StockFetcher Forums · General Discussion · Trading Strategy<< 1 2 3 4 >>Post Follow-up
snappyfrog
437 posts
msg #157146
Ignore snappyfrog
7/3/2021 11:16:36 PM

push5280,

***
7.) There are only 4 things that you need for a stock to go up that is trend, momentum, volatility and volume.

***

What are the three indicators you like plus volume?

push5280
178 posts
msg #157150
Ignore push5280
7/4/2021 5:11:12 PM

@Cheese

Do you have any existing code examples of

1. how you estimate and set your mental stop loss

2. how you estimate and use Buffett's holy grail (as Minervini called it)
Percentage of winning trades x average gain
divided by
Percentage of losing trades x average loss

3. Do you exit when prices drop below MA(50)?
********************************************************************
I set up a little calculation sheet in an Excel workbook that I use to track my trades. Here's an example...
At the end of each month I go into my trading history and I count the winning trades for the past 12 months. I calculate the avg gain for those trades.
60 trades
10.0% avg. gain


I then do the same for the losing trades.
40 trades
7.0% avg loss

I then Multiply the count x the avg gain.
60*10 = 600

do the same for the losing trades .
40*7 = 280

I then divide the winning trade product by the losing trade product.
600 / 280 = 2.14
Since this is above 2, I would leave my stop loss at 7%


If that number is below 2 I will use "Goal Seek" to adjust the avg. loss% to bring it to 2 .

If you use excel to track your trades I'll be happy to type out a cell diagram for you or if you are comfortable sharing your email I'll send you a workbook with the formula and you can copy / paste. Using "Goal Seek" makes it so simple

Cheese
1,328 posts
msg #157151
Ignore Cheese
7/4/2021 7:13:21 PM

@push5280
Thank you very much for your thoughtful explanation.
I know excel and I'm familiar with Goal Seek.

Cheese
1,328 posts
msg #157152
Ignore Cheese
modified
7/4/2021 7:16:21 PM

@push5280

noob question about
Buffett's holy grail (as Minervini called it)
Percentage of winning trades x average gain
divided by
Percentage of losing trades x average loss

What would you do if that ratio is 1 ? (in practical terms, not number crunching)

I'm asking that question because a few Minervini readers and followers
gave him the feedback that they still wiped out their accounts even
after following his rules. So, I thought I'd ask you as a successful practitioner.

Thanks.



nibor100
849 posts
msg #157160
Ignore nibor100
7/6/2021 12:03:05 AM

@push5280,

1. It seems to me that you have a few unnecessary calcs in your spreadsheet...I believe if you just divide your total 12 month gains by your total 12 month losses you'll get identical results; since dividing a total by a count is what gives you the average, which means multiplying the avg by the count gives you the total you started with.

Is your 7% stop loss a trailing stop?

Thanks,
Ed S.


push5280
178 posts
msg #157169
Ignore push5280
modified
7/6/2021 10:30:27 PM

@Cheese

noob question about
Buffett's holy grail (as Minervini called it)
Percentage of winning trades x average gain
divided by
Percentage of losing trades x average loss

What would you do if that ratio is 1 ? (in practical terms, not number crunching)

I'm asking that question because a few Minervini readers and followers
gave him the feedback that they still wiped out their accounts even
after following his rules. So, I thought I'd ask you as a successful practitioner.
*******************************************************************************************
Cheese, I don't trade Minervini's VCP, I just follow his rules for trading.
As far as "What would you do if that ratio is 1 ? (in practical terms, not number crunching)". Geez a ratio of 1 is breakeven so if they wiped out their accounts the most likely reasons to me are 1.) they didn't use stops or if they were using them they didn't have a stop level that would get them a ratio of two. 2.) I'll bet they were likely leveraged . 3.) They may not have actually had a VCP set up.
I guess there is a number of reasons they would have blown up their accounts. I feel like if they would have been following his 10 rules it likely wouldn't have happened though, to me following his rules would prevent that.

