BEL - Spike calls a bottom.

[spikefader]

Runner,
The great risk reward (5% risk and 580% profit for r/r of 116) I see combined with 50% chance of success you give it inspires me to go to the equity curve machine!:




Next post is comparing numbers and equity curve with a buy stop long the breakout price you see with the same stop price (10% risk, 511% target and r/r of 51). So the r/r is a bunch worse, although still very impressive. I'll assume the same 50/50 chance of success. And then I'll draw some conclusions on how those two systems compare.

Stay tuned for more on this, cuz I gotta run.

[spikefader]

OK, so continuing on from last post, here's the curve for playing BEL after a breakout at higher prices, with a wider stop.



Look at the Math Expectancy number there. You say, "What the heck is Math Expectancy?" Well it's just a number to represent stregth of a system. The bigger the number the better the system.

Now look at both those curves, and it's pretty clear which is the stronger methodology, and stronger by a huge margin. 57.5 versus 25, which is 130% better. All thanks to having a tighter stop with a bigger target; a better r/r.

So strength of a system....strength of YOUR system....very much depends on the quality of your risk/reward ratio and your win probability.

New Years resolutions for the forum should be to privately calculate your figures, punch them into the equity curve generator at hquotes.com and see what your Kelly and Math Exp. are. See how strong your methodology has been this year. And then consider whether it's necessary to tweak your methods/system to improve the numbers.

What can you do to get the highest Math Expectancy number as possible? What can you do to improve the risk/reward?

There's only a couple ways to do it; increase your win/loss number (average winner divided by average loser), and the only way to do that is by letting winners run and cutting losers short. Win probability (or strike rate of success) is less important really. You've heard me say before that you can have a lousy strike rate and still be very profitable if your other numbers work nicely. So focus on risk reward and strive to lower losses. Simple. It's not rocket science. Pass on trades that don't offer good targets. Let the winners run. Be patient! Cut your losses, be disciplined!

Be ruthless with the numbers. Because after all, it's just a numbers game here. And those that lose the best will win the best.

Nuff said, and back to BEL now

[billyjoe]

Spike,
You know what they say about "once bitten twice shy" well BEL has bitten me twice even though they were little bites so I'm now 4 times shy , but still lurking. What should I specifically look for before making a move or is lurking time over? Thanks

billyjoe

[spikefader]

Ya billy I hear ya about once bitten....

Remember, lurkin' time is never over! To your question what to specifically look for, well shoot, if you don't like the TA stuff that's there already I can't really help ya. Whatever you end up 'seeing' as valid long, then just make sure the r/r is there. For me, it's here now. I'll accept the loss should it come and be disciplined with the exit, and happy that I traded it well.

Right now with price down to 3.01 and at support, the r/r is now sub 4% with a stop at 2.89. Or if that's not good enough for you, then long 3.01 with stop at 2.98 is 1% risk. With my target, that's a 589% from 3.01, and the r/r is 589! Now that's insanely high. What are the chances that a 3.01 is going to nail the perfect entry? I don't know, but the r/r is definately on your side. Even if you set a near price resistance target of a measly 3.25 that's still close to 8% profit, and a healthy r/r of 8.

See it doesn't really matter what issue it is, whether it's BEL, or some other stock, or something that's bitten you before or your favorite stock that you may have a wonderful 5 from 5 record, it really doesn't matter in the world of possibilities. Statistically your chances of a winner improves with each loss. But that means zero to trading in my view. The pychology of your feelings about BEL right now is debatable, but bottom line is it really isn't relevant to the formula for success. You can get therapy and get over it but it's not going to help your trading unless your therapist is an expert trader/money manager

Look at your other BEL trades and calculate what your r/r was. Did you even consider it? If not, you really want to start doing that. You're in control of that stuff; it's the only thing you CAN control. You can't control where it goes, but by gosh you can control your entries and exits. And that's what management is all about. Find stocks that fit the model, and trade em without emotion, and without hanging on to past failures. ELN has been a frustrating stock for me in the past, but it doesn't mean I scratch it off my list. If I did that I wouldn't be sitting with +4% on today's entry with a very real chance at 251% profit for the gap fill.

With that kind of r/r and the way I hunt my entries, searching for perfection, I can afford dozens of attempted entries in the hunt. Now I'm not saying I'll actually get the ELN gap fill; the chart will likely give me a "take profits" signal before that, but then again, it may not. It may stop me out in 5 minutes time, it may act in such a way that I don't have to take profits for a long time. I don't have to worry about that; can't control it so don't waste my time trying. All I have to do is make my entries as good as I can make 'em, keep great r/r, sensible risk, controlled trade, discipline, good targeting, and the rest will take care of itself. Sure, I get frustrated hunting sometimes, but patience rewards, and hopefully patience will reward me this time with ELN. And hopefully the smart hunting for BEL will reward too.

[spikefader]

Some interesting action today

[Runner]

Spike did you just move BEL's stock price?

[billyjoe]

Spike,
Is that conductor signaling to stop?

billyjoe

[Runner]

Spike,
Is that conductor signaling to stop?

billyjoe

Billyjoe, looks to me as if he is saying "STOp".lol

[Runner]

Spike is HUGE he moves markets!!!

[spikefader]

Spike did you just move BEL's stock price?

lol no.

Spike,
Is that conductor signaling to stop?
billyjoe

I hope not! I think he's sayin' last call dudes. This is the one-way express to Bull Run Mountain.

[skiracer]

I was just looking at the raw data feed on it and there was 1 trade for 18,700 shares @ $3.15 @ 1.22:52 pm this afternoon.

[Runner]

Almost looks like a B/O

[billyjoe]

Spike,
You're a genius , I got on the train before the conductor made the controversial signal and now I'm rich , whoopie! However, I'd be richer had you told me to put everything on MCZ at 10:30 a.m. today , but I forgive you. We are now raising the bar and expecting more than a quick 5% next time , and we won't wait 3 years for another sure fire bottom call. If santa knew your address he might leave some magic markers and #2 pencils along with a sturdy straight edge for making graphs. #2 erase easier than #4 pencils.


billyjoe

[spikefader]

heh billyjoe. Good for you re BEL

I see you're still taking your medication! hehe

[spikefader]

BEL: Some chickens out there today hitting the bid; where's the faith!? haha
It's come back to intraday S1 3.03 for a second bite at the cherry. It's at solid daily volume by price, and FIB support from the move up, so green light for good r/r entry again. 1.6% risk if you put stop under yesterday. With my target, that' r/r is an early Christmas present!