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Super,
Sounds like good advice. I really want to be in the
1%, as I am sure all of us in the 99% do.
I will try your suggestion on the IBD100 and see
how it goes.
Thanks for keeping me on the path...
Scott
----- Original Message -----
Sent: Sunday, March 13, 2005 1:50
PM
Subject: [Metastockusers]
Scott---Building a Profitable System
This isn't about learning to read the "personalities"
of a small group
of stocks or some specific chart patterns,
etc.
Making money can be easy or hard. Something around 99% of the
people
like it to be hard. Okay, have at it.
If you open the charts
of the Valueline T1 stocks with a moving
average and one or two simple
indicators like the ADX (DI+, DI-) and
the IFT, you'll see maybe 25 to 50
stocks that look like they're
moving up. Okay, now we've got something to
start with. It doesn't
matter if they've been trending for awhile. Forget
that. Trying to
catch the beginning of trends or find precise entries is a
waste of time.
Out of the subset of 25 to 50 stocks, which ones have
the least
volatile, most consistent movement. Maybe 10 to 20. Okay, that's
your
portfolio. Now just hold those until you get an exit
signal--whatever
you want for an exit--swap out the laggards and losers
with new ones
from next week's list, or sit on what you have until some
better ones
show up.
It doesn't take a genius to do this.
In
Roy's newsletter there are technigues to figure out which of the 4
market
conditions are present and what to do in each of those.
Have fun!
--- In Metastockusers@xxxxxxxxxxxxxxx, "Scott Mariani"
<mariani@xxxx>
wrote:
> AA,
> Thank you. That is much
clearer to me. I should pick a few stocks,
say from the IBD100, and learn
their personalities. I guess only then
will I be able to make a
determination as to the value of the stock at
the current price?
>
Thanks AA,
> Scott
> ----- Original Message -----
> From: AA
> To:
Metastockusers@xxxxxxxxxxxxxxx
> Sent: Sunday, March 13,
2005 11:26 AM
> Subject: Re: [Metastockusers]
Scott---Building a Profitable System
>
>
> By
the term "financial products" I mean simply trading
vehicles.Either a few
stocks,or some futures,for example the e-minis
or the dax future.My point
is that you have to focus......
>
> My intention was
certainly not to suggest a specific trading
method or strategy.I tried to
tell you that all the indicators are
price derivatives and therefore
lagging the market.Also,the various
patterns are closely related to the
time frame.For example,a fractal
pattern on a 5-minute chart,dissapears on
a 10-minute chart.
>
> Scott,there are no oversold or
overbought conditions.That's why
RSI and stochastics and all that stuff
simply don't work......The
market is talking to you all the time.Every
single moment.When you
have bought a stock at 10 and the price is at 15,the
only facts are
the price and that you win 5 dollars.The next day the price
can go to
17 or to 13 and that will be the only fact then.....Do you
understand
what I'm telling you? Have a plan and stick to it.With
confidence,with
discipline and with consistency.Define what is a "profit"
and what is
a "loss" for you.Be ready to react.Know in advance what you'll
do if
the market skyrockets and you are long.How much of your profit
you'll
protect and how much you'll risk in anticipation of more
profits.No
method works all the time.....You don't know and you don't care
why
the market is going up or down.What you must know in advance is
what
you'll do in any market movement.
>
----- Original Message -----
> From: Scott
Mariani
> To: Metastockusers@xxxxxxxxxxxxxxx
> Sent: Sunday, March 13, 2005 5:40
PM
> Subject: Re: [Metastockusers]
Scott---Building a Profitable System
>
>
> AA,
> When you
say "Choose 1-2 financial products", do you mean equities?
>
> The recurring messages I keep reading or
hearing about are
"buyem when they'r cry'n and sellem when there yell'n" or
counter
trend trading. I also keep reading about just using MA's to make
buy
and sell decisions.
