Jump to content
Sign in to follow this  
notanewmember

Commander T's Diary

Recommended Posts

I came across this news piece. I didn't know Weight Watchers was a publicly listed company on the NYSE. But most regular Joes, wouldn't know what to do with the news.Well it's a trading idea. They are everywhere....

"I see trading ideas....."

 

Movie_i_see_dead_people-769472.jpg

 

 

 

Weight Watchers shares fall 19% on profit warning

 

Weight Watchers celebrated its 50th anniversary earlier this year

Shares in the weight-loss giant Weight Watchers dropped by 19% on Friday after the company warned it was losing customers to free apps and other electronic slimming aids.

http://www.bbc.co.uk...siness-23556277

 

So how does the chart look?

 

WTW.PNG

 

It looks weak - a new two year low made today (well the NYSE still has a few hours to go), below $40. So this could be a sell here at $38 (ideally I want it past under $37), and have a stop back in that range above $40 (maybe $42) a potential pivotal point round number, targeting $34 and below.

 

BUT DO YOUR OWN RESEARCH!

Share this post


Link to post
Share on other sites

I came across this news piece. I didn't know Weight Watchers was a publicly listed company on the NYSE. But most regular Joes, wouldn't know what to do with the news.Well it's a trading idea. They are everywhere....

"I see trading ideas....."

 

Movie_i_see_dead_people-769472.jpg

 

 

 

Weight Watchers shares fall 19% on profit warning

 

Weight Watchers celebrated its 50th anniversary earlier this year

Shares in the weight-loss giant Weight Watchers dropped by 19% on Friday after the company warned it was losing customers to free apps and other electronic slimming aids.

http://www.bbc.co.uk...siness-23556277

 

So how does the chart look?

 

WTW.PNG

 

It looks weak - a new two year low made today (well the NYSE still has a few hours to go), below $40. So this could be a sell here at $38 (ideally I want it past under $37), and have a stop back in that range above $40 (maybe $42) a potential pivotal point round number, targeting $34 and below.

 

BUT DO YOUR OWN RESEARCH!

 

looks like a resonable short trade to me also. I like the volume spike

Share this post


Link to post
Share on other sites

Going out for a walk, I can't see much upside for Weight watchers. It's a bit like the Yellow Pages/Hibu, all over again with their structural decline. Technology marches on. They must adapt or die!

 

 

Edit - the target should be $27 or the risk to reward ratio isn't right.

 

---

 

Nevertheless, there are other ways by which one can determine Pivotal Points. For instance, let us say that a new stock has been listed in the last two or three years and its high was 20, or any other figure, and that such a price was made two or three years ago. If something favourable happens in connection with the company, and the stock starts upward, usually it is a safe play to buy the minute it touches a brand-new high.

 

A stock may be brought out at 50, 60, or 70 a share, sell off 20 points or so, and then hold between the high and low for a year or two. Then if it ever sells below the previous low, that stock is likely to be in for a tremendous drop. Why? Because something must have gone wrong with the affairs of the company. P53 and 54 of How to Trade In Stocks by Jesse Livermore.

Share this post


Link to post
Share on other sites

and then hold between the high and low for a year or two. Then if it ever sells below the previous low, that stock is likely to be in for a tremendous drop. Why? Because something must have gone wrong with the affairs of the company. P53 and 54 of How to Trade In Stocks by Jesse Livermore.

 

Greggs, a nationwide chain sandwich bar and bakery, has exhibited a similar new 2 yr low not so long ago in May where it couldn't hold the 440 level. Something to do with the "weather" and "inflation". I've zoomed the chart out to a 3 year view, and using daily bars, as the 8% drop is happening now (and not showing on the weekly bars that I normally have on the chart setup).

 

greggs.PNG

^A nice capture from 440, to 420 possibly, but not beyond 400 (you might have been stopped out as it rallied back up). Perhaps it may break 400p and that would be a new 2yr low and new signal.

Share this post


Link to post
Share on other sites

1086.PNG

 

I think this is my best score, using a completely simple non emotional mechanical system. I don't think this game was designed with applying your own system but any who it is fun to practice it. You have to click the mouse fast 10x to get in at your price if you want to be "all in" and click 10x to sell out again. The simple system (you can't get any simpler) is buying on a new high, or selling on a new low, with a stop just beneath your entry. The stop is "raised" when it crosses a pivotal point - i.e. a round number such as 200, 250, 300 etc.

