Ok, thanks for that lesson. Not sure you know enough about fundamentals given your ta background. In any case, I trade via mosaic theory, which is not easy to do from home (or even with a pod).
If you are a day trader with a persistent edge, are you a millionaire yet?
- Thread starter Blitzjoker
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I have lots of respect for you but this one has taken me by surprise.
All the years I've traded stocks which is considerable, just trading via charts is not only hard work, low win rate but also huge number of negative surprises, to me it's a very high risk method.
My man.
It truly takes guts and patience to let our profits run until the end, all my respect.
I've found it low risk. If a stock hits my stop I'm out. I'm not biased by the fundamentals.I have lots of respect for you but this one has taken me by surprise.
All the years I've traded stocks which is considerable, just trading via charts is not only hard work, low win rate but also huge number of negative surprises, to me it's a very high risk method.
I no longer look at a stock and think it's overvalued and pass on a promising set-up based on what's in an annual report.
I don't need a high win rate. I need to make more on my winners than I do on my losers. As long as the losses are small one or two big wins is all I need.
so: 1) you're not day trading and 2) you are trading momentum. Have you compared the returns of a portfolio comprised of momentum stocks to your ex-post returns? If your ex-post returns of your PA is less than the beta, then you are not even able to effectively harvest the beta of momentum properly. If you do have a greater return than the beta of momentum, then we can discuss having an edge.
I know enough to convince myself to stay in a trade I should be out of.
Never heard of mosaic theory; I'll have to google that.
I really have no idea what you are referring to. You lost me at ex-post and I have no idea what my beta is.
I'm just a retail trader that figure this shit out for myself.
Beta refers to the systematic risk and return.
For example, assume you are defining momentum as "stock price today > stock price 5 days" (or whatever lookback period -- which refers to the amount of data you compare the current price against). Assume you are also adding a volume filter: "volume today > volume 5 days".
If you run this report daily, you'd get a list of stocks that meet your criteria. Say you only want to pick the top 10. Now, you can test the performance of this strategy (which will give you the beta, or systematic return and risk, of the strategy). You only want to trade strategies with positive returns, or you're just losing money. Having an edge means that you are able to improve the risk and return characteristics (e.g. your PA stats are better than your backtest).
Momentum is a profitable strategy, and the edge typically comes from 1) lookback analysis (constantly reviewing your lookback periods, for example testing the performance of 5-day, 20-day, and 60-day returns) 2) trend analysis (advanced stats, such as kalman filtering, and tying the momentum analysis to that), and 3) volume filters that are tied to positioning. Then of course, there is risk management.
Ex-post means based off data, ex-ante means based off a forecast.
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By the way, I ran backtests on the strategy for both the last year and 2018 (just to add to sample).
2020
2018
Anyway, I'm happy you have a style that works for you. But I think it's bad form to tell people that you can easily make money by looking at a 5 min chart and volume, click buy, and voila profits.
2020
2018
Anyway, I'm happy you have a style that works for you. But I think it's bad form to tell people that you can easily make money by looking at a 5 min chart and volume, click buy, and voila profits.
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Thanks for taking the time to explain this. But it's way above my pay grade.
Peter Lynch said you have to be able to explain a concept to a 10 year old.
I call my strategy the Will Rogers strategy. He said "Don't gamble with your money, just buy some good stocks, when they go up sell them; if they don't go up don't buy them" I just added if they go down sell them.
There a difference between a good stock and a good company. Investors try and buy good companies. Traders are looking for good stocks. No reason both can't make money.
My belief is that trading is less risky.