>
> I have
been looking at charts until I am cross-eyed. When you
say "that the truth
is the price" what are you eluding to? What makes
the current price a good
price to buy? Oversold conditions, a certain
standard deviation above or
below some moving average?
>
> I am
trying to be clever but it fells like I am trying to
reinvent the
wheel!
>
> Thanks AA,
Scott
> ----- Original Message -----
> From: AA
> To:
Metastockusers@xxxxxxxxxxxxxxx
>
Sent: Sunday, March 13, 2005 5:09
AM
> Subject: Re: [Metastockusers]
Scott---Building a Profitable System
>
>
> Scott,
>
> if I may add a few words of
advice also,to those the other
members of the
> forum gave you,let me tell you
this:
>
> I've also passed
through the stage of testing
indicators,geometrical
> patterns,combination of
indicators,etc.Please do yourself a
favor and throw
> all of them into the waste's
basket where they belong......
>
> A good system is not defined by
the percentage of the winning
trades.It's
> defined by the edge that is
giving you.You must be able to
define that edge
> and use it consistently in your
favor.No lagging indicators
and no patterns
> that are time frame depended will
give you that edge.The truth
is the
> price.Nothing else.....
>
> A good system is the one that
makes money.The good system will
be defined by
> your trade management rules.I can
use a simple moving average
system and
> make money and you can use all
the BS sold around
(fractals,Gann,neuronic
> networks,etc) and still lose
money.Learn to read the
charts.Find something
> that works independently of time
frames.It doesn't really
matters what the
> market is doing.What matters is
your position related to the
current
> price.Choose 1-2 financial
products and stick to them.Don't
scan every night
> thousands of stock trying to find
the next home run.Pull
consistently money
> out of the market and don't give
it back.And,most important of
all,don't
> ever believe that you can buy a
system and become rich.The
reason they are
> selling you this system is
because they can't make money out
of it.That's
> why they put all those
disclaimers on it.Be clever.
>
>
> ----- Original Message -----
> From: "superfragalist"
<jackolso@xxxx>
> To:
<Metastockusers@xxxxxxxxxxxxxxx>
>
Sent: Sunday, March 13, 2005 8:46
AM
> Subject: [Metastockusers]
Scott---Building a Profitable System
>
>
>
>
>
>
> > Read this entire Charlie
Wright article from beginning to
the end.
In
> > the later parts he shows
you how to develop a system. His
simple
> > system trades very
well.
>
>
> > http://www.elitetrader.com/tr/index.cfm?s=17
>
>
> > To help you understand
more about what you are doing, read a
few
> > systems development
books. I recommend reading all of them.
But
you
> > can start with books
written by Kaufman, Stridsman and
others.
I've
> > learned more about
trading from systems development books
than the
pop
> > books written by the
"guru's" who don't trade much at
all.
>
>
> > The percentage winners
is really not the problem. The
bigger
issues
> > are the
profit per winner vs loss per loser, the frequency
of
trading
> > and the
drawdowns.
>
>
> > Roy's newsletter is
about to start a series of articles
written
by
> > traders that will describe
how they trade and what MS tools
they
use.
> > You could benefit from
that a lot.
>
>
> >
www.metastocktips.co.nz
>
>
> > You could also benefit
from the back issues of MSTT which
explain
how
> > to use the systems
tester, etc.
>
>
> > I've developed a number
of systems and it's not very hard to
do.
> > What's hard to do is to
learn when to use each of the
systems.
No
> > single system works well
in all market conditions. That's a
really
big
> > mistake people
make.
>
>
> > I have a couple of
systems for up trends, down trends,
sideways
> > typical and sideways
with rotation. Each one has a
different
> > expectancy and
different values for P/L ratios
etc.
>
>
> > After I use the system
to find high probability trades I
fiter
the
> > charts through my best
computer--the one in my head. In
general
that
> > improves the ratio of
winners to losers by about 50%. In
other
words
> > if my system has a
50/50 ratio, my evaluation of the
charts
improves
> > the ratio
to 75/25, and often better.
