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This discussion is really interesting.
I have had some thinking and I still can't make up my mind on the best strategy for someone like me who can't afford to be there all day long (for now). I hesitate between two strategies, both using EOD data and buy at open/market orders:
1) Using MA, momentum, MFI and things like that for long-term trend following;
2) Using RSI and ADX for short-term breakouts;
I can hardly think of using both as I just don't see any utility for RSI in long-term trade, as an example.
Does anyone have any idea of what can be the best strategy? Is it better to stay in the trade for weeks to follow the "trend" or simply to swing in and out when resistance is busted?!
Thanks,
Louis
2008/2/26, Dennis Brown <see3d@xxxxxxxxxxx>:
No need to argue the point. Everyone is right, depending on the
particular circumstances.
As I have pointed out before, very high returns (>3%/day average) are
being made by some traders I know using hardly more than a ruler for
their TA --trading trend lines and support and resistance levels on
very short timeframes (seconds to minutes) --and perhaps a couple of
indicators like MACD or CCI. The key is leverage and that the
winnings are not compounded, but taken off the table and used to live
on, or put into more conservative long term positions. The market can
not support large dollar compounding more than the average of the long
term growth of the better performing issues. You can skim large % off
small $ if you fly below the radar. Greed will not work to your
advantage.
Dennis
On Feb 26, 2008, at 9:50 AM, dave_88_1961 wrote:
>
> 100% can be made in the early years but as the account grows returns
> diminish.
>
> Dave
>
>
> --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111" <brian_z111@xxx> wrote:
>>
>>
>>> A profit of 1% per day, every trading day, grows so fast that the
>>> account balance is larger than all the real estate in the US in just
>>> a few years.
>>
>> Hypothetical numbers can be quoted to create a desired effect e.g. if
>> we put it this way, things look a lot different:
>>
>> A trader starting with $100K who returns 100%PA on average, and
>> trades for 10 years, would be able to afford to buy a home in San
>> Jose Calfornia, but not the best one in the area.
>>
>> Do you think many traders with that kind of performance would
>> continue to trade after 10 successful years?
>>
>> brian_z
>>
>>
>> --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111" brian_z111@ wrote:
>>>
>>> I draw your attention to the following article, especially item 3:
>>>
>>> "Who is the most unusual trader you ever interviewed"?
>>>
>>> http://www.moneybags.com.au/profile.asp?id=1363
>>>
>>> Two consecutive 300%PA plus public performances from Mark Cook.
>>>
>>> It is possible that he was just incredibly lucky (are we fooled by
>>> randomness a la Taleb)?
>>>
>>> He was also incredibly lucky for a period spanning 6 years before
>>> that (trading bonds and stock indexes!)
>>>
>>> Note that the period 1992-1993 when he publically achieved those
>>> results was not a particularly outstanding two years for equities.
>>>
>>> brian_z
>>>
>>>
>>>
>>>
>>> --- In amibroker@xxxxxxxxxxxxxxx, "brian_z111" <brian_z111@> wrote:
>>>>
>>>> Howard,
>>>>
>>>>> Any time someone suggests a growth of more than about 40% per
>>> year,
>>>>> take that with a very large grain of salt.
>>>>
>>>> I expected you to disagree with my statement.
>>>> I'm sure a lot of traders would be aghast at the numbers I quoted
>>> as
>>>> the theoretical potential.
>>>>
>>>> At his website Professor John Price posts audited returns of
>> approx
>>>> 20-25% PA over a 5 year period, or more, using simple Techno-
>>>> fundamental methods (as I recall the figures).
>>>>
>>>> The caveat there is that the sample period is short and selective.
>>>>
>>>> Trading on margin that would return 30-35% PA with less than half
>>> an
>>>> hour a days work and no effort to use any other timing mechanisms.
>>>>
>>>> If your statement is true we can all give up any further efforts
>>> and
>>>> simple trade his method.
>>>>
>>>> Similarly, the ASX, which is a high dividend paying market (due
>> to
>>>> franking) has total returns of in excess of 15% PA on average
>> over
>>>> longer time periods.
>>>> Using simple leveraged buy&hold strategies that is 20-25% without
>>> any
>>>> ongoing effort required what-so-ever.
>>>>
>>>> In "Stock Market Wizards", Schwager, Jack.D, Harper Business 2001
>>> the
>>>> first page of the first chapter in the book quotes Stuart Walton,
>>>> fund manager, who achieved "115 percent average annual compounded
>>>> return in trading profits" un 8 consecutive years during the
>>> nineties.
>>>>
>>>> As I understand it Schwager's books are well researched and based
>>> on
>>>> verifiable case studies?
>>>>
>>>> I only opened the book at the first chapter and didn't need to go
>>> any
>>>> further or to his other 2 books containing similar testimonies.
>>>>
>>>> brian_z
>>>>
>>>
>>
>
>
>
>
>
>
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