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Lorena,
No, I'm not a full time trader, I have a day job, but one of these days
.... <G>. As far as to how long I hold as position, there is no time limit.
Theoretically, I could hold a position forever, practically it usually
averages a few months. I hold a position until I hit a target or a stop or
until the market short term trend reverses. I've posted a series of
messages in the past describing my methods. I'll copy my investment
strategy below and attach my building block posts. Yell if you have any
questions after you read them.
JimG
----------------------------------
INVESTMENT STRATEGY SUMMARY
I've decided to keep a file that summarizes my investment strategy or
trading system. Since this system evolves with time, I'll do my best to keep
the file current <G>.
My system begins with a method to narrow the universe of stocks for
consideration to a small number that I can follow. I used to run several
different Telescan Prosearches with both fundamental and technical criteria
to give me charts on the 25 stocks that best fit the criteria. I now run
QP2, Microsoft Investor and Schwab searches instead because the price is
right <G>, but the idea is the same. Then I look at the charts to decide
which, if any, I want to add to my MetaStock database. I try to keep my
MetaStock database to under 200 stocks. I run the Telescan searches weekly
and prune my database periodically. I usually only add a few stocks each
week.
Once I decide which stocks to add to my MetaStock database, I transfer
the data from my QP2 database to my MetaStock database. Then I run a
MetaStock profit system test comparison on 1500 days of data. This has two
purposes. First, as a final filter, If none of the tests show at least a
100% gain on 1500 days of test data, I delete that stock from the database.
Next, for those stocks showing more then a 100% gain, I change the
indicators above the chart plot to identify which test performed the best.
Finally I construct the trend channels. That's how I update my database
weekly.
I run weekly explorations on the stocks in my database. I look at the
resulting charts mostly considering the trend channels. I'll also just look
through the database charts periodically with my 20/20 eyeballs to identify
stocks for my watch lists. When I like a stock, I move it to one of my watch
lists. I look at charts of my open positions and my watch lists every day.
When I have buying power in my account and am sure of the market direction,
I'll add a new position weekly in the direction of the intermediate market
trend.
I use mostly trend channel analysis for my final selections since over
the years I've found that works best for me. I like to enter a long position
when an Intermediate Term Down Trend Channel reverses. When the market is
already in an Intermediate Term Up Trend Channel, I like to open long
positions after a stock has bounced off the bottom of the channel and has
broken a Short Term Down Trend Channel. A MetaStock buy signal is nice, but
not required. I'll also buy LEAP calls for leverage.
Since I'm often wrong, I like to limit my losses by getting in close to
the bottom of the ITUTC and setting my mental stops just under the channel.
If the channel is wide enough, I'll also set a target at the top of the
channel. Of course, I move the stops and targets up as the stock progresses
up the channel. I'll close a position immediately when a target is hit. I'll
close a position the next morning, after a stock closes below my stop.
One final comment is on portfolio management. I limit each new position
to no more then 10% of my portfolio. That diversifies my portfolio enough
for needed protection, without over diversifying to the extent that I get
average performance. I try to keep every position in different high ranked
industry groups, but may have two in the same group from time to time. If
the bond market looks good to me compared to the stock market, I'll
occasionally take a bond position through bond mutual funds.
That's my quick summary <G>.
-----Original Message-----
From: lorenab@xxxxxxx <lorenab@xxxxxxx>
To: metastock@xxxxxxxxxxxxx <metastock@xxxxxxxxxxxxx>
Date: Saturday, January 23, 1999 6:29 PM
Subject: Re: Weekly Pick
>Jim,
>As a new MS user, I have been following your posts with great interest. If
>you have the time, and are so inclined, I wonder if you wouldn't mind,
>sharing some specifics about your trading system, how long you hold
>positions, and whether you do this on a full-time basis.
>
>I myself am a short-term trader but tend to use more standard types of
>indicators (MACD, RSI, Directional, Stocastics). Currently I'm
>experimenting with the Triple Screen System discussed in Alexander Elder's
>book, Trading for a Living. I'm happy with it thus far, but would like to
>introduce new indicators into the general equation. Any advice you could
>offer would be much appreciated. Once again, really enjoy your posts--most
>helpful and educational. BTW, would like to be included on your chart
>e-mail list.
>
>thx
>Lorena Beccari
>
>At 12:18 PM 23/01/99 -0800, you wrote:
>>All,
>> This was one of those weeks <G>. I was stopped out of SIF Wednesday,
>>AOL and SHRP Thursday, and HRC Friday leaving me in an almost 50% cash
>>position. It looks like Guy correctly called the turn. Now I'm trying to
>>determine if we are heading into a significant correction or did we just
>>have a minor pull back. The answer is probably somewhere in between, but
>>school is still out using my trend channel analysis of the market indices.
>>The DJI and NYA indices tend to support the significant correction theory
>>since they both broke down, closing below the bottom of their MetaStock
>>Standard Deviation Short Term Up Trend Channel (STUTC) with the deviation
>>set at 1 (should hold 67% of the up moves). On the other hand, the NASD,
>>Russel, OEX, and SPX are still holding in the bottom half of their STUTCs.
>>Another puzzle is that while the DJI Binary Wave is dropping as you would
>>expect in a correction, the DJI QStick is rising rapidly which would
>>indicate that money is still going into the DJI stocks.
>> Over the years, I've found the best approach when I get a mixed
picture
>>like this is to just sit and watch and that's what I'm going to do. In
>>fact, I was really tempted to close all my positions and go to 100% cash,
>>but decided not to after a hard look at the charts of my open positions
>>Thursday night.
>> I won't open any new positions until the mixed signals clear up and
>>I'll raise my stops just as soon as I can. If the DJI and NYA turn back
up
>>and re-enter their STUTCs, I'll start to open new long positions. If the
>>other indices break down, I'll go to all cash and wait for turn back up.
>>After the turn back up, the initial new long positions will be in core,
>>market leaders like Dell, Cisco, Intel, America On Line, Amazon.Com, etc.
>>which are at good entry points.
>> That's it, no new pick this week. I'll send a DJI.GIF chart and my
>>Excel chart of open and closed positions to everyone on my chart email
list.
>>If you aren't on my list and want on, just yell.
>>
>>JimG
>>
>>
>>
>>
>
Attachment Converted: "c:\eudora\attach\Building Blocks for Stock Trading1.txt"
Attachment Converted: "c:\eudora\attach\Building Blocks - Narrowing the Universe of Potential Stocks1.txt"
Attachment Converted: "c:\eudora\attach\Building Blocks - Scans1.txt"
Attachment Converted: "c:\eudora\attach\Building Blocks - Charts, Trendlines, & Channels1.txt"
Attachment Converted: "c:\eudora\attach\Building Blocks - Direction and Timing1.txt"
Attachment Converted: "c:\eudora\attach\Building Blocks - Money Management.txt"
Attachment Converted: "c:\eudora\attach\Building Blocks - Trend Channels1.txt"
Attachment Converted: "c:\eudora\attach\Building Blocks - Targets and Stops1.txt"
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