Still looking for my strategy

smcoder · Oct 19, 2021

I've been trading for a few years now and over time I've tried my hand at different strategies and analyzing successes and failures I realize that I could have had maybe not huge profits but most probably near 100% successful trades by simply choosing to trade only long-term leaders such as google, microsoft, adobe, accenture, to name just a few. It would probably be all that is required to just wait for corrections to enter and consider taking profit when reaching overbought territory either on the specific stock or in general in the stock market.

Below for the sp500 I count 9 corrections since the beginning of 2021, a few probably too small to consider but I hope you get my point.

tomorton · Oct 19, 2021

Sounds like you've found your strategy.........

smcoder · Oct 19, 2021

tomorton said:
Sounds like you've found your strategy.........

Clearly this is a long only strategy but @tomorton would you be able to suggest what I could look into to improve my approach?

smallfil · Oct 19, 2021

That is swing trading. Or trend following if you prefer. Both approaches can work on most stocks.

jnbadger · Oct 19, 2021

There's a simple algebra equation I can share. You won't make huge money, but it works in my TDA Roth with zero commissions.

smcoder · Oct 19, 2021

smallfil said:
That is swing trading. Or trend following if you prefer. Both approaches can work on most stocks.

Ok, in my head swing trading does not go much beyond a few days but I suppose it corresponds well enough and yes trend trading is what get's most near what I do

smcoder · Oct 19, 2021

jnbadger said:
There's a simple algebra equation I can share. You won't make huge money, but it works in my TDA Roth with zero commissions.

@jnbadger, thank you, I would really appreciate it. I'm still very much trying to define my strategy better by even writing it down on paper or on file

and I'm also trying to formalize steps and tools to support decisions.

For example, what is it that you do to try time the market and get a feeling as to a coming correction or bubble and all those others economic factors such as inflation, interest rates, stock market sentiment, etc. Any useful tool to assess these? I'm constantly looking at t-bonds, pmi, unemployment, US debt, put/call ratio, fed announcements, market capitalization growth, overbought/oversold on major indices, greed & fear index but I really wonder sometimes if anything more effective exists.

deaddog · Oct 19, 2021

smcoder said:
Below for the sp500 I count 9 corrections since the beginning of 2021, a few probably too small to consider but I hope you get my point.

It's easy looking back.

The question is what is the plan for today? Buy, sell, or hold?

If you are buying or holding where do you exit?

If you're selling, where do you rebuy?

Leob · Oct 19, 2021

smcoder said:
@jnbadger, thank you, I would really appreciate it. I'm still very much trying to define my strategy better by even writing it down on paper or on file and I'm also trying to formalize steps and tools to support decisions.

For example, what is it that you do to try time the market and get a feeling as to a coming correction or bubble and all those others economic factors such as inflation, interest rates, stock market sentiment, etc. Any useful tool to assess these? I'm constantly looking at t-bonds, pmi, put/call ratio, fed announcements, market capitalization growth, overbought/oversold on major indices, greed & fear index but I really wonder sometimes if anything more effective exists

Maybe you can use intrady charts to take decision.
Maybe check the VPOC previous day health in current trading day. If by your judgment the VPOC of the previous day didn't touched or act as strong support line maybe this VPOC of yesterday that holds today.. can act as tied stop lose for swing trading. I use the intraday chart as S&R lines for my swing demo trade. My account size don't afford me trade this price steps..
So I need to scalp like a lunatic..
It's exhausting..
Good luck all.

smcoder · Oct 19, 2021

deaddog said:
The question is what is the plan for today? Buy, sell, or hold?

The plan is always the same, evaluate the stock market and a few economic indicators to understand the trend and see if any of the stocks in my list is in buy zone. My list is mostly made up of stocks that are top based on the canslim process or that I know and have been following daily for a few years. I need to define more clear rules but I'm usually looking for at least a 5% (more often a 10%) drop from their recent 52w high to start buying.

deaddog said:
If you are buying or holding where do you exit?

Buy and hold till getting into overbought for the stock or the market. Clearly I don't always sell when in overbought territory, if I think there is space for further growth. If price drops I average down but never before getting to at least a 10% drop and never if the drop is company specific (not related to the stock market trend).

Buying into companies with a solid business, revenues/income, sales, etc. I'm willing to risk putting in more money but clearly I do my DD on the company and I'm constantly reading company related news.

I also look into industry trends and world trends (oil, gold/silver, mining, credit/finance, utilities, etc.) to support decision and favor stocks from my list that pay dividends and possibly very good dividends (e.g. oil and gold mining companies).