 

 

1st Trade - Sell at 270 and below, new all time low, Stop 320

 

Stop raised to the 250 area - Trigger is 240 or below

 

-----

 

2nd Trade - Buy 340 and above, new all time high. Stop 320 (nothing to do with the first trade)

 

Stop raised to the 400 area - Trigger is 380 or below

 

 

-----

 

I guess one could use variations on that system to generate more signals, instead of all time highs and lows, one could use new highs and new lows for for every 2 weeks.

 

I felt why not try this in the Forex world - it might work. This is happening right now this morning. A buy signal would be a 2hr new high, and a 2 hr new low. This is a demo account.

 

FX+Trend+Following+Mechanical+System.PNG

A 2hr new high was made at around 6:30am, have a stop just beneath a pivotal point round number 1.533. The chart providers have kindly drawn in the grid lines - how convenient. Long initiated at anything above 1.53330. We actually got filled "at the market" (no limit order here) 1.53344.

 

 

FX+Trend+Following+Mechanical+System2.PNG

7AM Next pivotal point crossed at 1.534, stop raised to next level just beneath 1.534. One could pyramid here.

 

FX+Trend+Following+Mechanical+System3.PNG

7:15AM We haven't closed above the next pivotal point of 1.535, so we don't raise our stop. We must wait.

Share this post


Link to post
Share on other sites

FX+Trend+Following+Mechanical+System4.PNG

7:35AM we have been stopped out with a nice little profit after this 5minute close. What next? Maybe wait until another 2hr high/low close is made. We'd have to wait 2 hours. Maybe look at another currency pair.

Share this post


Link to post
Share on other sites

FX+Trend+Following+Mechanical+System5.PNG

8:22AM We got a new 2hr low below the round number 1.532. Go short below 1.3270! Stop at 1.53220. We look for a 5 minute close above 1.55220 to be stopped out.

 

FX+Trend+Following+Mechanical+System6.PNG

8:36AM Next round number crossed at 1.531. Raise stop to 1.53120. Pyramid long at 1.53070 and below. Trade is still live right now. Beginners luck?

Share this post


Link to post
Share on other sites

^All we are using is a basic mechanical system - if we're short we reverse the numbers around.

 

LONG Potential Pivotal Point Levels.

 

Let us say an instrument is trading between 76 and 54 for some time, and it makes a new high past,

 

80 - pyramid long at 83 and above, stop 78 and below

 

90 - pyramid long at 93 and above, stop 88 and below

 

100 - pyramid long at 103 and above, stop 98 and below

 

etc....

 

SHORT Potential Pivotal Point Levels.

 

100 - pyramid short at 97 and below, stop 102 and above

 

90 - pyramid short at 87 and below, stop 92 and above

 

80 - pyramid short at 77 and below, stop 82 and above

 

etc....

Share this post


Link to post
Share on other sites

FX+Trend+Following+Mechanical+System8.PNG

10:33AM I was about to shut the computer and do something else as I was getting tired staring at the screen, until we got another sell signal A New 2hr low was made at 1.529 level, (enter at 1.52870 and below) and shortly after we had a spike down! I quickly took profits - some £800! Look how the grid is now drawn automatically at wider intervals indicating increased volatility - 1.524, 1.528, 1.532, as opposed to 1.524, 1.525, 1.526.

 

I am toying with the idea of recording day trading on the demo account (I don't normally do it, but I have a week off this week), and seeing if anyone would be interested in following, although it is very mentally tiring sitting there watching the computer, and nothing may happen after 4 hours. Here is my first video on Youtube! It was done with CamStudio (free).

http://youtu.be/OpYoQv4nGEQ

Share this post


Link to post
Share on other sites

I was finally stopped out with a stonking profit - who would have known such a super trend would happen today. The volatility went up again and the grid got bigger once more. However we still use the same stop. I have drawn in the line that it must close under. We now wait for a new 2hr high (1.550) or 2hr low. But in this case I have had enough and going to do something else.

 

http://youtu.be/nRcXBcxrHkM

 

Here is the trade plan used;

 

LONG TRADE PLANS

 

LONG STOP

 

LEVEL ***1.545*** L@1.54530 S@1.54480 <

 

***1.540*** L@ 1.54030 S@1.53980

 

***1.536*** L@ 1.53630 S@1.53580

 

***1.532*** L@ 1.53230 S@1.53180

 

***1.531*** L@ 1.53130 S@1.53080

 

***1.530*** L@ 1.53030 S@1.53280

 

***1.529*** L@ 1.52930 S@1.52880

 

 

 

SHORT TRADE PLANS

 

SHORT STOP

***1.531*** Sh@ 1.53070 S@1.53120

 

***1.530*** Sh@ 1.52970 S@1.53020

 

***1.529*** Sh@ 1.52870 S@1.52920

 

***1.528*** Sh@ 1.52780 s@1.52820

Share this post


Link to post
Share on other sites

Continuing on from the videos above, the afternoon session of GBP/USD. It was a boring non-trending session. I used the same mechanical system as this morning. The US markets were open, but the UK was closing down. The GBP/USD pair had already moved some 1% in the morning, which is a fair move.

