeping the list clean" stems from our desire to trade stocks with the highest money velocity. No need to apologize for your activity and interest. I encourage you to continue your quest, while at the same time, strengthening your knowledge base. Only by building a strong foundation in the theory behind the methodology do we reach a greater understanding of "the big picture." I hope you find the above information helpful. - Spydertrader
It isn't you. A few of the earlier posts on this page had some formatting issues. I expect things to resolve after a subsequent number of posts have resulted in "adding an extra page" to the Journal. - Spydertrader
2005-05-09, Monday - Update This morning I monitored our list of Dry Up stocks (8 total equities): Those equities finding themselves "In Dry Up" we obtained both from our daily Hot List and The Final Universe List. Dry Up Stocks EXM EZPW MCRI SGTL SIGM SYNA TASR XXIA Our system generated 4 possible trade signals from the list of eight Dry Up Stocks when actual volume exceeded calculated "Low Band" Dry Up Volume prior to 11:30 AM. Dry Up Stocks Triggering Signal EXM MCRI SGTL TASR Dry Up Stocks NOT Triggering Signal EZPW SIGM SYNA XXIA Of the four signals generated, two of the equities failed to show price improvement (EZM & SGTL), and as a result, found themselves eliminated from further consideration. MCRI did show price improvement, as well as a positive MACD histogram. However, Stochastic returned a level below 80, and as a result, we eliminate MCRI from further consideration. TASR did show price improvement and met all criteria at time of signal generation. Time: 10:19 AM Price: $9.73 MACD: +.0242 Stoch: 81.0194 Score: 5 FRV: 9,048,477 shares As a result, I entered into a long position with TASR purchasing 2900 shares receiving a fill of $9.74 USD. 05/09/05 10:20:05 9.74 9.73 9.74 2900 Target Price: $10.72 Initial Stop: $ 9.27 I hope you find the above information useful. - Spydertrader
Spydertrader, While you were gone last week I thought I would start tracking your new method, since it is sure to generate a substantial amount signals. I will continue to track it as you are and let you know of my results when I can find time to post. I am currently paper trading, are you live with your new method now (i.e. TASR)? So far so good. On Friday I received many signals, but only two that were tradeable: Bot TRGL @ 16.49 (currently up 14%+ @ 18.94) Bot PACT @ 7.25 (currently up 6%+ @ 7.70) On PACT and other under $10 stocks that find there way to my lists, I will only risk 1% of equity. I have adjusted my stop on TRGL to 2x risk (10%), and will go to with breakeven or 1x risk (5%) on PACT soon (it's been kinda choppy). I don't have TASR, as I have put it on my "get away from me" list... that one just seems to go in unexpected directions for me... I hope it treats you better!