Visit our COVID-19 site for latest information regarding how we can support you. For up to date information about the pandemic visit www.sacoronavirus.co.za.

bs-regular
bs-extra-light
bs-light
bs-light
bs-cond-light-webfont
bs-medium
bs-bold
bs-black

Community


Share knowledge. Ask questions. Find answers.

Online Share Trading

Engage and learn about markets and trading online

A few thoughts on trading systems

Reply
Not applicable
An update on my personal stock trading strategy - note that indexes follow a different strategy all together, so index trading cannot be compared. So the most important components of a strategy are 1) entry, 2) exit (stoploss and profit) 3) position size and 4) stock selection. A lot has been spoken of about the 1st 3, but the last one bears some attention. There is no way of knowing which stock will catch the markets attention, so the best way of capturing a moving stock, is to spread the load - i.e. take positions in several stocks. I try to make 6 trades in 6 stocks every month on average (pending entry conditions being met). If 2 turn out to be winners (2*risk), 2 don't move, and 2 get stopped out, and if I follow the let winners run and ditch the losers philosophy, and I take a 1% risk each time, then I will be up 2% each time. Hardly impressive. But now, if I move my stoploss up on my winning trades to protect at least 1*risk (i.e. so that I break even on the 6 trades), then I isolate the winning trades and they become running trades. Now I have a situation where I enter a second set of 6 trades, but I still have 2 active trades - my profit potential is now increased, significantly if you consider the logarithmic effect of leaving winning trades (a 1% move on a stock starts to translate into a much bigger gain for your original capital). So far, since January, I am up 2%, with Palamin, Anglo and BHP carrying me (all three have surpassed my 1*risk stop), despite the fact that I have been stopped out 5 times (IMP, APN, SAB, MPC, ABL). I am waiting for Datatec, IMP and Metorex to move - and I am linging up for a second round of 6 trades
0 Kudos
5 REPLIES 5
Not applicable
Skaap, interesting approach. I see the logic in the plan but would you not then be risking a further margin over you original risk of 2% capital going for a new round of 6 trades? Or is this done only if your existing trade profits are over 3*risk on the two winning trades, basically cancelling out the 2 loss and two stagnant trades?
0 Kudos
Not applicable
never mind, I re-read the post and the answer is clear.
0 Kudos
Not applicable
never mind, I re-read the post and the answer is clear.
0 Kudos
Super Contributor
Skaapie, dankie vir hierdie insig. Goeie strategie, sal my eie aanpas om meer aandele in te sluit en om meer beslis op te tree.
0 Kudos
Super Contributor
0 Kudos