Bad day in the office

[#1]

Oooff! Everytime I have a bad day, I review my strategy a little. My observation this time is the importance of share selection. Most of my trades have been flatlining for a while, with only my AMS trade making some decent money. And the predictable result? A market selloff moving the flatliners into stoploss positions. A while ago I started reviewing what to do with a sideways trending stock, and decided it was as good as a losing one, since it a) prevented you from exposing more capital in something more promising and b) doesn't offer any protection to your capital for riding out downmoves. Previously, my rule was to let my stoploss decide. Now my observation is confirmed, a sideways trading stock is a loser, get rid of it and take the hit.

[#2]

Good judgement comes from experience,experience comes from bad judgement.

[john_1]

Skaap..have you considered using the wilder parabolic SAR...as an exit.. It has a time function so it will trigger a sell in a flat market...key to using it is re-entry if it moves,,as it can trigger a sell in a consolidation..

[SimonPB]

I am not sure that one bad day means you should rip your system apart .. moe often it is psychological rather then system and system should be changed slowly over time, if at all (assuming they ever really worked) ..

[#5]

nah, don't worry, not ripping my system apart at all, I have been deliberating for a while now whether it is better to ride out sideways movements or to exit. I have made up my mind now, because they are dragging back the performance. The good trades are doing well, and the non-performers are chewing up my total that I am prepared to expose, best to dump them early IMO, rather than let them offset the profits i am making. Oh, and no, I don't use SAR or any other type of trailing stoploss, I am not a big fan. When I enter a trade, I expect to make 2* my risk, period and won't consider exiting unless I am stopped out, or i at least make 1*R, at which point I will reajust my stops.

[john_1]

sure expectation and reality are two seperate things...Skaap...active investing is about leavering time....so you are right sideways trending stocks or downward mover are counter productive...thats why as a principle I appose the traditional value mentallity...the issue is how to determine the movers... well the SAR is great for that , because it works from the lows/highs...if the stock is moving you get a parabolic curve = good stay with it. If the dots are flat (as you will often see in a counter trend move) it means there is nothing happening...and its best to limit your risk...It not something you have to use but it does bring objective clarity to a situation...

[#7]

thanks John, I had actually never thought of it like that!