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Registered User
Joined: 12/18/2004
Posts: 9
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I read Sir Welcome Back's report in yesterday's Worden Note with interest because I also started paper trading Sir 9-Periods system to test it prospectively. My notes aren't nearly as detailed as Sir Welcome Back's but I can report nearly identical (a little lower, nearer 4%) results for the same time period Sir Welcome used, when I adhered to Sir 9-Periods rules.
I planned (plan) to use this system, if it checked out, in one of my roll-over IRA accounts so the accounting will be easier for me each tax season.That particular account is of a limited size so in my test I would set up to buy only up to 10 stocks (or less if the scan generated less candidates) each day. I wanted to trade it like I was going to do in the future. Using the 2% MOS for the limit order, I would often buy fewer than 10 stocks. It took me quite a while to build up the portfolio to 100 stocks, and the returns were volatile and initially pretty bad. By sale day however (Day 10 and often Day 19) I had more winners than losers.
2 things I noticed in retrospect, the first being no real surprise: Comparing my selected stocks' overall returns to the returns of the total list the 9-Periods scan returned over that period, the bigger (original) list had a better returns. Some of the stocks I chose using my own chart reading, and with the goal to diversify and also to not rebuy the same stock later in the period, did worse overall. I missed a few "big" winners too.
The second observation I made is that the original 18 watchlists I had compiled since March 10th (2 sets of 9 periods) consolidated into one just to watch, (composed of 100 stocks, coincidently) currently shows 83 gainers, 17 losers, for an annualized gain of 82.04% as of April 16th close. Many of those stocks would have been sold on day 10 or day 19 and maybe the gain would have been missed. That point is why I like Sir Welcome Back's modification about a trailing stop loss. I'm going to papertrade his other two ideas (using an EasyScan to generate the list to scan using Sir 9-Period's Percent True scan, and then cherry-picking the results using LR) to see if the returns improve.
As a final note, I should mention that I've been using the platform at www.foliofn.com to trade this method with real money. For those of us without huge accounts you can buy very small quantities of stocks and the fee to make a purchase using a limit order is only $3. If you're willing to sell at the market using a window trade (10 am or 3pm) you pay no additional fee over your annual fee. It's been working very well for me.
Rich
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Registered User
Joined: 2/5/2006
Posts: 1,148
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excuse me for being skeptical, but i look at systems like this, i wonder if it isn't a little like sitting at a blackjack table. it appears to me that the system might work well as long as were in a bull market, but not as well in bear or trendless markets.
when i look for buy candidates, i ilke use the tools of technical anaysis, and look for stocks with reversal or continuation patterns, favorable technicals, obvious price targets, and do a market and sector analysis as well. i feel this strategy has a much better chance of working regardless of the market environment.
just my 2 cents. i'd be interested in hearing some other opinions.
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Registered User
Joined: 12/31/2005
Posts: 2,499
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QUOTE (DocRich)
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Some of the stocks I chose using my own chart reading, and with the goal to diversify and also to not rebuy the same stock later in the period, did worse overall.
I missed a few "big" winners too.
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That point is why I like Sir Welcome Back's modification about a trailing stop loss.
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Rich
A couple points.
See http://worden.com/training/default.aspx?g=posts&t=30042 for previous discussion. Points of interest in the posts:
1. Using AVGC34/C as a tiebreaker for selecting from the available trades is a valid approach to pruning the selections.
2. A stoploss just captures the loss and limits overall performance. The sum of those trades that avoid additions losses does not exceed the gains of those that would recover during remaining days of the trade without the stop.
Also looking at the ones that got away can sometimes be counter-productive. A downer. Keep the trades you made in mind and avoid the corrosive effect of the ones that got away. The characteristic that created the "big winners" may not be detectable.
Fianlly, this is a statistical strategy. The measure of this strategy becomes apparent after 100's of trades. Any random sample of the setups would provide a measure of the merit. At this point 2 weeks is too small a sample.
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