My journey to long term consistency

DrSafari

Established member
590 36
Okay, going over my trades has only made my feeling stronger. The shorts are not working so I am going to abandon my rule that I need to have an equal risk going long and short. The reason I believe most it is not working is because general economy is bullish and finding stocks that have a bearish trend is more difficult to find. That makes me take up positions that are not ideal, not so clean charts. Taking long and short can be useful at times when the market is in recovery mode (like in januari, eary feb and after august 24 last year) Then again, its even harder to find shorts in those markets. So best is not to trade then (or do it when you have determined the up and down days but that is beyond the scope of this system so far) Lets say we wont trade markets like that for now.


Plan Demo Account including my new findings:

1) Deciding whether to trade or not
-before deciding to trade look if any major economic events are up in the current trading day if yes then we DO NOT TRADE
-before deciding to trade: check yahoo finances whether something big is up or not. If it is DO NOT TRADE


2) Find potential trades
- Look at the S&P500 and the stocks in your watchlist. Watch if most of them are in the plus or in the min. Dont go long if in the min and dont go short if in the plus.
- scan american stocks and look for clean charts (up or down determinded in previous point). Clean is a steady rise or decline for at least 3 trading days on a 2 hour chart (1)
- do not include stocks that gapped in those 3 trading days
- do not include stocks that require me to take stop losses wider than 2% of my equity
- the last three bars (2h) should go with the trendline, else dont take it


3) Taking positions
- look for the trend and 66% of the highest difference in opposite direction is where I place my stop loss
- I am not going to risk more than 2 % on each trade



4) Once in a position
- Make it a trailing stop loss
- Exit only if stop loss hits
- document every trade carefully in journal (with charts) saying what you did and what I should have done

Since the system changed again I will evaluate after 40 trades (or sooner if it seems totally worthless like I did many times already)


(1) how can I quantify this? I looked into this but cant find anything suitable at the moment. For now Ill leave this at my discretion but of course it is visible if a chart goes up or down in a steady fashion, the more it resembles a straight line the better, only need to measure that objectively and put a number on it
 

DrSafari

Established member
590 36
Demo account

Short Athenahealth
50 Shares
Reason of closure: adjusted stop loss got hit

Opening rate: 132.97
Opening time: 3/15/2016 3:52 PM

Close rate: 133.49
Close time: 3/16/2016 3:07 PM

Amount risked: € 96.96

Net P/L: €‪-23.49‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
AthenahealthChart.jpg



Personal notes
Didn't go against me and was 75ish into profit initially. Adjusted stop loss to -20ish according to my system. Then next day it went through it. If it was my real account I would probably have moved my stop loss to +50 because looking at the general trends I thought it would be going up, and so it did. Later it went down again so a wider stop loss or tightening it into profit would have been better here. However I abided by the system so all is good.
 

DrSafari

Established member
590 36
I made a bad trade on my demo account (which I will post soon). In my plan it says "look for the trend and 66% of the highest difference in opposite direction is where I place my stop loss"

However highest difference over which time period? This is not defined. This is why I made a mistake. It also says that the trend should be there for at least 3 trading days. But that does not mean I should take highest difference over the last 3 trading days. I should take highest difference over the entire trend. Alas I did the former resulting in taking a too large position with far too narrow stop loss and got stopped out in no time. At first I was baffled and couldnt see my mistake, after all I was just following my system or so I thought. But then I thought to investigate it further cause it felt wrong somehow.. and now I discovered why. I took on the same trade now but with corrected position size and stop loss. Will update the plan accordingly.