Share this post


Link to post
Share on other sites

This was taken this morning, and my best video yet (I found the pause button and can provide commentary using a notepad). No big trends yet so just breaking even - yesterday I think was more of an exception rather than the rule. I think that is the way to play it, just try and break even, until we are around long enough to be in a big move "that pays for them all" and then some. We're using exactly the same mechanical system as yesterday.

 

http://youtu.be/WaU1eXvlGn4

^A small profit, but then cancelled out by a false breakout (not shown in this video). We are waiting for a big trend.

 

I think this is what happens in a cycle;

 

1 Non trending / Testing Resistance or Support

2 Whip saws / Small trends / False Breakouts <------ what GBP/USD is in now.

3 Big trends, High Volatility

 

And then the cycle repeats again back to non-trending

Share this post


Link to post
Share on other sites

I don't think watching the screen is a very productive use of my time (as I might have guessed). Waiting for a trend to form in quiet markets is very exhausting, although it can be exciting when action happens. Let us say 1 out of 5 days there is action, so that is 4 days of sitting around. Not so good! It is easier to use daily and weekly close prices and trade that way using equities.

 

The trick to the lessons of this week is that, If one has time, they can probe [with small positions] the market watching the screen, and pyramid on their positions on round numbers as the gains get greater step by step.

 

http://www.youtube.com/watch?v=DLdau9R9dv0

Share this post


Link to post
Share on other sites

Checking back yesterday, the moment I left the house, a decent breakout happened. I refuse to trade on the go, and this will remain as "entertainment". One has to find the pace of the market suited to their style of trading.

 

breakout.PNG

Share this post


Link to post
Share on other sites

The AIM All share index (Smaller companies and penny shares) has shown some life this week after the deregulation:

 

aim+all+share.PNG

^Look at the gap up. It needs to beat the 800 level in the next 3-6 months, and I will consider moving significant funds into this area.

 

The small cap portfolio (all selected because of 2 year high breakouts) is showing a nice 7% gain inside of 8 weeks. And the penny shares (chosen at random), show mixed results:

 

Smallcaps.PNG

 

penny+shares.PNG

Share this post


Link to post
Share on other sites

Weight Watchers shares fall 19% on profit warning

 

Weight Watchers celebrated its 50th anniversary earlier this year

Shares in the weight-loss giant Weight Watchers dropped by 19% on Friday after the company warned it was losing customers to free apps and other electronic slimming aids.

http://www.bbc.co.uk...siness-23556277

 

So how does the chart look?

 

WTW.PNG

 

It looks weak - a new two year low made today (well the NYSE still has a few hours to go), below $40. So this could be a sell here at $38 (ideally I want it past under $37), and have a stop back in that range above $40 (maybe $42) a potential pivotal point round number, targeting $27 and below.

 

BUT DO YOUR OWN RESEARCH!

 

Weekly close at $37.04

 

---

 

These are the free Apps. Take a look, I'm going to give MyfitnessPal a go - it looks impressive !

 

http://www.techradar...android-1161222

Share this post


Link to post
Share on other sites

Illumin+L1.PNG

 

Illumin+L2.PNG

Illumin+L3.PNG

Illumin+S1.PNG

Smallcaps.PNG

^These portfolios are updated daily (nearly) after the market close on my blog.

 

An Update and time for reflection, It has been nearly 10 months since I started these portfolios. The first trade was in 8th October 2012 in portfolio 1.

 

So far as a snapshot:

 

Long Portfolio 1; 26 trades = 15.82263% Average gain

Long Portfolio 2 ;26 trades = 2.76709% Average gain

Long Portfolio 3; 8 trades = 2.43277% Average gain

Short Portfolio 1;17 trades = 4.60367% Average gain

Smallcap Long Portfolio; 19 trades = 6.90551% Average gain

 

Total Trades = 96

 

Total Average gain = 32.53167% / 5 portfolios;

 

= 6.506334% gain in 10 months / 10 multiplied by 12 = 7.80% to 2dp annualized return.

