Seriously? My choice to post on TradersLab had little to do with ET's Moderation. In fact, I never had any problems within the threads I authored on ET. This web site's moderation team performs a thankless task - and does so quite effectively. When I leave these friendly confines for good, you'll not have to invent absurd rationales for my absence, nor work very hard to pinpoint my next location. You'll only need to stop by and say hello - in person - to level any criticisms you wish. The time quickly approaches where you'll finally come to realize just how far off your reality exists from that of my own. Start the clock. I already have. - Spydertrader
The Initial Analysis Sheet (IAS) Each time a new stock enters your world you go through the process of qualifying it for future money making. The Initial Analysis Sheet is used for this purpose, in five different ways: to obtain a ranking for the equity, to set up a buy sell cycle, to write a risk minimization decision strategy, to have on hand a sell strategy (50% of hold) that focuses on the passage of time and, lastly, to have a determination of the absolute downside sell price (last 50% of hold). Accordingly the attached Initial Analysis Sheet is divided vertically into 5 parts. Each part will be discussed below. Initial Analysis To Determine Stock Rank To determine the rank of the stock you need to use a current daily chart that contains EOD price and volume bars and the duration of this chart should be at least 6 months. With a ruler you quickly sketch in the last 5 cycles by lining out the trend lines (right channel line) of the last 5 cycles. At a minimum, 5 cycles are required for the last 6 months. Also, but not necessary, you can scale in the Intermediate Term (IT) trend(s) that form the envelope of the short term cycles on the chart. Next, number the cycles from left to right or pick and number 5 cycles that best demonstrate the price action. On the initial analysis sheet write in the beginning date of the cycles you have chosen, or simply write the numbers 1 through 5 since you now have those annotated on the chart. For each of the five columns note the following 3 items: The point shift of price, the point value from trough to peak, the base price where the cycle began (trough) and the number of 15 days in the cycle. To the right of these three rows calculate and write down the average value for each. In the next box to the right labeled âReturnâ write out the results of the calculation which represents the decimal equivalent of the point shift divided by the base price (the percent of the run). The final calculation you do is to determine the rank by dividing the Return decimal (percent) by the number of days, on average, it took to get that return. The rank that results is the average amount of price change as a decimal (percent) that occurs each day of the cycle. This is the potential of the stock to make money. Thus each time a new stock is added to your universe (list) you know its rank as compared to all the other stocks in your universe. To make more money, priority is given to high ranking stocks when it comes time to choose. What you have actually gained by carrying out this process by hand, is a simple working knowledge of how this stock can be used to make money.
Trading Cycle Workout The second part of the Initial Analysis Sheet is getting oneself ready to actually carry out a trade. The upper half is used for targeting the time and price of the trading you are going to do. Fill in all six boxes. The target date is your sell date. The buy date, once entered, can be used as the sub-trend, to calculate the number of days of the hold. Be careful not to include weekend days. The making money part of this workout is on the right side. Pick a target sell price by determining the likely performance for the next cycle. Use the left channel line to find this value. If you do the same for the buy price, the target gross is determined by taking the difference of the two prices. The second half of this section is completed each time you do a trade. Put in the actual information that occurs and then compare the results with the expectations from your initial calculations. Two additional boxes are used. Calculate the percent of the year that was used on the left and the percent return achieved on the right.
Risk Minimization Decision Strategy Once a qualified stock is a part of your universe, you will be examining it periodically using charts to estimate how things can go. Chart ID; when you are charting, label the buy points on the chart A, B or C so that you can go back to it for the respective buy price location(s) you have entered on the IAS. Complete the break even price for each of the buy prices you selected by simply adding two commissions to that buy price. Multiply the break even price by 1.1 to determine a 10% profit value and enter this next to the break even price. Also enter the average trade swing points and the average daily price range (bar length) respectively. All of this puts you in the ballpark with respect to three buy prices labeled A, B and C on your chart. Next, on the left side of the IAS we note all of the chart volume factors. Enter the first rising volume (FRV). Enter the three recent peak volumes. Enter the dry up (DU) volume and enter the scale that you are using on the chart for volume. Enter the decision maximum volume and enter the maximum cycle volume as well. The decision maximum volume and the maximum cycle volume are what you will use as triggers to exit. On the right side of the IAS we deal with average daily price change from close to close, and the daily high low difference of EOD price bars. To complete this calculation simply write down 10 positive changes and 10 negative changes, total and add their absolute values, then divide by 20 to fill in the box labeled average change in close. You may quicken the process by entering 5 of each and carrying out the division by simply moving the decimal position on the absolute sum. To carry out the average high low difference, complete the rightmost two columns. Use either 5 or 10 of each and do a similar calculation as before to get the average daily bar high low difference. Both of these calculations help you become very familiar with what is going on with the stock during the estimated number of days determined in Section II. What you now have personal knowledge of, is the volume at which you will sell AND the number of days you will hold the stock. This number of days multiplied by the average change in the daily close, gives the expected price. Fill in the expected price box based on this information. It should correspond to the calculation one gets from the 1.1 times the break even price, or better. Having done all of these calculations in advance you will be able to choose when to buy and how long to hold the stock, until it reaches the end of its cycle. The market has told you all of this in lieu of your guessing it. Usually the market is right and it is your responsibility to buy at the referenced buy price when FRV volume occurs and to sell when the peaking volume is reached, on the number of days (later) that you have calculated.
Time Sell Indicators (50% exit) or Price Target Sell Indicators (50% exit) In this brief section you go through the consideration of when to sell your trade simply based upon time passing. Enter the buy date, the expected days to sell date and the calculated sell date, based upon that number of days. The middle column is a calculation of twice the number of whole days. At that time you will sell 50% of your position regardless of anything else. The right column is a price shift calculation. Enter the average daily change in close multiply it by the number of days you plan to hold and enter that on the line labeled Close Change. On the next line, enter twice the Close Change value. When either of these two prices is reached over time (your decision) you will sell 50% of your held position. So, above, you have a time out sell or a price target sell. Selling 50% of the position may be done then. Following this, you may deploy a trailing stop.
Absolute Downside Sell Price This calculation is used to determine when to sell your stock when the price is not following your planned hold. Enter 1.1 times break even in the first space and subtract the average number of swing points from section one to determine the absolute sell price. This is usually a negative number and indicates how much capital you are willing to lose on this trade. It is the difference between a 10% profit and the average point swing of a trading cycle. Most high ranking stocks that you trade will move more than 10%. Therefore, this swing value, in points, is greater than the 10% profit you are targeting. In trades that do not work out, you can expect to lose this amount of money as a worst case scenario. The first 50% sell of part four will usually take you up to less than expected profit and the last 50% that you sell (based on this) will be a loss that cuts into that partial profit previously taken. All of the calculations are based upon prior price performance where a performance has occurred a minimum of five times.
Oh, no, you don't get away with ambuggeruity. I am retired (actually unemployed), live in a single-wide, taking Social Security, and recently quit drinking, so money isn't "much of a concern" for me, either. I want to make enough money that I can quit chasing pussy, it will chase me. That's my definition of rich. (I won't ask how you managed to lose money today.)