3 Jan 24 Practice Results (DKS)

Symbol: DKS
Sector Filter: XLY (Consumer Discretionary Select Sector SPDR Fund)

Date	Trade	Entry	Stop Loss	Exit	Percentage Profit		Days To Exit
8 Mar 10	Buy	25.52	24.02	25.59	4.67%		11
6 Apr 10	Buy	27.01	26.03	27.87	87.76%		10
23 Apr 10	Buy	29.89	27.76	28.66	-57.75%		10
27 Sep 10	Buy	28.47	27.1	28.72	18.25%		17
3 Nov 10	Buy	29.73	28.18	29.59	-9.03%	Stock gapped up after exit	8
2 Dec 10	Buy	35.54	33.96	37.11	99.37%		17
4 Feb 11	Buy	37.45	35.7	37.41	-2.29%		12
4 Mar 11	Buy	38.17	35.57	39.8	62.69%		9
1 Apr 11	Buy	40.56	38.96	40.48	-5.00%		9
11 May 11	Buy	42.16	39.27	40.74	-49.13%		4
19 Aug 11	Sell	30.3	32.04	32.04	-100.00%		2
3 Nov 11	Buy	39.94	37.45	38.28	-66.67%		5
15 Nov 11	Buy	41.48	38.28	39.28	-68.75%		5
24 Jan 12	Buy	41.37	39.51	40.64	-39.25%		5
7 Mar 12	Buy	47.52	44.65	47	-18.12%		9
23 Mar 12	Buy	49.04	47	47.7	-65.69%		4
17 Apr 12	Buy	49.97	47.96	48.88	-54.23%		6
26 Apr 12	Buy	50.34	48.88	50.18	-10.96%		8
3 Aug 12	Buy	50.2	47.49	50.09	-4.06%	Stock gapped up on entry day	6
5 Sep 12	Buy	50.91	49.01	51.84	48.95%		15
2 Nov 12	Buy	52.23	49.41	49.79	-86.52%	Stop loss was based on a recent low	5
29 Nov 12	Buy	52.85	51.02	51.22	-89.07%		4
31 May 13	Buy	52.7	51.02	51.81	-52.98%		4
10 Jun 13	Buy	52.44	50.94	50.94	-100.00%	Stop loss was based on a recent low	3
26 Jul 13	Buy	51.67	50.46	51.53	-11.57%		9
1 Oct 13	Buy	53.7	51.31	52.7	-41.84%		6
28 Oct 13	Buy	52.56	51.18	54.79	161.59%		18
20 Dec 13	Buy	56.8	55.11	57.51	42.01%		13
12 Mar 14	Buy	57.2	53.07	56	-29.06%		9
18 Dec 14	Buy	50.49	47.16	52.48	59.76%	Stock gapped down	29
19 Feb 15	Buy	54.66	52.11	54.08	-22.75%		7
3 Mar 15	Buy	56.86	54.08	57.02	5.76%		18
7 Apr 15	Buy	59.31	56.75	58.31	-39.06%		6
22 Oct 15	Sell	45.88	49.4	35.96	281.82%		53

Results

Sadly, this is an unprofitable day. I used a sector (XLY) and stock filter (EMA 15, EMA 50, and EMA150 must be in the correct order and sloping correctly). The following position sizing strategy works the best:

• Reduce lot size by 0.1 unit if the past two trades are losers AND both trades exit within 10 days or less (subject to a minimum lot size of 0.25 unit); increase lot size by 0.1 unit if the past 1 trade is a winner (subject to a maximum lot size of 1 units)

Using the above strategy, I will end up with a loss of $1,214.07.

Analysis

Today, I have another of those “Death by a thousand paper cuts” day. DKS seems to be a cha-cha stock like SWN, in the sense that it does not trend very well – three days up, two days down, with the down days enough to trigger an exit.

On the plus side, it reinforces my hypothesis that low volume stocks do not trend well.

Another observation I have is that a sector filter may not work as well as I thought. After suffering from choppy trends for a large part of the practice session, I finally managed to catch a long downtrend and rode it nicely, for a 281% profit (though it took 53 days). However, to my dismay, I realize that this trade is a mistake. Based on the sector filter, I should not have taken the trade.

So, should I, or should I not, use a sector filter?

Today, I am also more selective with my entries. Although for all the stocks that I tested previously, this strategy is net positive, I am concerned about the transaction cost. Entering too many trades will lead to a lot of fees, which definitely eats into profits. Therefore, filtering out bad trades not only increases my profits, it also reduces the cost. I tried to enter trades only if EMA 15 > EMA 50 > EMA 150 on the stock’s daily chart and the three moving averages are sloping in the correct direction, or at least appears to be turning up for bullish trades, or down for bearish trades.

Next Steps

• Take a screenshot of all the profitable trades with profit > 200%.
• Practice on a stock with average volume > 20 million.
• Selected Stock: Ford.