Will post details later
 

DrSafari

Established member
590 36
Demo account

Long BMO
500 Shares
Reason of closure: stop loss got hit

Opening rate: 61.24
Opening time: 3/17/2016 4:11 PM

Close rate: 60.88
Close time: 3/17/2016 5:41 PM

Amount risked: around €155

Net P/L: €‪-158.88‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
BMObadChart.jpg



Personal notes
Like I said in previous post, stop loss was way too narrow because I only took into consideration the last three trading days instead of the whole trend. Next trade I am posting is the same instrument, this time done correctly, unfortunately also a loser but i did follow the system
 

DrSafari

Established member
590 36
Demo account

Long BMO
150 Shares
Reason of closure: stop loss got hit

Opening rate: 60.99
Opening time: 3/18/2016 2:49 PM

Close rate: 60.06
Close time: 3/21/2016 3:00 PM

Amount risked: around €125

Net P/L: €‪-125.99‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 1 hour chart this time. So the longer trend is also visible and my previous very bad stop loss
BMOChart.jpg



Personal notes
This time a more sensible stop loss... Notice the amount risked is not that different but the amount of shares is only 150 instead of 500. But of course it started going against me as soon as I opened. This is starting to get rediculous. Maybe this is a sign I shouldn't be trading on my real account for the time being...
 

DrSafari

Established member
590 36
Demo account

Long Philipps 66
150 Shares
Reason of closure: stop loss got hit

Opening rate: 90.7
Opening time: 3/22/2016 4:01 PM

Close rate: 89.54
Close time: 3/23/2016 2:31 PM

Amount risked: around €125

Net P/L: ‪€‪-156.57‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
philips66Chart.jpg



Personal notes
Another loser, I wonder what the statistical probability of this is, close to zero I bet. If I had done the exact opposite each time I would have a great track record haha. Anyway, up until just now, when typing this text I had no idea what I could be doing wrong but now something hit me. I am always opening at beginning of the US trading day. Because thats near the end of when I get off from work here. Anyway I have read and also experienced that the beginning of a trading day is a bad time to go into a position, you dont have a good feel of the market yet, alot of newby traders take their positions etc. On my real account I also usually waited at least 1 hour before taking a trade. So Im going to make my system that I should wait at least one hour after opening to take a new trade. Going on with this losing streak makes no sense. Will post an update of the new system
 

DrSafari

Established member
590 36
Plan Demo Account including my new findings:

1) Deciding whether to trade or not
-before deciding to trade look if any major economic events are up in the current trading day if yes then we DO NOT TRADE
-before deciding to trade: check yahoo finances whether something big is up or not. If it is DO NOT TRADE


2) Find potential trades
- Wait at LEAST 1 hour after trading has opened before taking up a position
- Look at the S&P500 and the stocks in your watchlist. Watch if most of them are in the plus or in the min. Dont go long if in the min and dont go short if in the plus.
- scan american stocks and look for clean charts (up or down determinded in previous point). Clean is a steady rise or decline for at least 3 trading days on a 2 hour chart (1)
- do not include stocks that gapped in those 3 trading days
- do not include stocks that require me to take stop losses wider than 2% of my equity
- the last three bars (2h) should go with the trendline, else dont take it



3) Taking positions
- look for the trend and 66% of the highest difference in opposite direction of the entire trend is where I place my stop loss
- I am not going to risk more than 2 % on each trade



4) Once in a position

- Make it a trailing stop loss
- Exit only if stop loss hits
- document every trade carefully in journal (with charts) saying what you did and what I should have done

Since the system changed again I will evaluate after 40 trades (or sooner if it seems totally worthless like I did many times already)


(1) how can I quantify this? I looked into this but cant find anything suitable at the moment. For now Ill leave this at my discretion but of course it is visible if a chart goes up or down in a steady fashion, the more it resembles a straight line the better, only need to measure that objectively and put a number on it
 

DrSafari

Established member
590 36
Demo account

Short Hersha Hospitality Trust
840 Shares
Reason of closure: adjusted stop loss got hit in the profit zone

Opening rate: 20.8
Opening time: 3/23/2016 4:40 PM

Close rate: 20.4
Close time: 3/24/2016 3:38 PM

Amount risked: around €180 initially later €300 (trailing)

Net P/L: €‪300.00‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Orange line is price level where it got closed. Chart is a 15 min chart.
HeshaTrustChart.jpg




Personal notes
The curse is broken :p One thing to note is that after a gap (up or down) into your direction its best to close your position, after a gap it usually stabilizes so best to reel in any profits. If the trend seems to continue you can always enter again later (3 days later according to the current system)
 

DrSafari

Established member
590 36
Demo account

Short Ross Stores
360 Shares
Reason of closure: stop loss got hit

Opening rate: 57.36
Opening time: 3/24/2016 7:24 PM

Close rate: 57.88
Close time: 3/28/2016 3:47 PM

Amount risked: around € 172

Net P/L: €‪-172.11‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
RossStoresChart.jpg




Personal notes
Got unlucky that it gapped up the next trading day. **** happens.
 

