StockFetcher Forums · General Discussion · Stop & Reverse...<< 1 2 3 >>Post Follow-up
TrendSurfer
109 posts
msg #64384
Ignore TrendSurfer
modified
6/26/2008 7:20:07 PM

:::Stop & Reverse:::

A stop that when hit is a signal to close the current position and open an opposite position. A trader holding a long position would sell that position and then go short on the same security.

http://www.proshares.com/funds

DDM - Ultra Long Dow30
DXD - Ultra Short Dow30

Ultra = correspond to twice (200%) the daily performance of the Dow Jones Industrial Average

I believe being able to move back and forth into the broad market swings with confidence is KEY.

To build that confidence your ship needs to be at sea, to get your sea legs, internalize your emotions and such. The strongest way I know to do that is to set sail and learn to correct course when needed.

Cheers

FuriousThug
256 posts
msg #64386
Ignore FuriousThug
6/26/2008 9:31:06 PM

Everywhere you turn, from mutual fund managers to newsletters to general long-held beliefs, you're told that you can't time the market. Well, you can.

Keep in mind, in particular, fund managers have a vested interest in you staying fully invested 100% of the time...it's how they make their money. There are countless arguments they dredge up, such as "if you try to time the market, you might miss the 10 best days of the year." What they'll never say is that you also might miss the 10 worst days of the year...and if you go back and do the research, you'll find that missing those days would be far better than missing the 10 best days...today being a perfect example. Fact is, the more days you're out of the market, the less risk you are actually undertaking.

The reason I bring this up is that "stop and reverse" is basically the simple application of a market timing strategy, whether you're trading/investing short- or long-term.

I've had my 401k invested this year almost solely in the long and short market ETFs, using a mix of the leveraged funds as well. Using a strategy that takes all of ten minutes a week maybe, the account is up 15% on the year...compared to how many minuses in the benchmarks? I laughed a couple of weeks ago when my wife's account rep from Merril called to say "You're up 2% this year, which is great considering the market." 2% - fund management - expense ratio = not up 2%...

The timing strategy I've used is so simple...it's a 21dma. Go long when the index is above the ma; go cash or short when it's below. I would have been happy to have just left it at that, as it works best in a normal ranging market. But early on I realized this market was whipsawing over that ma so I wait a day or two after crossover for confirmation.

Be interested to hear of anyone else's strategies.

FT

cunparis
71 posts
msg #64394
Ignore cunparis
6/27/2008 8:59:45 AM

Backtesting says this doesn't work (37% positive trades with 7% ROI).

If you wait a few days for confirmation then you could end up buying the high of a 1-2 week trip above the MA.



FuriousThug
256 posts
msg #64395
Ignore FuriousThug
6/27/2008 9:05:44 AM

Then don't use it.

TrendSurfer
109 posts
msg #64396
Ignore TrendSurfer
modified
6/27/2008 9:40:38 AM

Backtest??? ;) All-righty then!

I'm not even going to get started again. LOL.
Not sure how anyone could backtest anything without knowing the method of how something is done and accomplished.

Cheers



TrendSurfer
109 posts
msg #64658
Ignore TrendSurfer
modified
7/3/2008 2:43:16 PM

Once again, I will try to elaborate and along with stockfetchers indulgence post another link. This time for the two ETFs charts referenced above. I will leave up for a couple of days. ::: http://www.XXXXXXXXXXX.us/ ::: Just follow the click through, and hit (Ctrl-F5) to reset page if you can't see it.

This may show how stop and reverse may be used accurately several days at a time to capture and anticipate moves with a simple and clean stockfetcher chart. I believe it should be self-explanatory how one may create a method to trade a simple blue line.

Oh, and yes there is a way to do this within an intra-day time frame. One of my favorites, but as I hope you see this can be done by anyone on a daily EOD chart.

As I've posted elsewhere here at SF, you can backtest your way out of a great method and not even know it. That would just be a shame.

