Charting the Stock

Market For Profit
Building client wealth SINCE 1998

 The Chartist trial green

Articles

  • Parent Category: Articles

Trend Following on a Weekly Time Frame

Cover unholy grailsOne of the most popular systems I wrote about in my 2012 book, Unholy Grails, was the Bollinger Band Breakout strategy.

That version used daily bars, but a common question I got was, "How does it perform on weekly data?"

Back then I coded up a weekly version to appease readers, so let's revisit to see how it's stood up over the last 7-years. We'll call it the Weekly BBO.

In layman's terms the rules are:

When the broader market is in an uptrend, look to buy any stock that breaches the upper side of its Bollinger Band. Place an initial stop 20% below and continue to trail that stop 20% behind as price moves higher. However, if the broader market trend turns down, then tighten that trailing stop to 10%. We will also exit if the stock closes below its lower Bollinger Band.

Read more

  • Parent Category: Articles

Have you been doing the maths?

Have you been doing the mathsNew traders rarely focus on maths.

And if they do, it tends to be primarily a focus on the winning percentage of their trades. In fact, if you tell your friends you are a trader, one of the first questions they ask is “What is your winning percentage?”

And if you answered 70 - 80% you’d likely get a fair number of approving nods and pats on the back. Yet if your losses were huge compared to your wins, you could actually be losing money with an 80% win rate.

Read more

  • Parent Category: Articles

Combining Strategies For Comfort

Combining Strategies For ComfortBefore I get into today's article I need to respond to some comments received after last week's Mean Reversion article. One criticism was the system was losing its edge as the equity curve had been flattening over the last few years.

This most likely came about as I used a log scale chart. So for better clarity, here is the linear scale chart.

Read more

  • Parent Category: Articles

Trading Mastermind

trading mastermindYour special topic for today is Trading Psychology.

Your time starts now.

Question: How can you overcome your most debilitating psychological trading barriers?

My Answer: Go out and get another job. We’ve discussed this before. And I don’t mean stop trading. I just mean add some other revenue streams into your bread winning basket. If trading is your only source of income, you are going to be under pressure every month to make money. No matter what the market conditions.

Read more

  • Parent Category: Articles

An Effective Mean Reversion System - Part 2

trading strategyLast week I laid the foundation for mean reversion trading. You may read that article HERE.

I'll build upon that now with a specific set of rules then test the outcome.

In layman's terms the rules are:

When a stock is trending higher look for a heavily oversold point. Once an oversold level is attained, place a buy order below the market for the following day. If that order is filled, await the first higher close then exit the position on the next open.

Read more

  • Parent Category: Articles

Keeping Your Mental Pathways Clear

Mark TwainI love this quote by Mark Twain:

‘I have had many troubles in my life, most of which have never happened ‘

As Traders, and in life in general, it is easy to clog our brains with concerns and worries. We’ve all met people who are constantly worried about things that have yet to occur.

The thing is the human brain can hold millions of thoughts. Yet that doesn’t mean human beings are capable of functioning properly whilst moving back and forth between these thoughts. It’s human nature of course to do this, yet such behaviour will never have us functioning to our full potential as creative beings.

Read more

  • Parent Category: Articles

An Effective Mean Reversion System - Part 1

tradingsystem1The following is an excerpt from the Trading System Mentor Course. Limit seats now available for Q4 2019. Apply HERE.

Mean reversion is the process of prices moving away from the respective average or mean price and then reverting back again, in some instances quite quickly.

Mean reversion is the opposite of momentum.

Momentum relies on the long tails that sustained trends provide and the goal is to ride those trends for as long as possible.

Read more

  • Parent Category: Articles

Acceptance

business acceptanceFor many of us, acceptance is a hard thing to swallow. Especially when things go against us. Yet when it comes to trading, accepting the outcomes of all your trades, not just the good ones, is going to be key to your longevity.

There will always be situations out of our control that are going to see us giving back some profits. Or taking a loss. Yet just as we are happy to give ourselves a pat on the back for our wins, we also need to accept responsibility for our losses. After all it was us that pulled the trigger.

Read more

  • Parent Category: Articles

Revisiting My First Trading System

strategyLet's spin the clock back to 1985.

Trading fell in my lap one day. Randomly. One of those life changing events.

For some background take a listen HERE from the 24 minute mark.

The strategy wasn't mine yet I could see trends and thus profits.

Read more

  • Parent Category: Articles

Affirmations, Attraction, Action

Affirmations Attraction ActionYour brain is a very powerful piece of equipment. Yet it can be both your friend and foe when it comes to trading.

The goal is to not only make the brain our friend, but also our secret weapon.

You want to make brain power part of a daily strategy to improve consistency with your trading results.

You can have the greatest strategy in the world, but you will always be its weakest link.

So how can we lessen the impact of this ‘weakest link’ and turn it into our strongest and most trusted ally?

Read more