DrSafari

Established member
590 36
Demo account

Short Williams Partners
150 Shares
Reason of closure: stop loss got hit (stop loss is lower than usual in this case because it seems I made a trivial calculation error. I noticed on the chart that my stop loss was way to wide so I narrowed it to correct levels according to system with the result that I risked less money of course.

Opening rate: 17.41
Opening time: 3/29/2016 4:16 PM

Close rate: 18.22
Close time: 3/29/2016 5:39 PM

Amount risked: around € 108

Net P/L: €‪-108.51‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
WilliamsPartnersChart.jpg




Personal notes
If I did this trade with my real account I would bang my head against the wall. I entered this position around 15 minutes after the USA consumer confidence indicator was published. This number was better than expected which caused my stock to rally (at least that is my intrepretation) . However this wasnt really visible yet after just 15 minutes. Had I waited another hour it would be visible. At first I wanted to do that BUT... nowhere did I define it in my system. So the trade is good (according to the system) but exposed another weakness in the system. Best is to wait at least 1 hour to enter a position after one of the important indicators is published. And obviously only take the trade if the trend doesnt change. That is a rule I will add on to my current system.

Keep in mind the comment about tightening stop loss when in profit zone. I will not change this yet because I want to see if it is profitable in the long run to keep your SL range the same as original (trailing of course)
 

DrSafari

Established member
590 36
Plan Demo Account including my new findings:

1) Deciding whether to trade or not
-before deciding to trade look if any major economic events are up in the current trading day if yes then we DO NOT TRADE unless after 1 hour of occurence
-before deciding to trade: check yahoo finances whether something big is up or not. If it is DO NOT TRADE


2) Find potential trades
- Wait at LEAST 1 hour after trading has opened before taking up a position
- Wait at LEAST 1 hour after the occurence of a major economical event or indicator (1)
- Look at the S&P500 and the stocks in your watchlist. Watch if most of them are in the plus or in the min. Dont go long if in the min and dont go short if in the plus.
- scan american stocks and look for clean charts (up or down determinded in previous point). Clean is a steady rise or decline for at least 3 trading days on a 2 hour chart (2)
- do not include stocks that gapped in those 3 trading days
- do not include stocks that require me to take stop losses wider than 2% of my equity
- the last three bars (2h) should go with the trendline, else dont take it



3) Taking positions
- look for the trend and 66% of the highest difference in opposite direction of the entire trend is where I place my stop loss
- I am not going to risk more than 2 % on each trade



4) Once in a position
- Make it a trailing stop loss
- Exit only if stop loss hits
- document every trade carefully in journal (with charts) saying what you did and what I should have done

Since the system changed again I will evaluate after 40 trades (or sooner if it seems totally worthless like I did many times already)

(1) If this is the case I am allowed to look at the 15min charts to check whether trend continues or not

(2) how can I quantify this? I looked into this but cant find anything suitable at the moment. For now Ill leave this at my discretion but of course it is visible if a chart goes up or down in a steady fashion, the more it resembles a straight line the better, only need to measure that objectively and put a number on it
 

DrSafari

Established member
590 36
Demo account

Long Accenture
100 Shares
Reason of closure: stop loss got hit

Opening rate: 116.13
Opening time: 3/30/2016 5:10 PM

Close rate: 114.53
Close time: 4/1/2016 3:31 PM

Amount risked: around € 140

Net P/L: €‪-142.39‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 1 hour chart for a change. I included the longer term chart at the bottom to show that the trend was in fact up, only its wierd my stop loss was so tight, looks like a calculation error at first sight, although it did not fluctuate THAT much (downwards) it could be possible but it still seems a strange trade looking at the chart.
AccentureOneHourChart.jpg





Personal notes
Very strange trade. I will have to look deeper into it. Im supposed to be looking for clean charts, this isnt very clean... at least on shorter term.Maybe something to add to the plan, making sure that it looks clean on short term too?
 