Buffett's holy grail (as Minervini called it)
***************************************************
Oddly I read an interview this weekend with Buffett and he said he doesn't use stops because stops are for traders and he's an investor :)

push5280
178 posts
msg #157170
Ignore push5280
7/6/2021 10:31:54 PM

@miketranz

thanks for the heads up about " "Unknown Market Wizards", I ordered it this weekend and should be here tomorrow. Looking forward to the read.

Cheese
1,328 posts
msg #157171
Ignore Cheese
7/6/2021 10:42:36 PM

Thanks again, push5280
I've learned and re-learned a lot.

push5280
178 posts
msg #157175
Ignore push5280
7/6/2021 11:27:09 PM

@snappyfrog

What are the three indicators you like plus volume?
*****************************************************************
ok here goes...
volume: the only volume piece that I use is in my scan, average volume(63) > 100,000. I honestly don't even have the volume plot on my charts.

volatility: I don't use a volatility indicator either. Volatility comes from the stocks I choose. Stocks between $1-$15 with a float under 10 million. Also as part of my scan I have what I call MyRange which is the 52 week high / 52 week low. I only look at those > 3. Jesse Stein said in his book that stocks that were once runners often run again and I've read and heard that many time since. So... I don't use a volatility indicator per se but get natural volatility from the stocks that my scan spits out...or at least I think I do.

trend & momentum.... These are primarily what I use. I'm a swing trader so I'm basically looking to buy the short term pull back in a trend.

Trend: I use the ema(13) > ema(48) in my scan to find stocks in an uptrend and draw the emas on my chart. That works as my mid-term trend
I also have an indicator that I stole from someone here on SF and I think I modified the parameters ( I'm not sure) and it gives me the very short term trend. when mytrend_8 is 1 or less I start to look to buy.
/* MYTREND 8 code */
set{value1, count(ema(8) > cma(ma(2),7) ,1)}
set{value2, count(cma(ma(2),7) > cma(ma(2),7) 1 day ago,1)}
set{value3, ema(8) - cma(ma(2),7)}
set{value4, count(value3 > 0,1)}
set{value5, value1 + value2}
set{mytrend_8, value5 + value4}

I also plot the rsi(14) and the rsi(5) with moving averages and the rsi(2) on it's own. The rsi(2) is my primary "buy" indicator. I look for formation signals on the rsi(2), divergence between the rsi(2) and the rsi(14). cma(rsi(14),45) > 50 can also give a different look at the trend as does the cma(rsi(5),45) over 50. when the rsi(5) crosses above the cma(rsi(5),10) and the rsi(2) shows a pattern I like thats a buy signal for me.

I try to keep my charts simple and un-cluttered. I also try to keep my trading style simple ( at least simple to me) I know "simple" is quite subjective. The way I trade seems to work for me but may not be right for everyone or anyone else.





push5280
178 posts
msg #157179
Ignore push5280
7/6/2021 11:55:58 PM

@nibor100

@push5280,

1. It seems to me that you have a few unnecessary calcs in your spreadsheet...I believe if you just divide your total 12 month gains by your total 12 month losses you'll get identical results; since dividing a total by a count is what gives you the average, which means multiplying the avg by the count gives you the total you started with.

Is your 7% stop loss a trailing stop?

Thanks,
Ed S.
*****************************************************************************************************
Ed,
Minervini talks a lot about managing your losses in order to improve your returns, specifically you should aim for your gain loss ratio to be minimum 2:1 regardless of your winning percent. If your winning percent is low, like 30% ish he says you should aim for 3:1.
Your math is correct if you're at 50% win rate on your trades (average gain 10% average loss 5%, ratio 2:1) however if your win/loss % are now 40/60 your ratio is now 1.33 : 1. You would have to move your stop loss to 3% assuming that your win/loss ratio stays at 40/60 in order for your gain loss ratio to be 2:1. I don't know how to find that 3% value by dividing only gains/losses without using the number of winning/losing trades in the equation

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