>
>
> > Can you reduce the chart
evaluation to a mechanical
system---no.
You
> > need experience to
evaluate the charts, especially in the
four
> > different market
conditions.
>
>
> > A very simple and very
profitable method of trading is
simply to use
a
> > prefiltered list based on
TA, momentum and
fundementals--the
valueline
>
> T1 stocks, the IBD list or the S&P neural fair value
list.
>
>
> > Use a moving average of
any type, and one simple indicator
like
the
> > IFT of the RSI (Roy's
newsletter). Buy the momentum stocks
on one
or
> > two of those lists
whenever they're above the MA and the
IFT, if
it's
> > above it's thresholds.
That's all you have to do to make
money.
>
>
> > That being said, 98% of
the want-to-be traders want to do
exotic
> > explorations of 3000
stocks a night for patterns, breakouts
or
other
> > crap they can't even
define muchless find. Of course they're
going
to
> > have 40% or 50% winners
when the market is in an uptrend.
When
the
> > other three conditions
exist they're only going to have
20%
winners.
>
>
> > If the market is in an
up trend advancing stocks always
lead
declining
> > stocks, so
a monkey could throw darts at a copy of the
wall
street
> > journal and
wind up picking 50% winners.
>
>
> > Trade from the defined
lists, learn to read the charts of
the
momentum
> > stocks so you can
tell when the momentum is likely
to
continue--there
> > aren't
any indicators that are going to tell you that any
better
than
> > your eyeball after
you've looked at something around
1000
momemtum
> > stock
charts.
>
>
> > There are simple methods
to use in all four market
conditions. I
think
> > Roy will have articles
about the methods in up
coming
newsletters.
> > There
isn't the time or space to post everything every
newbie
should
> > know--not to mention
having to repeat it one hundred
times.
>
>
> > Start with the Charlie
Wright articles and work your way
up.
>
>
> > We are in a sideways
market with rotation or a slight
downtrend
with
> > rotation. That's the
worst market there is to trade in so
buckle
up.
> > On Friday, I saw some
signs that the rotation might be about
to
stop.
> > If it does, I'll
determine what kind of market we have after
that
and
> > then use the appropriate
system. This is good time to
read
because
> > without a lot
of experience you aren't going to be making
any
money
> > right now anyway in
this kind of market. Maybe after
August.
>
>
> > If you don't believe me
regarding market conditions, here's
a
simple
> > test. Set up the
explorer to find stocks that have gone up
two days
in
> > a row. Run it everyday for
the last two weeks and see how
much
over
> > lap there is between the
lists on a daily basis. For this
test,
> > confine your lists to
the S&P 500, 400 and 600. That's
1500
stocks.
> > Now if you
can't find many stocks that have gone up two days
in a
row,
> > and with lists that
overlap, it's time to read a book and
stop
trading.
>
>
> > Have
fun!
>
>
>
>
>
>
>
>
>
>
>
>
>
>
> > --- In
Metastockusers@xxxxxxxxxxxxxxx, "Scott
Mariani"
<mariani@xxxx>
>
> wrote:
> >>
O.k.
> >> I have been building
system test after system test,
trying
several
> > different
combinations of indicators. Since I use EOD data
I
have
> > given up on getting
accurate exit values. I get a bunch of
high
losses
> > which I attribute to
the EOD data not exiting until the
close.
>
>>
> >> I assume the
object of a system test is to have more
winning
trades
> > than loosing ones? I
have resorted to adding one
optimization so I
can
> > look at the overall
system performance on a total $$ basis.
The
only
> > problem with this is
that with the exits being what they are,
my
> > losses are humongous. I
have been trying to find a system
that
is
> > better than 50/50 but have
yet to stumble on anything that
yields
more
> > winners than
losers.
>
>>
> >> How do others go
about analyzing system tester
results?
> >> Thanks,
Scott
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
>
> > Yahoo! Groups
Links
>
>
>
>
>
>
>
>
>
>
>
>
> >
>
>
>
>
>
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