 

Assuming this performance keeps up. Don't forget stamp duty, commissions.

 

Please let me know if I have calculated anything wrong - I am only human.

 

Some way to beat these guys;

 

60% for 16 yrs. - Ed Seykota

29% for 37 yrs. – George Soros

21% for 40 yrs. – Warren Buffett

30 % for 18yrs. - Steve Cohen

29% for 18 yrs. – Eddie Lampert

29% for 18 yrs. – Peter Lynch

24% for 13 yrs. – Jim Cramer

15% for 20 yrs. – Benjamin Graham

 

What have I learned? I did not look at the Barometer enough, to decide how much to devote to being long or short. There have been a string of shorts that have reversed when the overall market (SP500, FTSE ALL SHARE) trend was still up - it was just going through a correction. Stick to quality trades, not quantity and pyramid on them - this I have not done enough. Don't short on corrections (in uptrends) or go long rallies (in downtrends).

 

Maybe on my main LONG and SHORT portfolios, not including small caps, I should limit to 5 probing longs (no limit to pyramiding on winners), and 2 probing shorts when the market trend is up. And 5 probing shorts (no limit to pyramiding on winners), and 2 probing longs when when the market trend is down. When the market is mixed or neutral, then no new probing longs or shorts, only pyramiding is allowed.

 

PROBE -> PYRAMID -> PYRAMID ..... -> STOP

 

Additionally looking around, other trend following funds* have had a bad summer. I wasn't alone when nearly all my longs were stopped out in June. The lessons learned and more at this page of this diary. 1st rule of trading - don't lose money, phew!

 

----

 

*Quants struggle through Summer Sell off

AUGUST 2013

 

Quant funds struggle through summer sell-off Hedge funds that use sophisticated computer systems rather than human judgement to make investment decisions have had a rather torrid summer. An abrupt sell-off across equities, bonds and commodities after official comments that the Fed would look to taper down the asset purchases saw many automated strategies post negative returns.

http://www.euromoney...r-sell-off.html

 

Turning market hits "trend-following" quant funds

JUNE 2013

 

(Reuters) - The global equity pullback over the last month hit "trend-following" quantitative funds the hardest, but the strategy could remain the most profitable in the longer run, delegates at a leading industry event said on Wednesday.

 

http://uk.reuters.co...E95Q00Z20130627

 

---

 

In some ways I am disappointed in not achieving double digit gains. But I take comfort in the real world the professionals had a tough time too. Looking to the future, there is much to look forward to as the market never stays the same for long. Hot money is coming into speculative shares, the like I have not witnessed since 2004 in the AIM shares. Examples are LSE:PHE which increased by 6x in one day, and LSE:ATUK nearly doubling.

 

phe.PNG

 

atuk.PNG

 

It is impossible to catch these moves or spikes unless one is at the computer all day, looking for 10% moves, and then nestling into them, and riding them raising your stop as you go.

 

penny+shares.PNG

^Penny shares saw some life.

Share this post


Link to post
Share on other sites

 

An Update and time for reflection, It has been nearly 10 months since I started these portfolios. The first trade was in 8th October 2012 in portfolio 1.

 

So far as a snapshot:

 

Long Portfolio 1; 26 trades = 15.82263% Average gain

Long Portfolio 2 ;26 trades = 2.76709% Average gain

Long Portfolio 3; 8 trades = 2.43277% Average gain

Short Portfolio 1;17 trades = 4.60367% Average gain

Smallcap Long Portfolio; 19 trades = 6.90551% Average gain

 

Total Trades = 96

 

Total Average gain = 32.53167% / 5 portfolios;

 

= 6.506334% gain in 10 months / 10 multiplied by 12 = 7.80% to 2dp annualized return.

 

Assuming this performance keeps up. Don't forget stamp duty, commissions.

 

 

The FTSE ALL-Share index was about 3,100pts in October 2012, and it now sits at 3,500pts a

 

(400/3100)*100 = 12.9% gain. A under performance on the benchmark. Maybe it is easier to trade the index!

Share this post


Link to post
Share on other sites

Very good and honest appraisal, NANM. I'm hugely impressed at your application, and I'm sure that you are laying the foundation for being a successful trader - define "successful" however you want.

 

Tell us a bit more about your system -

 

Do you look at commodities, FX and other instruments?

Do you keep your bet sizes constant, or vary them?

What are your money management rules?

Do you use stops?

Share this post


Link to post
Share on other sites

Thank you, for posting. Please ask any questions! I don't think millions of people read this board, so if I give some of it away its not going to affect my trades. Although I do block the stops from view just in case.