DrSafari

Established member
590 36
Demo account

Short Aqua America
500 Shares
Reason of closure: adjusted stop loss got hit

Opening rate: 31.54
Opening time: 4/5/2016 7:40 PM

Close rate: 31.61
Close time: 4/7/2016 3:49 PM

Amount risked: around € 122

Net P/L: €‪-32.71‬

Chart
Green arrow is where I opened position and red arrow is where it got closed. Chart is a 15 min chart.
AquaAmericaChart.JPG


Personal notes
My profits were almost times 1 my stop loss but then it started going against me. Another "rule" I could implement is to tighten the stop loss IF I have a certain profit and IF at the end of a trading day. I have touched this topic before but I have not included this yet to see if potential tremendous gains due to not tightening would more than cancel out the profits I dont take or losses I do take. More and more I am starting to think the answer to this is no. Lets just continue a bit more like this to have a good view on this.
 

DrSafari

Established member
590 36
Thus, your stop loss should be set at a point where you think your trade is "wrong" in relation to the time frame you are trading.
Yes, it might have turned around again before your stop was reached but that would have owed more to luck than anything else.
These two quotes got me thinking. Currently in my system I identify a trend. Lets say the trend is downwards and 5 days going on. I will look for the highest difference in price in those 5 days against my position and take 66% of that to determine my stop loss. However in some cases the trend isnt clean and temporarily goes into the other direction, but then continues to go down again. I realise to view this as one trend is wrong. If viewed as one trend the temporarily going in the opposite direction will result in too wide of a stop loss according to my system. Why too wide? Because if you take into account that big of a difference of price going against you, you cant possibly know if its a new trend up or if it will go down again (as it did before but its not part of the trend). Thus I would be relying on luck for that as mentioned in the second quote.

The only thing left to do is to define what deviation from the trend constitutes as a new trend. Which is already mentioned in my trading plan that I should look into that, haha funny how that comes biting me in the ass again :)

...... --> this means some time has passed but I am only posting now :p

After some thinking and testing I am going to use the 10 period weighted moving average to determine this from now on. If it goes against its own trend (for even one period) or it stays the same for 3 consecutive periods then the trend is broken and if the global trend continues this is to be considered a new trend. I took my last trade Aqua America as an example for that.
 

DrSafari

Established member
590 36
Plan Demo Account including new findings:

1) Deciding whether to trade or not
-before deciding to trade look if any major economic events are up in the current trading day if yes then we DO NOT TRADE unless after 1 hour of occurence
-before deciding to trade: check yahoo finances whether something big is up or not. If it is DO NOT TRADE


2) Find potential trades
- Wait at LEAST 1 hour after trading has opened before taking up a position
- Wait at LEAST 1 hour after the occurence of a major economical event or indicator (1)
- Look at the S&P500 and the stocks in your watchlist. Watch if most of them are in the plus or in the min. Dont go long if in the min and dont go short if in the plus.
- scan american stocks and look for clean charts (whether up or down determinded in previous point). Clean is a rising or falling 10 period WMA with no interruptions for at least 3 trading days (2)
- do not include stocks that gapped in those 3 trading days
- do not include stocks that require me to take stop losses wider than 2% of my equity
- the last three bars (2h) should go with the trendline, else dont take it



3) Taking positions
- look for the trend and 66% of the highest difference in opposite direction of the entire trend is where I place my stop loss
- I am not going to risk more than 2 % on each trade



4) Once in a position
- Make it a trailing stop loss
- Exit only if stop loss hits
- document every trade carefully in journal (with charts) saying what you did and what I should have done

Since the system changed again I will evaluate after 40 trades (or sooner if it seems totally worthless like I did many times already)

(1) If this is the case I am allowed to look at the 15min charts to check whether trend continues or not

(2) if the 10 period WMA goes against its own trend (for even one period) or it stays the same for 3 consecutive periods then the trend is broken
 

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