Happy and safe 4th all...

ludowillems
90 posts
msg #64703
Ignore ludowillems
7/4/2008 7:08:17 AM

Trendsurfer,
I follow your posts with great intrest and I like especially the elaborate comments.
However, when you wrote in a previous post::
"I believe it should be self-explanatory how one may create a method to trade a simple blue line. "
two things I don't catch: 1. what filter produces the "blue line"? and 2. what does the blue line shows us, how do i read the long and short signal? Many thanks for your comments. Ludo


FuriousThug
256 posts
msg #64706
Ignore FuriousThug
7/4/2008 9:57:59 AM

sigh

TrendSurfer
109 posts
msg #64709
Ignore TrendSurfer
modified
7/4/2008 11:18:40 AM

:::ludo:::

Thanks for your interest, and even more so hopefully your curiosity. It's really no big deal, just the power of keeping things simple. That way, effective indicators and such pop without to many distractions. You can draw that blue line with several measures, so play around with things.

Take a piece of note paper and move it left to right slowly across the charts. Watch the past transitions reveal themselves and how a move one direction brings the next move in the another. As confusing as the markets can be, things somehow always stay the same. This is what I mean about being in time with the broad markets.

Notice I used a stockfetcher chart to demonstrate at the link above. Just my way of 1) showing respect to the forum owner for their product. 2) Letting the readers here know, something exists, you may or may not have been familiar with before. While I have other tools, you can find anything you want to with SF.

I'm a price purist when it comes to trading, all my decisions come from the price action on the charts, including the fear and greed they reveal on a daily basis. I've learned over the years to ALLOW NOTHING to influence me other than that. There are plenty that will disagree, this is just me.

I'm not sure how anyone can run scans, look at hundreds of results at a time, watch a half dozen CNBC shows with just as many and more opinions, screaming heads, read and react to headlines with no understanding of what they really mean, dig their way into fundamentals that are rigged anyway, put a dozen conflicting indicators on a chart, be conflicted as to whether they are a scalper, day-trader, swing-trader, position trader, etc, etc, etc...

And then somehow build the confidence to make a real trade every once in a while???

I believe I may get agreement, real traders have mastered something and they do it extremely well. To each their own, but you must find what works for you. You can accomplish this with an overwhelming curiosity, desire and some hard work. That last part is not what we want to hear is it? Yep, you gotta work it out! Sorry!

If a stock or ETF is on my radar and trends for 6 months, I have probably bought and sold it numerous times. Strong trends can turn, and I'm always taking my profits and reloading. For my trading account, I trade the short term moves in days, sometimes a week or two in better markets, not any longer unless it keeps on ripping.

I also concentrate on winners not diversification (powerful). The zone of time I trade in allows me the freedom to do this. So, if one didn't understand the method I've described, they may argue this point and jump to conclusions.

If you trade like Rip Van Winkle, well you better be diversified (and good luck to you, you'll need it). Even with longer-term core accounts, things have changed. Timing is everything. Do you see how you must know where you are, and what you're doing?

I have found special niches that work for me and have paid my dues. Stop and reverse is always at my back when the trends reveal.

So, I'm hoping your curiosity will get you busy researching! And that you do find the 'true value' with this little niche and many others that will pay you profits for years to come.

FTR in general, I'm not trying to take anyones thunder away in this forum, I'm just sharing. I'm sure your methods work as well for you as mine do for me.



luc1grunt
622 posts
msg #64726
Ignore luc1grunt
7/4/2008 8:05:58 PM

Trend, that is an exceptional post and certainly one of THE most honest in I have seen in months.

I agree 100% in simplicity. I have 3 scans I use for volume, ATR/ADR, and volatility. A few more to keep my brain busy, but too many rules, "what-ifs" etc. I am no coding master so the pursuit of a grail or massive ROI/r-r backtest is not my primary pursuit. Effective and consistent / scalable trading is. :)

I do appreciate the work of others, but they are their systems and I would have a hard time making them work for me as the "art" will allude even the most righteous "turtle".

A couple dividend scans for investments....and that's really about it.

Price / volume.

StockFetcher Forums · General Discussion · Stop & Reverse...<< 1 2 3 >>Post Follow-up

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