New years resolution

[#1]

I made two simple new years resolutions while I had some time to reflect on 2006. 1) Never to buy anything unless it is trending - for me trending means the ADX is above 20. The ADX is an indicator which has a value from 0 to 100 and is non directional and indicates when a counter is trending either way by an increase in the ADX value. Last year I spent much much too much time in trades that were going nowhere - i.e. just churning around a price level. I have analised my trades compared to the previous year and while I have a higher rate of succesful trades I spend longer in the trades and the profits have been smaller. Time decay, money sitting in a trade when it could be making money elsewhere and the energy a non treding trade robs severly impacts on the performance of the portfolio. 2) Taking daily profits (or losses) every day in a seperate account. There is lots to be said for the discipline of having to sell something everyday. The daily taking of profit smooths out the portfolio growth and allows the longer term (warrant or SSF trades) to take their course. The longer term trades are not forced and the imperative to make a profit on a daily basis is shifted to different account and accompanying mindset. So far so good.....

[Tango]

Your approach of only trading a trend seems contradictory to the idea of daily profit-taking. Do you mean taking the growth out of the trade only, and leaving the rest to run, or cashing-in in the trade completely (sounds like day-trading)? I have also done a lot of pondered over the last month or 2, and come up with a system that should give me far fewer trading triggers, but give me more successful trade and keep me in them longer. In my back-testing, it tends to generate only 5-7 trades a year for a given counter, but between 60-80% successful trades (depending on the underlying), and the ones that run really work. Most of the trades in the backtesting were between 1 and 6 weeks duration. I'm going to keep an eye on more shares this year (probably 15-20) and look for real oppontunities rather than taking any impulsive chances. I've integrated stop-loss levels and position-sizing into the system so I really don't have to think much - just take the trades and obey the stops. I've taken 3 trades so far this year (ANG, BIL, HAR) and still sitting in all of them.

[#3]

yes I am talking about day trading...

[SimonPB]

tango, if you're going to start watching 15-20 stocks will that not then give ou some +75 trades a year, almost 2 a week? That's a stack? last year I did some 14 trades and it was my best retuen (calendar year) ever. This year I plan about 10 trades, but of course Ms Market may have other ideas...

[Tango]

yep, you're right, does seem like a lot. Following triggers has put me into 3 trades this year, which is already seeming like a lot and means at this point I would probably ignore further buy signals and potentially miss out on the really lucrative trades. Probably make more sense to pick a single share per sector to ensure that I don't end up placing multiple trades simultaneously in the same sector (which will probably all have a similar outcome). Thanks for the input. I'm logging all my trades, reasons and outcomes, so should be able to refine the frequency over a few months.

[#6]

Pls give us a detailed explanation of how to interpret this indicator. Ive been trying to use it, but its quite confusing and sites ive tried dont explain it so I can understand. Thx

[SimonPB]

ya, narrow it down to one per sector, gives you 6-8 stocks to watch and means you don't essentially double up by being in HAR and GFI (as example).

[dimitri_1]

Chartist, hindsight is always 100%. Just because you've analysed your stagnant trades from last year and saw you could have made money elsewhere, doesn't mean you'll make better choices this year. All you'll be doing by buying and selling every day is making your stockbroker and the SARS rich. Not yourself. Also your daily routine of profit taking is contradictory to your first resolution of trading the trend. If you're trading the trend, it means you stick with it until the trend has turned and only then do you take profits.

[CAB]

Hi SimonPB. If you only had 14 trades last year what instruments were you trading? Warrants would have had too much time decay surely? I agree that to place the trade and leave it to run is the best way to go, obviously with the predetermined stop loss in place. I'm experimenting with SSF's and find them better than warrants, especially to allow the trade to run as there is no time decay. Dunno if its my imagination but the warrants offering is not too great these days?

[SimonPB]

cab, warrants (an the odd instalment). If you get the trend right (and it's strong enough) and select your warrant right = time decay not an issue.

[CAB]

OK thanks Simon. On your warrants trades what was your average time (days) in the trade? Something else, your stop losses must have been set a fair distance away from price so as not to get stopped out?

[#12]

that works for me " I agree that to place the trade and leave it to run is the best way to go"

[SimonPB]

index trades some 5-7 weeks and stocks around 2-3 weeks. stop loss 20% and/or lower low on EOD chart (if long).

[#14]

Dimitri, nothing contradictory in what I am doing. I am still trading the trend on a daily even hourly trend. I am trading in two accounts one a daily account and the other a longer term acc. Trends have different parameters depending on the time horizon of your trade.

[dimitri_1]

Ah, I see. I didn't click on the seperate account in your original post. It's still not a good idea though. You're still only making your brokers and SARS rich by buying and selling every day. Pick one strategy and stick with it. Day traders lose their shirts because they don't stick with their strategies, and they don't keep that strategy simple.

[#16]

dimitri - clearly you speak of something you know nothing about...how do I make SARS richer by trading more? In any case there are no brokers involved in my day trading...