Swing trading the Mr.Market Portfolio

[Karel]

Hi spike, hang in! Only: I find your stops awfully narrow. Is that how you ususally place your stops?

Regards,

Karel

[spikefader]

Hi spike, hang in! Only: I find your stops awfully narrow. Is that how you ususally place your stops?

Regards,

Karel

Will do. No, not at all. I don't place stops this way at all. I usually use intraday support price stops - tucked just underneath price support somewhere like under low of day or sometimes the nearest price support on the previous day. Which begs the question, then why use this new method in this system???

Well, I wanted something consistent and easy to calculate, one that took emotion out of the equation, and at the same time giving some 'wiggle room' on an intraday basis. You see, in my experience, S2 is usually a very good point to enter...and if S2 fails with any signicant degree, then you don't want to be long the stock. I think the 2 x (S1-S2) gives enough wiggle room to give the trade a chance of success on a swing basis (several days), and yet gets me out of the position on a huge down day like MCRI experienced yesterday.

I am open to new ideas on the stop for this system, and it's very early days. Should the system continue to a massive drawdown, I'll be contemplating changing the rule. And input is very welcome on this. Bottom line, I'd love to come up with a robust swing system for Mr.Market's picks. I think it could really lock in some great profit. There may be other system conditions that will increase the chances of this, which I'm also gonna put some thought into. Perhaps only trade the system when general market conditions have a green light for up and not when it's getting overbought like it is now. But the one thing that worries me about that is that markets can remain overbought for a long time and give some good profits...and by sitting out, the system is not given the opportunity it needs.... anyway, just thoughts anyway.

[New-born baby]

Spiked by the stops

Spike,

Let's face it: it was a horrible day to be long in the market. Very few stocks didn't get slammed. And something else, I think what is wrong with your system is that you are using burnt biscuits. These MM picks are old; the fundamentals underlying their original choice in the MM system have all changed. Therefore, it seems likely to me that your test program is going to yield less than fully accurate results.

What if you hone your system now as a test, but the real competition comes with the next real, fresh, MM pick? I say, that ought to be the one that really counts.

And also, I think you should get to pick the entry, too. If we are going to use TA for the exit and stops, then it ought to be applied to the entry.

[spikefader]

Yep, you're right. Market got slammed today.

Yes, good point, I may be using burnt buscuits. I just took all of Mr. Market's open positions because I'm assuming he's still bullish on them all since he hasn't closed them (I'm referring to some of his other posts where he says he only sells when he doesn't like the stocks anymore). But stocks like BEL surely must be off his list.....

OK, let's hear it folks, which of his picks should be included in this new system? Or which ones should be left out. I need help since I know less than squat about FA!

I like the idea about his fresh picks, but at the same time, I'd like at least 8 picks on the watch list so we're not waiting an eternity for an S2 entry on only one or two picks.

Pick the entry huh? Yes, this is worth some more thought. OK, how about this.....I change the system to wait for an S2 hit signal, THEN I pick the entry based on a double bottom or inverted SHS with neckline break, or attempting to anticipate a double bottom or right shoulder, or any other significant intraday pattern, like a wedge formation or a triangle, or a bullflag breakout or 5 wave down completion. How's that sound? That way, I will be able to tighten the stop to a mandatory low of day stop, which will mean an even lower risk percentage. And if stopped out, another entry can be attempted on the next bullish pattern.....There may be more losses, but they will insignificant in the bigger picture, and the great entries that are eventually caught (along with the nice moves to R2) will logically make up for the stop outs. Yes?

Further on this thought of picking the entries......how about I pass on any S2 signals if the stock's last channel touch on the daily is bearish. That way I'm only taking S2 signals for stocks that have had a bullish channel touch, which should improve the % win rate.

On that point, I'll go and check the current list agains the daily charts and see where they stand as far as channel hits.

[yaoyao]

I like your last thought: pass on S2 signals if the stock's last channel touch on the daily is bearish. However, it may significantly reduce the chance that the stock hits its S2 signal.

[New-born baby]

Top 8 Stocks

Spike,

How about a compromise? 8 is too many the way the man announces stocks (i.e., the Top Five). Why don't we let you send the entire top 5 to market? With MM picking, and Spike giving the order to "jump," I think I'll buy all five of 'em!

And while I'm a fussin', I think somebody needs to say this: the MM system needs to be honed for this horrible market. This has to be MM's worst year. Period. I checked his portfolio, and there are several burning wrecks that he picked this year. In any case, I think we either need to lower the target for crummy, bear markets to 10%, and/or else find some other refinements that will increase the efficiency of the system in times like these. I am open to suggestions.

And Mr. Market, I am not, by this post, in any way trying to denigrate your good work. As I have written before, I love this forum and have learned much from it. By my suggestions I am seeking to benefit us all.

