Quote from SK0:
Hi Jack,
This is regarding PVT trading and practising annotation on daily stock charts as you suggested to me. Sorry to others if it is OT.
How do you cull quality stocks and narrow them down to a short hotlist in global markets where no providers give EPS and RS ranking? I assume you have not dropped them yet. What criterion you would recommend?
I believe that it is beneficial to manually annotate five cycles with >20% returns within the last six months for each stock in the hotlist and then rank them by % change in money velocity per day.
For global markets, the one-pager unusual volume correlation table is not relevant. Would you suggest one should follow your classic way to purchase a stock in the hotlist when its DU volume is reached in the first two hours and exit when estimated peak volume is hit?
Also, how would you use trailing stop for people who prefer to monitor on EOD basis?
Thanks in advance.
The current mix of Q's allows us all to focus on becoming successful in any market anywhere and on any fractal if and when sufficient liquidity exists for that market.
Bcoming successful has two themes: learning and its result, themental differentiation deployed in ucsonscious competence.
Not all markets are coverd by IBD and its RS and EPS. If you read WJ O'N's bio (page 173 of "24 Essential Lessons for Investment Success"), you find he arrived on the scene (1964) well after his heros did and when they made their contributions. He refined the work of those who preceded him and makes a supporting contribution to the world's sectors of the financial industry. Markets now covered by IBD are all over the globe and you can do what WJO'N did before he provided his srevices to the US markets. Darvas, and everyone else was in this boat in the early and mid '50's and they succeeded by using a QA sort of the availalble stocks.
The IAS can be applied anywhere just as the EPS and RS analysis can be applied anywhere. The criteria is Universal. The Universe comes from the IAS and the criterion of 5, 20% cycles in 6 months using instruments in the float and volume ranges with ownership considerations. These volume aspects set up the equivalent of a band pass filter, and as a consequence the instrumnent performance in a market context has a set of characterisitics. These have been verified by testing using a sample that is about 400,000 events. No changes in the characterisitics were made as a consequence of the test. what this means is that the characterisitcs were determined correctly and the vrification is an excellent corroboration matter. All of this foalls into the realm of science.
The catenaries of individual stocks come from their fitting into the Universe criterion. This is a cart and horse consideration and in this case it is bilateral. Do not use this advantage if you cannot reason through its validity.
Trader666 proved conclusively that using a lousy Universe and lousy timing will yield NEUTRAL statistically insignificant resoults. It is definintely MY FAULT that he could not get any results. He got no results and a person either recognizes his failure to get results or not. If a person follows Trader666 down the path of ignorance, it must be MY FAULT and those persons Can be blameless for their ignorance and irrational ways.
WJO'N started with 500 bucks and in 26 months increased his capital by 20 fold. WJO'N used QA and a rotine for trading stocks similar to PVT. Davas used QA and "box" trading o achieve the same. Trader666 messed up and he, blames me.
If you want to persis and belive the catenaries do not work, then do not use the Unusual Volume trading rule one pager on stocks that fit the Universe criterion. Those who practice PVT trading use it sucessfully on the stocks in their Universes as determined by QA criterion for Universe members. this is not depenent on EPS and RS. EPS and RS are very very useful for sorting stocks and many many methods of trading use the bsis of the EPS and RS as contributing facets for making money.
As part of the IBD MeetUp, vidoes and transcripts were made. Also additional canned documentation served as an adjunct to those meetings. One such document was an analysis of 12 different methods of using stops for protecting trading in PVT. This document had tabular comparisons, examples of each method and web references to full explanations of theapplication of each method.
The lower half of the IAS is devted to the method I recommend and the method is fully articulated in writing and in illustrations. A feature of the approach is to sample data and use an averaging techniques to assure success. In ET I have posted the pragmatic usage, IN ADVANCE OF ENTRY, all illustrated. This was used by the contributor of a chart, oft used here as an example of failure, to exit at a profit by using such protection.
As a general practice, there are inherent difficulties in proving something doesn't work. Using the null hypotesis in science to do proffs is not the same as proving something doesn't work. Proving something doesn't work fits into the "stupid" category. In trading the bar for entry is pretty low and it is possible a lot of stupid people get involved and they do stupid things. Trader28 and trader666 and traderzones are profound example of this mental incapacity called stupidity. They get to be identified with the part of trading that is the stupid part as a consequence of their personal demonstrations.
I will address how learning deals with knowing that you know about "correctness" next. Ignorance is a logical state for anyone browsing before considering learning. Once learning gets under way, avoiding stupidity is one of the concerns.