Float Analysis ... Turn over & Chanels

The Precision Profit Float Indicator: Powerful Techniques to Exploit Price and Volume

not the greatest book or holy grail but interesting ideas

and I have never seen it offered so cheaply as now

$9.99 :p
 
The key is to discover the character of the instrument....some call these trading stocks....or perhaps contra-trading stocks when considering your post...lol

and leave Mr.Market alone he is huge (besides we need to make money off these folks)

Michael B.


Quote from gms:

From what I understand (that's the caveat) about float analysis, it's the turnover of the amount of shares somewhere numbering the quantity of the float. The presumption is that once the new buyers are are all on board, they become the sellers and in turn sell to the newer buyers until the float has turned over again, and so forth and so on. And so, that by so noting the turnover, one can more accurately ascertain when tops and bottoms are near.

Which sounds great until one considers that not every buyer will sell within the next turnover, nor will those that do sell then sell every share they bought, that some will buy while others short (borrowing the stock) which skews the number, that some will both buy and sell within the turnover itself, that some will die while holding the stock and it won't be released from probate for sale until probate is finalized which could be after the turnover, that demand and supply for the stock will wax and wane, that some neglect to sell when they wanted to sell and others will hold off selling not wanting to either realize their loss or cash in their gain yet, that mrmarket will hold his position until he hits 15% or dies or there is a FA change warranting an exit, and conversely that a bunch of traders will be out this afternoon and back in tomorrow and in and out a few times today, tomorrow, next week and next month.

Now keep track of the float analysis for determining tops and bottoms.
More...
 
I do have the book, and though the concept sounds intriguing, Steve Woods admission that he "knows [float anaylsis will make people money] to be a fact" is based on his own tenfold gain in 16 months, is severely impacted by the caveat he adds, "Note that in that timeframe... the stock market was in a new bull phase, a great time to be in stocks" (The Precision Profit Float Indicator, pg 33). Well, duh.

Secondary to that is his clarification on pg. 3 that in defining a Float Turnover, "we can not say that all the shares in the float have been traded". Now, though we all understand that and the reasons why that is so, that truth is the exact opposite of what a Float Turnover is. So the author goes into other aspects of using this indicator that basically point to realizing a stock is in a basing pattern. Double Duh.

I can look at a chart's basing period and know when I see a breakout without having to count the volume backwards until it gets numerically to the float value, can't I?
 
Float turnover analysis gives insights as to when to exit in stocks where there is a pool or syndicate deliberately ramping it. It would have worked in 1920's US market, I was not there, but I suspect that is why it yielded results in pre 2000 internet stocks, and it works in some stocks in some asian markets. It is a guide as far as I am concerned rather than a standalone system in its own right.
 
I have coded the Acme F system from Professional Stock Trading by Mark Conway and done some <i>preliminary</i> backtesting. Acme F is a Float Channel breakout and pullback strategy.

For the three stocks I tested, AAPL, COH, and GOOG using daily charts over a 2 year time period, the system performed very well on both the short and long side. In fact, it killed the market.

One piece of maintenance you have to do is manually enter the float numbers for each stock you want to cover. Please post if you know a way to automate this part of the process.

I have a thread called Chabah on Automated Trading if you want to read any more about this topic.

http://www.elitetrader.com/vb/showthread.php?threadid=77887

Chabah
 
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