small drawdown

[kavelot]

hello

I'm new here, just studing/backtesting stocks for some time

I'm convinced (maybe I'm wrong, but no one will get to change my mind) that it's near impossible to beat the market on the long run using just technical analysis
my main argument is that I backtested literally hundreds of trading systems and none of them beat the market for more than 10 years and for many stocks (sometimes it happens with one stock or another, but that's expected)
(another argument is that all famous people that got rich trading did it using fundamentals, not just technical analysis)

that said, I'd like to know if someone can recommend me a trading system that allow me to reduce my drawdown
(I'd also say that's impossible in the long run, but I'm ok to give up some of my earning... for example, I prefer having a 14% profit in a year with 10% drawdown than having a 25% profit with 20% drawdown)
in other words, I want a insurance, and I'm ok to pay for that (so I don't think it's impossible )

thanks

 

[Splitlink]

hello

I'm new here, just studing/backtesting stocks for some time

I'm convinced (maybe I'm wrong, but no one will get to change my mind) that it's near impossible to beat the market on the long run using just technical analysis
my main argument is that I backtested literally hundreds of trading systems and none of them beat the market for more than 10 years and for many stocks (sometimes it happens with one stock or another, but that's expected)
(another argument is that all famous people that got rich trading did it using fundamentals, not just technical analysis)

that said, I'd like to know if someone can recommend me a trading system that allow me to reduce my drawdown
(I'd also say that's impossible in the long run, but I'm ok to give up some of my earning... for example, I prefer having a 14% profit in a year with 10% drawdown than having a 25% profit with 20% drawdown)
in other words, I want a insurance, and I'm ok to pay for that (so I don't think it's impossible )

thanks

Long run, for me, is years. I agree with you that TA, by itself, is no complete solution to share selection on that scale. Fundamental analysis of the shares, themselves, must be undertaken. TA, only, is a lazy man's method and will bring poor returns for long term holders. However, once the shares have been selected, TA for timing an entry is very useful.

During this present setback, there are a lot of profitable and healthy companies that will go down with the rest. Only FA will discover them.

Split

 

[kavelot]

yes, I already choose the companies, so the timing is exactly what I need, plus the small drawdown that would be great

 

[Chorlton]

hello

I'm new here, just studing/backtesting stocks for some time

I'm convinced (maybe I'm wrong, but no one will get to change my mind) that it's near impossible to beat the market on the long run using just technical analysis
my main argument is that I backtested literally hundreds of trading systems and none of them beat the market for more than 10 years and for many stocks (sometimes it happens with one stock or another, but that's expected)
(another argument is that all famous people that got rich trading did it using fundamentals, not just technical analysis)

that said, I'd like to know if someone can recommend me a trading system that allow me to reduce my drawdown
(I'd also say that's impossible in the long run, but I'm ok to give up some of my earning... for example, I prefer having a 14% profit in a year with 10% drawdown than having a 25% profit with 20% drawdown)
in other words, I want a insurance, and I'm ok to pay for that (so I don't think it's impossible )

thanks

Kavelot,


IMO Assuming that the system generates a high percentage of winning trades, you could possibly modify your system so that it uses a tighter stop. This will ensure that drawdown is kept to a minimum and improve the overall smoothness of the equity curve.

Obviously this would need to be backtested to ensure it offers a financial improvement over the existing system.

All IMO

 

[Rhody Trader]

(another argument is that all famous people that got rich trading did it using fundamentals, not just technical analysis)

I won't disagree with the idea of using fundamentals as the basis for identifying stock and then technicals for timing. That's exactly my primary stock trading strategy.

What I do disagree with quite strongly is the statement above. There are most definitely folks who have do extremely well for themselves with a technicals-only approach. Just give Market Wizards a read and you'll see plenty of examples.

 

[Splitlink]

I won't disagree with the idea of using fundamentals as the basis for identifying stock and then technicals for timing. That's exactly my primary stock trading strategy.

What I do disagree with quite strongly is the statement above. There are most definitely folks who have do extremely well for themselves with a technicals-only approach. Just give Market Wizards a read and you'll see plenty of examples.

Trading and investing are two different things. I agree with you that traders work with TA, probably more so than with FA.

Split

 

[Rhody Trader]

Trading and investing are two different things. I agree with you that traders work with TA, probably more so than with FA.

Then here's where I open the can of worms. :whistling

Define the difference between trading and investing.

Then again, at no point has "investing" been mentioned in this thread until now. Kavelot himself used the term "trading". Of course his definition of trading might be what others would call investing.

 

[kavelot]

(...) What I do disagree with quite strongly is the statement above. There are most definitely folks who have do extremely well for themselves with a technicals-only approach. Just give Market Wizards a read and you'll see plenty of examples.

let's face it
there're, maybe, 100k traders in the world, trying hundreds of different trading systems
shouldn't it be expected that some of them got LUCKY to try to "correct" system for some time? or maybe to change their system in the right time?
I think this is really expected

 

[Splitlink]

Then here's where I open the can of worms. :whistling

Define the difference between trading and investing.

Then again, at no point has "investing" been mentioned in this thread until now. Kavelot himself used the term "trading". Of course his definition of trading might be what others would call investing.

Wouldn't you say that there should be a different approach to a long term than with a short term one?

I don't see a can of worms, there, because I have had some shares for the best part of four years. I feel that the companies are in a healthy condition, although the market is uncertain.

The same cannot be said for the ones that I am trading. Sometimes I short them and I, rarely, hold them for more than a few days.

I consider both methods as quite different and because of volume, some shares are useless for trading but may be excellent investments

Split

 

[Rhody Trader]

Wouldn't you say that there should be a different approach to a long term than with a short term one?

Nope. Just longer-term charts.

Like I said previously, in stock trading I definitely do include fundamentals in most situations, but my holding periods tend to be weeks. I consider what I do trading more than investing.

In other markets I am a technical trader exclusively. I use the same techniques whether I'm day trading or long-term position trading. I've had many forex trades that have run longer than most of my stock trades, but I would never call that investing.

I don't see a can of worms...

I was referring to the long-running debate as to how different folks define the difference between trading and investing. People can get reallyed riled up on the subject. :cheesy:

 

[BBPI_FXTrader]

what i do is start with fundamentals and use TA for entry and exits. however, there is a significant difference between my trading and my investment stocks.
and you are able to be profitable with trading based on TA exclusively on the short-term(day trading, holding a stock for a week etc). long term however is a totally different thing