10 Jan 24 Practice Results (AMZN)

Ticker: AMZN

Date	Trade	Entry	Stop Loss	Exit	Percentage Profit		Days To Exit
14 Apr 16	Buy	30.9405	29.45	30.91	-2.05%		7
11 May 16	Buy	35.3275	32.8	34.67	-26.01%		6
29 Jul 16	Buy	38.25	36.62	38.31	3.68%		13
29 Aug 16	Buy	38.6	37.6	38.34	-26.00%		9
25 Oct 16	Buy	42.015	40.155	39.1	-156.72%	Stop loss was based on a recent low, stock gapped down	4
13 Jan 17	Buy	40.8065	38.92	40.336	-24.94%	Stock gapped down	15
16 Feb 17	Buy	42.2405	41.14	42.04	-18.22%		6
29 Mar 17	Buy	43.023	42.36	44.47	218.25%		12
9 May 17	Buy	47.64	46.39	49.78	171.20%		23
17 Jul 17	Buy	50.6275	48.46	50.607	-0.95%	Stock gapped down	10
6 Nov 17	Buy	55.834	52.53	57.05	36.80%		20
15 Dec 17	Buy	59.0965	57.85	58.47	-50.26%		5
4 Jan 18	Buy	60.4745	58.03	69.05	350.81%		22
15 Feb 18	Buy	73.3445	63.3	74.32	9.71%		10
6 Mar 18	Buy	76.66	72.7505	77.7265	27.28%		10
18 Apr 18	Buy	75.7325	70.79	72.85	-58.32%		5
24 May 18	Buy	78.7525	78.26	85.01	1270.56%	Stop loss was very close, hence the large percentage profit	22
10 Jul 18	Buy	87.178	83.9	89.87	82.12%		10
3 Aug 18	Buy	92.028	88.5	93.87	52.21%		9
12 Sep 18	Buy	99.644	95.85	95.85	-100.00%		4
26 Sep 18	Buy	98.9955	94.37	98.08	-19.79%		6
17 Dec 18	Sell	78.3	85.95	74	56.21%		9
2 Apr 19	Buy	90.9835	87.28	91.26	7.47%		10
17 Apr 19	Buy	93.6885	91.26	94.9	49.89%		11
25 Sep 19	Sell	86.5775	91.63	87.39	-16.08%		15
6 Jan 20	Buy	95.1005	89.97	93	-40.94%		7
7 Apr 20	Buy	100.855	94.46	117.55	261.06%		15
1 Jun 20	Buy	122.318	116.5	122.21	-1.86%	Stop loss was based on a recent low	5
9 Jun 20	Buy	127	122.21	133.45	134.66%		15
1 Jul 20	Buy	138.982	133.45	150.62	210.38%		9
21 Jul 20	Buy	160.568	145.911	147.42	-89.70%		4
24 Aug 20	Buy	166.5	155.07	169.32	24.67%		9
12 Oct 20	Buy	167.497	154.5	159.89	-58.53%	Enter bar was a gap up	5
17 Dec 20	Buy	162.85	153.64	158.63	-45.82%		11
4 Mar 21	Sell	149.25	158.91	155.39	-63.56%		5
22 Apr 22	Sell	147.089	157.37	114	321.85%		17
30 May 23	Buy	122	113.78	124.12	25.79%		16
23 Jun 23	Buy	130.83	124.12	127.26	-53.20%		11
14 Jul 23	Buy	135.17	125.92	128.83	-68.54%	Signal bar was a gap up	6
14 Sep 23	Buy	145.48	136.75	138.64	-78.35%		4
20 Nov 23	Buy	145.73	139.91	145.32	-7.04%		8
14 Dec 23	Buy	149.96	143.13	152.71	40.26%		11

Profitability

Today’s results is much better. Managed to catch a few good trends. Combined with yesterday’s results, the final balance for AMZN is $207,375.90, with a maximum drawdown of -17.20% (starting balance of $100,000, 5% risk per trade).

Honestly, I am a bit surprised by AMZN’s poor performance. Given that the stock is part of the Magnificent 7, I was expecting it to perform like NVDA. Instead, the stock was more choppy than I expected, moving in broad channels most of the time even when it trends.

Analysis

The trade with the largest profit (24 May 18) is due to a very tight stop loss. This is not a problem per se. Using a tight stop loss does lead to a very high reward to risk ratio, but does also increase the chance of a much higher loss if the trade is a loser. This has happened multiple times, where a trade with a tight stop loss was stopped out at a 100% loss. I guess there are always pros and cons regardless of what stop loss method you use.

However, I was reading the book “You can still make it in the market” by Nicholas Darvas and was surprised to find that his stop loss works a bit differently from what I remembered from my previous reading. Firstly, his initial stop loss is 10% below his purchase price. Secondly, he has a buffer of 5% below the bottom of his Darvas boxes for his trailing stop loss.

Currently, I use a stop loss that is inspired by what Darvas does. Here’s how my stop loss works:

For buy trades, if a stock’s low is not penetrated for the next three days, the stop loss is the low 3 days ago. Suppose the lows for 4 consecutive trading days are as follow:

Day	0	1	2	3
Low	10	10.2	10.5	10.9

The trailing stop for Day 3 will be 10.

Having articulated the rules so specifically, I realize there is a flaw with this stop loss. Given that I will know the low of Day 3 only after the day has ended, I can compute the trailing stop for Day 3 only after the close of the day. Hence, I can exit the position only on the next day, not on Day 3 itself. This means my exit will not be at $10, and may be higher or lower (likely lower). I believe this is known as a “Look forward” error, or something.

I believe this will not make a huge difference in most cases, but I still gotta alter my stop loss code.

In addition, Darvas has a 5% buffer for the bottom of his Darvas boxes. In other words, he did not exit a buy trade the moment it broke below the bottom of the box. He exited only if it broke more than 5% below the bottom. I should add this in to my stop loss too.

As mentioned in my previous post, I frequently got stopped out by a slight dip below the trailing stop loss, only for price to resume. Adding a 5% buffer may help.

What’s Next

I notice that Amazon is quite choppy on the daily chart. This made me wonder if I should use a weekly chart instead.

Also, how does adding a buffer to my stop loss affect results?

These are things that I want to explore next.

For now, I will re-code my trailing stop and practice trading AMZN on a weekly chart.