The Surf Report--part 2

[marketsurfer]

Quote from Fireplace:

Rough trade man, but look at the bright side, you aren't trading size so at least your loss isn't very large. Still sucks to wake up to a gap up against you. One of the reasons I love being flat at the end of each day

Thanks, fireplace. Every study I have seen clearly indicates that going flat overnight greatly reduces returns annually. Although, individual adverse situations can and do occur, as just did, overall closing at the EOD is far from the optimal tactic.

Although, i do understand that saying this in seminars makes the attendees feel good and makes sense to those who really don't do any testing.

surf

 

[marketsurfer]

Here is an example of a test we did when I was with TradingMarkets in 2007. You and einstein will learn that market reality does not "feel good" or make sense once you start actually breaking away from the hindsight feel good pretty charts and annotations.


<i>Day trading is a blast. If you have the internal constitution to handle the inevitable losses and fast action, intra day trading is an exciting way to earn a living. Many traders believe that they are limiting their risk, but still capturing the upside by only holding positions during the day. These investors go back into cash at the close of every trading day. Their theory is tons of negative news occurs when the market is closed therefore by closing out positions, this overnight risk is mitigated. While it is true that bad news often happens when the markets are closed. In addition, it makes sense that if you’re not exposed to stocks overnight, you will miss the negative impact of being trapped in an overnight gap down situation. However, like most things in the stocks market, the truth is stranger than you can imagine.

We decided to test this idea to see how it plays out in the real world of trading. The results were downright shocking. We tested trades on the SPY from 1995 to 2007. One group of trades bought the SPY every day on the close and sold on the open. The second group of trades bought the SPY on the open and held until the close every day. What was discovered flew in the face of conventional wisdom of closing positions at the close. The overnight group gained 171.40 points over the time frame; while the day trading only group lost a total of 70.88 points! This was despite all the negative things that occurred overnight during those 12 years. Remember, the market tripled in value over this time frame, but if you assumed no overnight risk with the SPY, you actually would have lost money.

These tests make it clear that holding overnight is superior to closing out trades at the close daily. </i>



Feel free to replicate this study to prove it to yourself.

surf

 

[mwingo1135]

on 30 min chart the market has a long bias to 1281.00 but did a mini cycle reversal last night before whipsawing back around.

If someone told me they won 100% of the time that would be questionable. We all lose even if we have a 85% winning ratio. I for one will still be following you but the lose shows why having a recap is cool because people would see the loss and run but then if they saw for example 5 trades made 4 winners 1 loser 26 points made 13 points lost it would be something people could sink their teeth in.

 

[Fireplace]

I'm not suggesting that you shouldn't hold overnight, if that's part of your system and these things happen, then you take your lumps and move on because you know that you will catch the opposite event more often than not (assuming you have a good system).
For me, my focus is on catching smaller, but more frequent fluctuations intraday and holding overnight is not part of my game plan. So while I do not get affected negatively by things like this morning, I also do not benefit when a gap works in my favor.

Quote from marketsurfer:

Thanks, fireplace. Every study I have seen clearly indicates that going flat overnight greatly reduces returns annually. Although, individual adverse situations can and do occur, as just did, overall closing at the EOD is not the optimal tactic.

surf

 

[Gabfly1]

Quote from marketsurfer:

Here is an example of a test we did when I was with TradingMarkets in 2007...

Are you net positive yet?

As for the study you described, it just goes to show how a little bit of "knowledge" can be a dangerous thing. Are you even aware of the weaknesses and limitiations of this study? The general conclusion may or may not be valid, but that would be merely coincidental based on the design of your study. When you pretend to be smarter than you actually are, the outcome is often the opposite of the one intended. This would be such an occasion.

 

[marketsurfer]

Quote from Gabfly1:

Are you net positive yet?

As for the study you described, it just goes to show how a little bit of "knowledge" can be a dangerous thing. Are you even aware of the weaknesses and limitiations of this study? The general conclusion may or may not be valid, but that would be merely coincidental based on the design of your study. When you pretend to be smarter than you actually are, the outcome is often the opposite of the one intended. This would be such an occasion.

Of course all studies have weaknesses and issues. However, i would much rather base my beliefs on something rather than nothing or hearsay, staring at charts, and guessing direction.

What's up with the constant badgering? For someone who says they don't care, your actions clearly contradict your words.

If you don't like the <b> SURF REPORT</b> don't read it.


surf

 

[marketsurfer]

Quote from marketsurfer:

Short RIMM @35.20

ES profitable slightly, holding into Thursday.

love it baby, love it! caught a very nice downmove in RIMM after nearly being stopped out earlier. Holding overnight proves its worth on this one. staying short.

surf

 

[CH1973]

Quote from marketsurfer:

love it baby, love it! caught a very nice downmove in RIMM after nearly being stopped out earlier. Holding overnight proves its worth on this one. staying short.

surf

Great trade Surf, 20% move! You nailed this one
Congratulations

 

[marketsurfer]

Quote from CH1973:

Great trade Surf, 20% move! You nailed this one
Congratulations

Thanks! I was almost shook out earlier, but it has paid off in spades and is now 22% move---

Going to hold for a bit to see what happens--this thing is just melting down......

Perhaps my earlier article forecasting RIMM will be trading for $4.50 just before the takeover will come to pass......

best,

surf

 

[marketsurfer]

Gonna close out the RIMM here @ 27.56 down 7.77 on the session. Looks like the daytraders are bidding it up right now, following the machines high volume.... who knows for sure?

surf