Trend Trading to the MAX

Discussion in 'Journals' started by RunTrade, Jan 20, 2006.

  1. i am not talking down to you, whatever that means.

    i dont have any idea who you are.

    i understand what you are saying, but you are applying the wrong construct to understand what i mean.



    ps. by the way, nice trading run !
    #41     Jan 24, 2006

  2. Only problem with this test is when the trend strengthens as with ESCL today. It closed at $28.47!! A whole 8% higher than where i took my profits. Will stick with the plan though...if anything, stop loss will be moved up to target profit if similar situations occurr again.
    #42     Jan 24, 2006
  3. I am really enjoying this thread run, thank you.

    If you are doing this just to show that TF in stocks can work you should keep you -3% +3% entries and exits, and don't add the 4 day rule.

    If you really want to create a trendfollowing system you should keep your 3% stop loss, but come up with a different exit. For instance, it could be let position run and if the close is lower than previous days close and position is still above 3% exit 20% of position. That way you can still have a position or part of a position on when ESCL is up 9% in a day. I don't think a time based exit works well, but may be necessary given your limited capital.

    Just MHO

    #43     Jan 24, 2006
  4. I hope at some point you reconsider what you are doing and how you are doing it.

    The fact that you learned to reconsider your exits is a very good indication that you will be able to begin to think through each part of your current approach and replace it with a better alternative.

    Lets say one tenant you set up, the 3% exit target, is easily found to be a poor arbitrary setting. You could have known from the beginning that no stock of any sort follows a path that is as narrow as you selected.

    So you have just experienced selecting a stock that makes you about 5% a day for a few days. You chose to take 3% of that and then watch the rest of the run so far.

    I hope you go back over how to choose stocks too.

    Here is a for instance. Why not choose stocks that vary by X% and plan on making Y% of that run?

    You were looking at making 3% for the Y amount and you see Y is actually about 5% a day for a few days. The MAX in your journal name could be applied to Y and, when choosing stocks to the set X value as well.

    How will you fix the stop stuff you are doing? Lets say there are a dozen common approaches to setting stops. The ones that relate to MAX type thinking do not use an arbitrary Z%. Will you look at how the way you pick stocks relates to the way to set stops? I hope so.

    You picked a stock to make 3% and it fooled you and did what most high velocity money makers expect their stocks to do. What do you think made it fool you, speaking as a trend trader?

    Would you post your annotated graph so we can see the trend it is in?
    #44     Jan 24, 2006
  5. Journal Update:

    Opened 2 positions this morning...unfortunately, I got in about 5 minutes too late. I like to get in right after the bell. I lost a little ground because of that, but still confident.

    Long 740 TRE @ $6.75
    Long 150 RES @ $33.99
    #45     Jan 25, 2006
  6. Journal Update:

    Bad news, Res got stopped out half way through the day. Good news, I decided to add another $5k block to TRE and it paid off.

    Closed 150 RES @ $32.89 = -$165 Gross
    Closed 740 TRE @ 6.96 = + $155 Gross
    Closed 740 Tre @ 6.965 = + $159 Gross

    NRPH still open


    Wins 4
    Losses 1

    Gross: +$509
    #46     Jan 25, 2006
  7. cnms2


    Interesting thread. I hope it will spark more interesting posts.

    In the SFO Magazine's Jan 06 issue there's an article with an interesting take on the markets' randomness and predictability:

    "A new technology ... recognizes the markets for what they are: highly complex and usually independent of historical patterns, not necessarily random but marching to a different drummer of more fundamental and universal principles."
    #47     Jan 25, 2006
  8. cnms2


    Regarding trendiness dependency on the time frame (which in my experience seems true), this was posted by Alan Crary:

    "Just finished an analysis of the SP market. For the analysis I used the SP data from 1989 - 2001. Here's my results:

    The data from 1min. resolution per-bar through 30min. resolution per-bar is primarily in a trending mode. If planning on building a trend following system or intraday breakout, then these are the bar intervals I'd review.

    The data from 60min. resolution per-bar through 1 week resolution per-bar is primarily in a contra-trend mode. If planning on developing reversal systems, then these are the lengths I'd consider.

    The monthly data reverts back to trending mode, so if you need something to time long term investments (like mutual fund infusions), then this is the interval I'd use.(ex. 200 day MA).

    The data itself proved to be remarkably stable within the time frames. For example, the 30 min. bars had good trends in 11 of the 13 years. Likewise, the 60 min. bars had good contra-trends also in 11 of the 13 years.

    I did this analysis to get ready to build a really good daytrading system. Since daytrading is primarily concerned with the shorter bars, I'll have to look to building a system with the 1-30 min. bars using either a breakout or outright trending idea. "
    #48     Jan 25, 2006
  9. cnms2


    And this is another interesting observation about dealing with various time frames, that time frame analysis is dependent on the chart resolution not only its span:

    "In thinking out time frames it is necessary to understand that you cannot substitute a 10-period moving average of 1-hour bars with a 40-period moving average of 15-minute bars. Similarly, you cannot substitute a 10-week average with a 50-day average.

    It seems natural to think that any two trends covering the same time span will give the result, but that is not the case. Although, we can average many data points, we cannot get rid of all the noise; fewer data points over the same time span will always yield a smoother result. Therefore, the use of hourly, daily, and weekly time periods multiple time frames gives a much different picture of the market than simply using three different moving averages based on the same data.

    It is much easier to see the major trend using weekly data, find the short term direction based on daily data, and time short entry using hourly bars."
    #49     Jan 25, 2006
  10. Again, a position continued to increase signifigantly today. TRE ended +4% higher than my exit point. I am in the process of formulating the best way to gain this missed opportunity. I want to attempt to keep the conservative approach of "taking profits" since the whole idea behind trading with the trend is that I will have many more winners than losers, therefore I should not look for homeruns.
    #50     Jan 25, 2006