 

---

 

There are people selling trend following systems out there - they are basically dressed up Donchian channel systems - the father of mechanical trading.

 

My system has developed over time. It is a trend following system that started out from a Donchian channel system. If a price closes at a new 4 week high, that is buy, and if it closes at a 4 week low that is a sell. Nearly all trend following systems follow that. If one wants to visit the very first page of this diary that is how it started.

 

On #25 there is a picture of how it is set up on Bigcharts

 

bigq.gif

 

They don't call it Donchian channels - they call it a Price channel. The blue lines indicate it - (20) in the legend means 20 days which is a 4week price channel. The charts are set up as weekly bars. Weekly prices are better for filtering out noise, daily bars can throw your system out if it is volatile. Here in the chart, the weekly close is outside the blue channel - this is a new 4 weekly high - a buy signal!

 

I strongly recommend looking at different systems and trying them out to see if they fit your personality of trading. It may be a weekly timescale, or a more exciting daily timescale.

 

The systems I think everyone should look at are

 

The Donchian Channel System - here is an example using CEY;

WEEKLY%2BTRADING%2BRULES.jpg

 

^I found too many false signals with a 4week break out, 2yr breakouts work better(see the Weinstein and Livermore systems next)

 

The Way of the Turtle book by Curtis Faith is where I learned about the Donchian Channel System there.

 

The Stan Weinstein Trend Following System; There are two systems in there- The Investors Method, and The Traders Method. You need to know how to set up the charts - the book was written in the 80s. I had to go back in time on Bigcharts, find a company that existed back then, and today, go forward in time to ensure the charts today matched his set up to be sure I was doing it correctly - weekly charts with a 30SMA is equivalent to his 150SMA moving averages.

 

The Livermore Pivotal Point System - This is collection of information I have used to build up a picture of what he did. He was a trend follower, not a day trader. He made his money during crashes when the market is fast. He killed himself in 1940 - the market was dead, and so his passion for trading too, I believe. There is no "definitive book"!

 

Both these systems work in leading stocks, in the leading groups. It will not work on an obscure mining company breaking out from a 5p to 8p trading range to 12p whilst the CRB is at the lows and only 50,000 shares were traded.

 

I use a mix of Weinstein traders method and Livermore pivotal points* - this is all written down in an algorithm on a Cork notice board, - the whiteboard is gone now. I do use stops - not stop orders. I use daily close prices, and put the order in the next morning if it is triggered. Ed Seykota uses daily close prices - if he does it, so can I. I am pondering whether to make the system less aggressive, so that the trend is less likely to be stopped out, but the draw downs will be bigger - if anyone knows about Weinstein, the Traders method and the Investors method sit precisely at opposite ends of that spectrum, but in the book he doesn't even know which is better in the long run.

 

*I want to know that if I had to trade without all the bells and whistles of RSI, Moving averages, etc, I can do so just on price action. This is very important to me.

 

I can't day trade Forex, that I know, but I always try different systems on the demo account (like a 2hour breakout) if I have a week off to see what happens. See the thread up a bit. I can't see trend following working too well in Forex - stick to equities and commodities. I know that Trend following Quant funds had a bad summer - I know I am not far from what they are doing. Anton Kreil says that volatility is key to profits - historically equities are more volatile than Forex - so I can comfortably leave Forex well alone. There is nothing of interest in commodities right now - they need to make breakouts. Contango will sap the patience of any bottom pickers - namely the Natural Gas ETF!

 

Devise a system, that throws up candidates to buy. You can do a top down approach - look at the leading groups, and then leading shares. Then a bottom up approach -> Use a stock screen to look at big movers, new 52 week highs, etc. Then look at a sister company to see if the action is similar. If it is obscure like green energy, there will be no "group" action. Not every candidate will be a buy, but at least you will be getting leads from your own work, and not from Tips.

 

Money management

Put on a bet size that you are comfortable with. If your trade plan says buy at 63p, Stop 58p. That is 5p loss (minimum) per share. If was going to put on a bet of 1000 shares, that is a potential loss of £50 maybe up to £75 including fees and slippage. That I can sleep with. Ed Seykota does not risk more than 5% in one trade. Some of the portfolio constituents (most really) I have not bought, a lot of them are paper trades, I like to see what would happen if that trade was put on using the same system. Mark Douglas recommends we paper trade so we can see where we ought to be. I keep bet sizes pretty constant - I am not a big player. A small player with big aspirations... one day!

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this  

×