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James
We're always in, regardless of whether the trade goes against us or not. I
have to admit that I have chickened out and closed positions, but that's
very rare as generally our system calls for us to always be in the market.
I know this doesn't sound too sophisticated but when applied to our money
management rules it seems to work.
For our S & P futures trades, we are always in. We have experienced
drawdowns of 40 to 50 points on rare occasions, and have experienced a 100+
point loss once in the last year or so. That 100 point loss equaled more
than the entire initial margin on that trade. We made back 60% of that loss
the following month. We have enough confidence in our indicators to ride
out any and all draw downs in the futures markets.
My first stock trade (the largest NASDAQ down day in history at that time)
when I went long caused me to chicken out and I closed out half of my
positions like an idiot. If I had left everything alone I would have made
money on the trade. For what became the largest NASDAQ down day in history
(I went long that day also), I think I ended up losing $9,000 on the entire
trade.
Anyway, I guess what I'm saying is that you have to develop a trading
methodology that you're comfortable with. We've tried stops and they
inevitably cost us money. For some unknown reason, we seem to have the
uncanny ability to pick points just below the bottom or a top. Then we went
to visual stops basis close but that didn't improve our trading results. So
even though we have some pretty large positions, we're comfortable with
them. Historically (15 to 20 years) we have very few large losses compared
to winners, but they do occur and that's why money management is so
important in our trading methodology. With regard to stocks, if the market
drops significantly we will probably add to our positions using some of the
margin we have available. Again we play this by ear.
Since we're fairly new at trading equities, I'll limit the remainder of my
comments to S&P futures. First, here are the theoretical (using the updated
rule set we implemented right after that huge loss - this rule set is one
we've been working on for three years) results of our current system:
1997 25 winning trades out of 27 Average size of winning trade 29.55 points
Average loss -1.07 points
1998 22 winning trades out of 26 Average size of winning trade 40.49 points
Average loss -32.00 points
1999 20 winning trades out of 24 Average size of winning trade 39.09 points
Average loss -35.75 points
2000 15 winning trades out of 19 Average size of winning trade 49.35 points
Average loss -7.85 points
Now lets review our actual trades for the last 8 months (because I have that
information available in a spreadsheet we send out with our family
newsletter).
10/11/99 Sell 1343.00
10/26/99 Buy 1285.20 57.80
10/27/99 Sell 1327.00 41.80
11/23/99 Buy 1409.00 (82.00)
12/23/99 Sell 1477.50 68.50
01/28/00 Buy 1365.00 112.50
02/01/00 Sell 1415.50 50.50
02/28/00 Buy 1327.20 88.30
03/06/00 Sell 1410.70 83.50
04/03/00 Buy 1513.20 (102.50)
04/07/00 Sell 1517.00 3.80
04/14/00 Buy 1439.00 78.00
04/25/00 Sell 1444.00 5.00
05/09/00 Buy 1430.50 13.50
05/16/00 Sell 1428.50 (2.00)
05/30/00 Buy 1381.80 46.70
06/05/00 Sell 1476.50 94.70
06/13/00 Buy 1467.00 9.50
06/20/00 Sell 1505.90 38.90
06/23/00 Buy ????
That's 15 winning trades out of 18 and includes both large losses.
I should say that our system called the 1987 collapse, but I need to admit
that we got back in a couple of weeks early. We've been trading it a long
time and feel comfortable with it. It's even easier to trade when you're
not using your own money. :)
Guy
Paranoia...you only have to be right once to make it all worthwhile!
-----Original Message-----
From: owner-metastock@xxxxxxxxxxxxx [mailto:owner-metastock@xxxxxxxxxxxxx]On
Behalf Of James Palmer
Sent: Friday, June 23, 2000 7:00 PM
To: metastock@xxxxxxxxxxxxx
Subject: Re: Looks like we're early
Guy,
Just out of curiosity, what makes you get out of a trade that doesn't go
your way? Do you use stops? Or do you wait for another trading signal to
reverse? And if so what have been your largest drawdowns percentage wise.
James
----- Original Message -----
From: Guy Tann <grt@xxxxxxxxxxxx>
To: Metastock User Group <metastock-list@xxxxxxxxxxxxx>
Sent: Friday, June 23, 2000 12:49 PM
Subject: Looks like we're early
> List,
>
> Well, we jumped right into this trade with our eyes wide shut. We've had
> several that have really gone against us the first day and then turned
> around. I would like to think that this is the case this time. OTOH, our
> percent profitable trades are much higher than our historical average, so
> this might be the loser that brings us back in line. Like when you start
to
> feel omnipotent someone always whacks you on the side of the head to get
> your attention. :)
>
> Anyway, we will be running our SP39 filter this weekend and I will build a
> spreadsheet of the alternative portfolios with a report as to how they're
> doing.
>
> The ValueLine portfolio is down $13,500 at the present time (not counting
> the options) and I think I'll take my son out for Fat Burgers (George
> Forman's favorites).
>
> JimG
>
> Guy
>
> Paranoia...you only have to be right once to make it all worthwhile!
>
>
>
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