StockFetcher Forums · General Discussion · A good system for trending stocks<< >>Post Follow-up
alichambers
48 posts
msg #44079
Ignore alichambers
5/23/2006 6:46:55 AM

Hi,

I've been experimenting with Wilders SAR and DMI for entry points into a trending stock. I've noticed that EOD stocks such as GOOG trade very well with this technique. I haven't any formal data - I've just been making manual observations.

I basically wait for the SAR to change direction, then confirm the direction with the DI lines (DI lengths 4 and 14 work well) - ie. if SAR indicates GO LONG, don't go long if +DI line is below -DI line, and vice-versa.

I use an EOD low trailing stop strategy, with a stop-space % added to knock out some volatility. I'm writing a computer programme to find optimal DMI settings against trailing stops and all stop space percentages. I don't own Tradestation, etc but am pretty handy with Visual Basic - and you can download all price data free from Yahoo to use for testing.

However, how does one find nicely trending stocks such as GOOG to trade? GOOG has moved:

$475 - $350 from Jan - Feb 06
then up to $400 and back
then up to $450 and back again

... ie. it TRENDS well (sorry for shouting).

The DMI/SAR system works really well in trending stocks.

Can anyone suggest a SF scan to look for stocks going up and down and trending nicely like this every month or so. I can then apply my system.

Thanks,
Alex


SiriusII
11 posts
msg #44624
Ignore SiriusII
6/5/2006 3:46:55 PM

Try the +DI(14)crossed above ADX(14) on SF. I use this to help identify trending stocks. I look for those rising above 25 but below 30.




as214
184 posts
msg #44625
Ignore as214
6/5/2006 3:52:55 PM

Honestly if you want to maximize your profits in the market and minimize risk.. Go to FORM4ORACLE.COM, subscribe, and buy when the insiders buy.


EWZuber
1,373 posts
msg #44704
Ignore EWZuber
6/7/2006 2:41:12 AM

Insiders don't always play the market smart. Some are better than others. Also they typically can only buy and sell within certain time windows that may or may not syncronize with technical entries and exits.


markcrisp
187 posts
msg #44744
Ignore markcrisp
6/8/2006 7:14:07 AM

Insider trading isn't such a great indicator.

A great trend follwoing method?

Stocks >$30
Doubled past 6 months

Trade the break outs. Keep the risk low. Cut your losees. Let your profits run.....no doubt this is too boring for many.


nikoschopen
2,824 posts
msg #44766
Ignore nikoschopen
6/8/2006 5:21:05 PM

Perhaps you might be interested in looking at GOOG from another perspective. Here's a link to the screenie of GOOG with annotations:

http://tinyurl.com/grzv2


alichambers
48 posts
msg #44785
Ignore alichambers
6/9/2006 6:26:00 AM

It looks like an interesting system. Have you backtested it on others - what sort of ROI?

I spreadbet in the UK and I've love to trade GOOG. However, it is such a high priced stock that trading it would violate my 5% money management principle - very often the initial stop can be 1000 points below the buy price.

Alex



nikoschopen
2,824 posts
msg #44807
Ignore nikoschopen
6/9/2006 6:31:54 PM

As a former backtesting junkie with a chronic habit of being high-strung on caffeine, I've spent many sleepless nights in my excessive zeal to find that one optimal setting to buy me a ticket to financial freedom. However, you can curve-fit the system until you practically drop dead, and in my threadbare judgment I did just that. I soon realized that there really is no good or bad system. What was once a good system is now a bad system because it failed to keep up with the changing times. But the paradox is that you can have only so many filters under your belt before you bury yourself under their weight. It may be a good thing to keep abreast of the changes but will you constantly change one filter for another as the result of those changes? Lets not forget that not only times and environments change, but our own perceptions of those changes is also subject to change.

I'm still far from reaching my financial freedom and still tweaking those damn systems from time to time, but I'm more content with my trivial pursuit in the matters of money management. I figure that even without a working system, a good money management principle will get you closer to being successful than those without. I suppose the moral of the story is that one needs to learn to adapt or perish. But there's this often overlooked caveat that bites us in our unwary moments: Past performance is no guarantee for future results.

At any rate, I haven't done any extensive backtest of the above system but I did manage to run a simple backtest using AmiBroker and TradeStation some time ago. The results weren't exactly divine but well within the range of my liking. I can't recall the specific details, but I believe the ROI was higher than 40. But then again, past perfomance is no match for future returns.

This system is by no means perfect, but it has served me quite well. For one thing, this is a one-size-fits-all system, namely it works on all time-frame (e.g. 3-, 5-, 15-, 30-, 60-min, and daily charts; I've yet to test it on 1-min interval.) I also found that it work fairly well in both trending and consolidating markets. I'm currently applying this system on S&P E-mini and if I have any complaint it lies more with my impatience than with its effectiveness. Here are the links to the screenies of the S&P chart in various time intervals:

http://tinyurl.com/jcur6 (5- & 15-min intervals)
http://tinyurl.com/ebwen (30- & 60-min intervals)
http://tinyurl.com/ecao2 (Daily interval)


On a final note, I would like to stress the needless fact that what you see is not necessarily what you will get in real life. In hindsight everything look so rosy and perfect. But for various reasons unknown to mere mortals, it never pans out as it supposed to. Hence the above disclaimer "Past performance is no guarantee for future results" is definitely not an exception to the rule.


StockFetcher Forums · General Discussion · A good system for trending stocks<< >>Post Follow-up

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