Trend Trading to the MAX

R

RunTrade

After discussing the topic on another thread, I decided I should start a journal.

The trading used in this journal (experiment) is done to try and determine how much better your odds are of making a profitable trade when you trade "with the trend". I would like to quantify these odds as best as possible.

I will use a real money account, and use about 20K in buying power to start. My stops will be set at 3% and my profit taking will also be at 3%. Thus, I can see how much the trend improves my chances.

In theory, picking random stocks infinite number of times will yield 50-50 results as far as winners and losers. My current estimate is that trading with strong trends will yield between 60-65% winners. I will not discuss how I define a strong trend for a couple reasons. First being that this journal is not being used to critic my trading style, only to document it and discuss the importance/profitablity of trading with the trend. Second, a strong trend can be defined in many ways. You can look at the trades I make and hopefully agree that (in some form or another) a relatively strong trend exists.

I will not have a time frame, the trades will remain open until either +3% or -3% is hit. I will trade with $5,000 blocks. If my expectations are correct, I should gross anywhere from $1,500 to $3,500 after 100 trades. It is harder to determine how long it will take to reach 100 trades. It could be anywhere from 4 months to a year.

I will make an attempt to update daily, even if there is no activity.



RT
 
Just wanted to clarify what you are saying. $5,000 blocks each trade and 100 trades would mean about how much in starting capital? IN other words it is just $5,000 in one position at a time or you are going to use, for example, $20,000.

I am interested because of the $1,500 to $3,000 gross and on what amount or buying power in order to folllow along.


Quote from RunTrade:

After discussing the topic on another thread, I decided I should start a journal.

The trading used in this journal (experiment) is done to try and determine how much better your odds are of making a profitable trade when you trade "with the trend". I would like to quantify these odds as best as possible.

I will use a real money account, and use about 20K in buying power to start. My stops will be set at 3% and my profit taking will also be at 3%. Thus, I can see how much the trend improves my chances.

In theory, picking random stocks infinite number of times will yield 50-50 results as far as winners and losers. My current estimate is that trading with strong trends will yield between 60-65% winners. I will not discuss how I define a strong trend for a couple reasons. First being that this journal is not being used to critic my trading style, only to document it and discuss the importance/profitablity of trading with the trend. Second, a strong trend can be defined in many ways. You can look at the trades I make and hopefully agree that (in some form or another) a relatively strong trend exists.

I will not have a time frame, the trades will remain open until either +3% or -3% is hit. I will trade with $5,000 blocks. If my expectations are correct, I should gross anywhere from $1,500 to $3,500 after 100 trades. It is harder to determine how long it will take to reach 100 trades. It could be anywhere from 4 months to a year.

I will make an attempt to update daily, even if there is no activity.



RT
More...
 
Op Coach


I plan on making trades of $5,000. But I am only allocating $20,000 BP to this. So at most (in the begining) I would only have open 4 trades at a time.
 
<i>The trading used in this journal (experiment) is done to try and determine how much better your odds are of making a profitable trade when you trade "with the trend". I would like to quantify these odds as best as possible.</i>






your odds are no better. this has been tested rigorously.


surfer
 
Just curious what you would be using as your entry criteria? I know that you didnt necessarily want to discuss your trading strategy, but in this particular instance, only allowing 3% wiggle room either way could dramatically sway the overall results. Specifically, using stops based off of %'s, as opposed to technically defined stops, could hurt the performance in the long run. This is also where position size comes in.

Just my .02

jm
 
Quote from marketsurfer:

<i>The trading used in this journal (experiment) is done to try and determine how much better your odds are of making a profitable trade when you trade "with the trend". I would like to quantify these odds as best as possible.</i>






your odds are no better. this has been tested rigorously.


surfer
More...


Are you serious??

If my odds are no better than why do people even pay attention to trends?
 
Quote from jmiles301:

Just curious what you would be using as your entry criteria? I know that you didnt necessarily want to discuss your trading strategy, but in this particular instance, only allowing 3% wiggle room either way could dramatically sway the overall results. Specifically, using stops based off of %'s, as opposed to technically defined stops, could hurt the performance in the long run. This is also where position size comes in.

Just my .02

jm
More...


Well, I use % so that the trend can be appropriately measured. If 3% turns out to be too tight, I may adjust in on a trade-to-trade basis. Either way, stop loss = target profit.


EDIT: Will post first entries soon
 
First trade already can and went.

Long 350 STXS @ $14.469 on 1/20
Sold 350 STXS @ $15.07 on 1/23

Gross: + $210



Current open position(s):

Long 150 NRPH @ $33.55 on 1/23
 
Quote from RunTrade:

Are you serious??

If my odds are no better than why do people even pay attention to trends?
More...



yes.

trends only exist in the past.

if you flip a coin 10 times and its comes up heads 10 times are you in a heads trend?

good luck,

surf
 
You can have a system that makes money 30% or less of the time and still beats systems with 80-90% success rates because riding trends is what creates the profits, not the probability of the indicator to be right. So the best thing might be to define where in the timeframes these trends occur, and trade those timeframes. They usually last months, so no point looking for them in minutes or hours.

Random entries can work, but youll find the implementation of that set up is difficult and your better off throwing stuff at the wall and seeing what sticks, generally something much more basic. To get random entries you need to scale in and out of trades, etc and it gets tedious. The best system Ive heard of with random entries only made 20% a year on a backtest. Tom Basso apparently used one in trading.
 
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