4 Jan 24 Practice Results (F)

Ticker: F

No sector filter

Date	Trade	Entry	Stop Loss	Exit	Percentage Profit		Days To Exit
24 Feb 10	Buy	11.68	11.11	12.98	228.07%		19
5 Oct 10	Buy	13	12.15	13.51	60.00%		11
26 Oct 10	Buy	14.21	13.51	16.04	261.43%		19
2 Dec 10	Buy	16.72	15.75	16.63	-9.28%		10
4 Jan 11	Buy	17.36	16.6	18.29	122.37%		11
27 Jan 11	Buy	18.52	17.35	17.35	-100.00%		2
12 Jul 11	Sell	13.13	14.22	13.2	-6.42%	Stop loss was based on a recent high	8
29 Jul 11	Sell	12.25	13.2	11.23	107.37%		11
19 Aug 11	Sell	10.17	11.23	10.7	-50.00%		5
22 Sep 11	Sell	9.79	10.69	10.15	-40.00%		10
2 May 12	Sell	11.1	11.88	10.43	85.90%		16
4 Jun 12	Sell	10.01	10.88	10.68	-77.01%		4
22 Jun 12	Sell	10.2	10.74	9.38	151.85%	Stop loss was based on a recent high	18
10 Dec 12	Buy	11.55	10.98	11.26	-50.88%		4
24 Dec 12	Buy	11.91	11.4	13.89	388.24%		19
12 Mar 13	Buy	13.45	12.53	13.17	-30.43%		5
6 May 13	Buy	13.88	13.35	14.6	135.85%		14
29 May 13	Buy	15.4	14.6	15.24	-20.00%		6
2 Jul 13	Buy	15.84	15.1	16.65	109.46%		10
5 Sep 13	Buy	17.07	15.71	17.28	15.44%		13
18 Jun 14	Buy	16.85	16.38	17.07	46.81%	Stop loss was based on a recent low	14
11 Jul 14	Buy	17.5	17.07	17.65	34.88%		11
23 Sep 14	Sell	16.29	16.72	14.22	481.40%		19
16 Dec 14	Sell	14.22	15.75	14.92	-45.75%		4
29 Jan 15	Sell	14.37	15.13	14.99	-81.58%		3
21 Aug 15	Sell	14.29	14.85	13.86	76.79%		7
29 Sep 15	Sell	13.01	13.95	13.87	-91.49%		4
3 Feb 16	Sell	11.4	12.3	11.75	-38.89%		9
27 Jun 16	Sell	12.4	13.44	12.89	-47.12%		9
27 Sep 16	Sell	11.95	12.33	12.22	-71.05%		6
27 Oct 16	Sell	11.71	12.2	11.84	-26.53%	Stop loss was basedd on a recent high	11
11 May 17	Sell	10.98	11.37	11.11	-33.33%		8
4 Aug 17	Sell	10.82	11.38	11	-32.14%		8
18 Oct 17	Buy	12.36	11.87	11.96	-81.63%	Stop loss was based on a recent low	9
29 Nov 17	Buy	12.29	12.02	12.43	51.85%		12
3 Jan 18	Buy	12.71	12.45	12.58	-50.00%	Stock gapped down	10
23 Mar 18	Sell	10.68	11.22	11.06	-70.37%		5
23 Jul 18	Sell	10.46	10.97	10.08	74.51%		12
10 Aug 18	Sell	9.85	10.08	9.62	100.00%		7
10 Oct 18	Sell	8.9	9.31	8.76	34.15%		12
20 Dec 18	Sell	8.22	8.73	8.04	35.29%		10
15 Jul 19	Buy	10.55	10.1	10.24	-68.89%		4
18 Feb 20	Sell	8.03	8.38	4.84	911.43%	Kind of a cheat trade. Took this trade because I know it is the start of the Covid crash. A more realistic gain is 204.65% (enter on 6 Mar)	25
16 Nov 20	Buy	8.74	8.08	9.08	51.52%		18
12 Jan 21	Buy	9.37	8.68	11.31	281.16%		25
2 Mar 21	Buy	12.45	11.31	12.62	14.91%		11
27 May 21	Buy	14.38	12.57	14.99	33.70%		12
8 Oct 21	Buy	15	13.88	19.31	384.82%		36
4 Jan 22	Buy	22.52	20.45	24.01	71.98%	Both entry and signal bars gap up	11
20 May 22	Sell	12.66	13.63	13.12	-47.42%		5

Results

Today’s result is pretty good, and reinforces my belief that volume is needed for a stock to trend. Ford has an average volume of 53,789,695 (as of today), which is much higher than most stocks.

If I use strategy 4 for position sizing (i.e., reduce lot size when performing badly), the ending balance is $362,798.17 (5% risk per trade, starting balance of $100,000) with a maximum drawdown of -18.77%.

If I modify strategy 4 such that I increase the position size when doing well, up to a maximum lot size of 1.5 unit, the ending balance is $620,637.14, but the drawdown increases to -30.79%. The reason for this is that I was doing very well until I hit a long string of losses. Prior to the string of losses, my position size was at a maximum of 1.5 units. Hence, the position size remained above 1unit for most of the losing trades.

Analysis

For today’s practice session, I did not use a sector filter. However, I did use a moving average filter. Essentially, for buy trades, I want EMA 15 > EMA 50 > EMA 150. For sell trades, I want EMA 15 < EMA 50 < EMA 150.

• Enter only when all 3 moving averages are sloping in the correct direction and in the correct order.
• After a triple cross (i.e. the 3 moving averages cross in the correct direction) or after a flattening moving average starts to trend again, only take the first 3 setups. Anything more can be overextended.

I notice that

• A good trend tends to have more trend bars, or one sided wicks. Prefer to have a relatively high proportion of trend bars before the pullback, but trend bar should not be too large, as the move may be overdone.

Swimming in a calm pool

Towards the end of the practice session, I got better at disciplining myself to only take the higher probability trades.

I told myself that a low probability setup may end up being profitable, but it is still a bad setup.

There are good trades and there are profitable trades. A profitable trade is not necessarily a good trade as it may be a low probability trade; I should try to only take good, high probability trades. Over the long run, taking low probability trades will lead to a death by a thousand paper cuts situation. The market may reward a bad trade every now and then, but over the long run, the market will take back those profits, and then some.

I’m trying to focus on trading only when the market is clearly trending. According to Stan Weinstein’s terminology, that would be trading only in Stages 2 and 4. If I’m not clear what the stage is, I should stay out.

This is similar to how I only swim in a swimming pool or when the sea is calm, I did not swim in Maldives near my villa as the current is strong. Trading should be the same. Why risk swimming during strong current when I know I am just a mediocre swimmer.

Next Steps

I think studying stage analysis will help. Since I do not have the full day to practice tomorrow, I should do some learning.

Will probably watch this tomorrow: https://www.youtube.com/watch?v=xZL0bwjzufo, plus read his book?

Also, who is Qullamaggie? Is he legit? 5k to 100m? Interested to find out more: https://www.youtube.com/watch?v=we5LLjFlHCc