Best of investing to all on this forum!

[Websman]

Y'all are getting too complicated for me. I'm just a dumb redneck from lower Alabama.

Maybe when y'all get this figured out you can make it where, even I can understand it.

[New-born baby]

Live and Learn Something Everyday

Websman,

I didn't know Spock was from Alabama!

[Websman]

Websman,

I didn't know Spock was from Alabama!

Actually, I'm from Florida, but Alabama isn't too far up the road...so sometimes we call where we live, Lower Alabama

[spikefader]

Spike,

How about a compromise? 8 is too many the way the man announces stocks (i.e., the Top Five). Why don't we let you send the entire top 5 to market? With MM picking, and Spike giving the order to "jump," I think I'll buy all five of 'em!

And while I'm a fussin', I think somebody needs to say this: the MM system needs to be honed for this horrible market. This has to be MM's worst year. Period. I checked his portfolio, and there are several burning wrecks that he picked this year. In any case, I think we either need to lower the target for crummy, bear markets to 10%, and/or else find some other refinements that will increase the efficiency of the system in times like these. I am open to suggestions.

And Mr. Market, I am not, by this post, in any way trying to denigrate your good work. As I have written before, I love this forum and have learned much from it. By my suggestions I am seeking to benefit us all.

Best of investing to all on this forum!

Now there is something worth thinking about! The Top Five. I just wonder......

As is fairly obvious from the start of this thread, I have not spent a great deal of thought on the system rules, and to be frank, I really don't think it's going to matter THAT much how the system chooses ENTRIES, but rather it will be how we MANAGE those postions with stops and targets that will lead to profitability over time.

While a high % win rate is always a good thing to have in any system, this fact alone become less important for overall profitability if your % gain target on open positions can overcome the stops. It's entirely possible that a system to have cruddy win rate and lots of stopouts, yet still be profitable. For this case, if we have a fairly limited target, i.e. the first R2 hit then our win rate is going to have reach a certain standard. I don't have the time or inclination yet to backtest for it (anyone else is more than welcome??) thus I started doing the paper trading test of this thread to see how robust Mr. Market's open position were at the significant S2 intraday areas. I presume that if they are going to outperform, then S2 is going to be very good place to be entering. Maybe the Top Five would be better to use. I'm off the Church with the family, so I'll give it more thought later today.

Get your brain cogs spinning folks, and see if we can't form a profitiable stop-based system with Mr.Market picks. It's not been done before, but I really think it's possible. We just need to get the rules right.

[billyjoe]

I'd call myself a position trader rather than a swing trader it's all according to time elapsed or time holding a particular stock. Anyway it seems as if it is a common occurance for 3 of MM's top 5 to do well. If that's true why not buy all five, cut the first two with aggressive stops , and give the remaining three more leeway. I'm assuming the first two dropped would be lower quality stocks. Actually they may just be more volatile. Either way we've got to eliminate them . I've noticed that the great majority of my successful trades drop very little or not at all in the first week after purchase. I don't know if cutting the target would help much. If you calculate MM's open positions, how many weren't sold because they hit 10% but not 15%? Just some ideas, keep up the good work, Spike.
billyjoe

[spikefader]

System tweaks introduced to system.

1. Only the current Mr.Market Top Five will form the watchlist.
2. Only those that have not been eliminated by bearish channel setups on the daily will qualify to be traded.
3. Entries and exits will no longer be based on madatory S2 intraday entries. Instead they will be based on the general principles outlined in the Scientific thread. (i.e. such as double bottoms, inverted head and shoulders, wedges, bullflags, wave theory etc.)

Any open positions from original system will be closed at R2s or when stopped out.

These changes are huge changes to the original system obviously. But I think the tweaks will be worth it. My stops will be tighter, and my targets will be bigger.

[spikefader]

OFG long at S2 at 29.45.
Stop is 29.16, risking 0.98%
R2 target currently 30.13 or 2.3%

We have a winner!
OFG, the Vulcan's stock Of all the stocks to be the first winner hey Webs!
Only 1% gain or $50.00 on a 5k position. But better than a kick in the pants.

SYSTEM SUMMARY TO DATE: -$550

[Karel]

Hi spike,

with tweaks this great, you might as well reset the system. Perhaps something else comes up after these tweaks, and you need to re-tweak big time. No problem; reset the system again. Perhaps you are still in the system building phase? And you need a life beside this test and your own thread, so the top 5 looks OK to me. And you might think about excluding thinly traded stocks, because I don't think one would be able to get a good entry there, the way you set things up.

Regards,

Karel

[spikefader]

NUTR long 16.42
stop is 16.03 or 2.4%

Another winner.
NUTR. Out 16.51 for + 2.15% or $67.50 on a 5k position.

SYSTEM SUMMARY TO DATE: -$482.50