Quote from mark1:
See u all soon and have a great day!
Welcome to the discussion, and I look forward to your future contributions to the thread. After reading through the Original Journal, you no doubt have experienced the benefit of internalizing the information compiled within the many pages. Believe it or not, I have reviewed the entire Journal myself on more than one occasion over the past year. I find doing so helps to reinforce the many lessons I learned along the way.
Quote from cnms2:
I wonder if Jack and spydertrader having so many followers now, and the Final Universe stocks having relatively low liquidity, isn't there the risk that this trading system becomes a "trigger" competition? I mean that the trading volume and the price performance of the Final Universe stocks in DU mode might be affected by the large number of followers.
Several traders posted similar concerns in the Original Journal, and while I understand the concern, significant reasons exist to show how an increased following benefits, rather than, hinders price improvement. For example, a large number of traders currently follow a similar methodology - William O'Neil's CANSLIM Method. Occasionally, stocks on the CANSLIM.net 'recommended list' coincided with our own Daily Watch List of Dry Up stocks. When such an 'alignment of planets' occurred, we would often see huge spikes in both volume and price - often making 10% gains within a single trading day. The large number of followers of the CANSLIM Method significantly outnumber those that Follow the methods we discuss daily. In fact, Jack Hershey himself now leads a Investors Business Daily Discussion Group in Arizona. In addition, Jack's posts indicate he trades off his Daily Hotlist and List of Tenured Stocks, and not as we do, off a Final Universe. Also, as we noticed with our discussion with respect to the time KNDL reached Low Band Dry Up Volume threshold, latency and subtle variances between datasources contribute to signal differences reaching various traders and slightly different times. Such differences create an avalanche effect in orders or a 'self reinforcing philosophy' as an ever increasing number of traders interpret the buy signals. Further, each trader using a different iteration of the Hershey Methodology trades under a different agenda than another. The CANSLIM folks trade on a much longer time frame. Jack uses a 6 to 8 day hold time. I use a 4 day maximum hold, while others may only trade the methods intraday. Whatever the goal, this sudden increase in trading volume alerts other traders, who may have never heard of Jack Hershey or Spydertrader's Journal, toward an opportunity for profit. Once any of these equities make it onto the main stream radar, huge volume and price changes occur (See TASR, HANS and FORD from the last Journal). Lastly, even if we all followed the exact same methodology, human nature being what it is, a certain number of individuals will think themselves slightly more crafty than the rest, and try to 'front run' the volume signals, and establish a position before the rest of us. Over time, this spreads out the volume across various price points.
As you can see from the numerous examples cited above, the increase in traders following the methods listed here (and elsewhere) improves the rate of return, rather than, increases the level of competition for fills. While certainly an increase in demand exists, we should view the increase in a positive light. After all, a rising tide lifts
all boats - irrespective of size.
I hope you found the above useful.
- Spydertrader
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