Oct

My Stock Trading Activities Thus Far - October Recap

Written by Neil Galloway

Another recap of what I was doing in October on my trading adventures. I had written a September Recap previously. FYI, I have gotten more involved in the past and this is just my latest attempt. I find this stuff really interesting, so it is easy to put an hour into it here and there.

Super Trader - Van Tharp

I read this book next. It has a number of short chapters about a variety of topics for people wanting to trade actively, techniques, controlling emotions, creating a plan, etc. Not a great book to start with, but a nice easy read if you already have some good background knowledge.

The Complete Trading For A Living - Elder

Another read recommended by someone. Quite interesting and discusses a lot of different strategies in depth. He also proposes his own strategies. Worth a read and you will find it quick to read if you already have read similar books first (like Van Tharp's).

Continued Paper Trading

Same as last month. Used a few techniques and the TradeScores website. Decided I will publish my results. You can read more about it my Paper Trading Results, which also has a link to my spreadsheet where I kept track of them. If you care to try and decipher what I did...haha.

Interesting profit/loss behaviour at this point too. Because you get stopped out of bad trades earlier, I had losses for the first while in terms of actual closed out trades. Now I'm left with my winners which are slowly getting stopped out as I've adjusted the stops higher, so the P&L is starting to get back to even and my spreadsheet doesn't show it, but the increased stops are locking in quite a bit of the "fake" profit.

All trades in here were done using the "Basic Long" and "Basic Short" market scans available for free from StockScores website (basically just a way to filter down some stocks to ones that might be of interest to you...you still have to do your own analysis after that point).

Overall, the markets were stronger in September and October for what I was trading. So I do believe my performance was skewed a bit as I rode the general market.

Wrote Down My Plan

Created documents on Google Documents for the following things:

Trading Objectives - What do I really want out of this and what do I think is realistic in terms of risk, time I can allot (I do work), and other criteria.
Self Assessment - What are my strengths and weaknesses and how can I leverage them for the better or reduce their impact if they are negative.
Strategy #1 - Detailed description of my system to find stocks in a bullish trend and the criteria they need to pass to be trade-worthy.
Strategy #2 - Detailed description of my system to find stocks in a bearish trend and the criteria they need to pass to be trade-worthy.
Spreadsheet for tracking the performance of my "real money" trades and calculating the statistics on them as a whole.

Lower Commissions Trading Account

Opened a trading account with Disnat and transferred over my existing self-directed portfolio. There is a promotion to receive materials from Stockscores, plus there platform is a little more full-featured with very cheap commissions.

Membership at StockScores

Got "Pro" access to StockScores. Reviewed strategies and watched all the "Advanced" videos and a few of the "Pro" strategy videos. Received the book in the mail too, which has a bit more depth and is just easier to read in book format too. A lot of it is similar to the book "Trade Your Way to Financial Freedom", but it is a bit simpler so is a good refresher. The value in Pro membership are the more detailed 'market scans' you can use on their site to find stocks trading in an unusual way that may indicate an opportunity.

I've gotten through 1/3rd of the printed book, so still have some time to spend there.

Started Trading Again

Did my first "real money" trades using either of my two strategies.

Trading Journal

Created a binder to serve as a "journal" that contains the following:

Objectives
Strategies
Instructions on how the journal works.
Two page layouts of each trade. First page (left hand side) is chart with lines drawn on it and basic information about why I did the trade. Second page is the chart on exit with analysis and final metrics. Google Documents is a great way to do this as you can write everything in there (even put the chart images) and just print off the pages for the binder as needed.
Lessons I've learned at various points and changes I will make to my strategy.

Helpful Software

Installed SnagIt. A great tool to take a screenshot of a chart and then mark it up with areas, lines, and some text. I use these in my journal entries.

Mentorship

Email conversations with the StockScores group. They will answer educational type questions, which has been helpful.

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Category: Investing

Original Post: Sunday, October 31st, 2010

7 Comments

Wes Says:
2010-10-31 13:22:21
Another evaluation criteria you may want to examine when backtesting your results is minimizing max-drawdown, and consecutive losing trades. If you maintain a positive expectancy 95% of a decade, and then have a 80% drawdown over 40 consecutive losing trades in a row, you may not be following a good strategy.

Also you may want to look at Finviz elite. (http://finviz.com/). Even the public/free screener at Finviz is amazing.

Neil Galloway Says:
2010-10-31 17:40:31
I have looked at back testing somewhat. How do you really do this effectively? I understand if you use simple criteria like "buy on a 15 day high", but using chart analysis this is difficult. Even testing exit strategies using this method is difficult as I use a couple different ones (break in trend line, falling tops, or even bursting bubble if the stock was going a bit crazy).

Also..the 40 losing trades, in a row. I assume you see that happening while executing the strategy?

pandora necklaces Says:
2011-07-03 20:56:02
Also you may want to look at Finviz elite. (http://finviz.com/). Even the public/free screener at Finviz is amazing.

pandoras jewelry Says:
2011-07-03 21:11:45
Another evaluation criteria you may want to examine when backtesting your results is minimizing max-drawdown, and consecutive losing trades. If you maintain a positive expectancy 95% of a decade, and then have a 80% drawdown over 40 consecutive losing trades in a row, you may not be following a good strategy.

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