I am a beginner in my trading equities. The problem for me is to have enough flawless candidates(what i consider flawless is of course subjective) to enter through out the month. My current stock universe is around 200 stocks. With my current universe, i have been able to trade around 5 stocks per month yielding around 10% per month. This month has been better given I have been in BOOM, REDF, and RHAT with 2 very good cycles and 1 ok cycle. You mention shifting performance up 20% if someone were able to connect with you. I was hoping you would elaborate on how one would go through the process of doing this. I did have one question regarding the % increase. Are you shifting the cycle which is 6.6 days to 20% more or are you shifting the monthly percent by 20%? My current solution for increasing profits per month was to get a universe in the range of 500 to monitor rather than 200 which would hopefully allow me to have many more flawless stocks to enter. I am sure their are much better ways to improve performance. Thanks for the great post.
There are, of course, ways of measuring the smoothness of the equity curve. If you're running thousands of computerized what-if scenarios and don't want to visually inspect each one of the equity curves, you can use one or more of these "how smooth is it" measurements to sieve out the most promising dozen or two, then look only at those. If you're mathematically inclined you can invent your own (oh my god, that means you have to THINK!) ways of crunching the data of an equity curve and deriving a smoothness measure. Other people have tackled this problem and have invented quite a number of smoothness-of-equity-curve measurements, which you may or may not like: Kestner's K-Ratio The Ulcer Index The Lake Ratio R-squared (fitting a straight line to the equity curve) The Semideviation Ratio All of which you can look up on the web. Several of them are available as built-in, or user add-on, modules in Wealth-Lab and Trading Blox Builder.
Is right field the correct place to be ? .... Most of your posts are not decipherable: this one is. This is exactly what need s to be done to keep trading profitably. Perhaps it could be stated in fewer words like trade volatility and reproducible patterns ..... I dont trade the same issues if they fail my tests and I change the mix of markets and issues according to observable conditions. Once an issue breaks down you need to move on until things improve.
A couple of other measurements I look at in both backtesting and actual results: 1) average drawdown , which is the daily average of (max equity minus current equity) over the entire period -- gives a feel for the frequency and length of drawdowns 2) expectancy minus standard error -- helps remind me to be suspicious of results with too few trades and/or too much inconsistency
Have you thought of starting with a daily computer scan of the entire stock market? You could still focus on just 200 (or fewer), but they could be different ones each day.
my question is very elementry but here goes...From the books that i have read on trading, they talk about using excel spreadsheets, but i do not understand exactly why. i read about trade stats. but why about the actual price data? Is there a method of understanding the relationship between the prices, ex. O, H, L , C? If there is what is it called ? Excuse me for my ignorance