Trade By Trend

The importance of visioning your life

2010-01-10T15:06:00.001-08:00

One of my of favorite blogs is The Kirk Report by Charles E. Kirk. His post about visioning your goals reminded me of the things I planned to accomplish during the last year, some of them I was able to accomplish successfully and some I hope to accomplish in the year to come.

Following Kirk advice I think I will spend the next few days making a list of all the things I wish to accomplish in the following year. I believe a written list will help clarify what are the most important things I need to focus on.

Here is a partial list of the things I need to take care of:

Launch ChartStocker international website
Successfully manage our portfolio.
Find a new daily job (As a project manager)
Find a bigger house
Have a new baby girl after my two boys (6.5 and 9.5 years old). I think I’m going to make this one a top priority :-)

What’s your goals for the coming year?

A screenshot of our US portfolio

2010-01-10T14:19:00.001-08:00

In my previous post I mentioned the new path me and my partner have embarked. One task is to manage a portfolio for a client. We decided to start with a moderate portfolio of ~128,000$.

It’s been a month and a half since we started managing the portfolio and I’m happy to say it’s going very well. We were able to gain more than 5% in this period.

I’m attaching a couple of screenshots of the portfolio taken on January 8th, 2010. The image shows a list of all the open trades.

I will post new screenshots of the portfolio from time to time to keep you updated.

Let me know which stocks you currently hold.

And we’re back…

2009-12-27T11:22:00.001-08:00

It’s been a long time since my last post but that’s only because a lot has happened. In the last year I was very busy setting up a business with a friend (Eran Perluk) who became my business partner.

We opened a web site www.chartstocker.co.il where we shared our stock picking with our visitors. As the year is about to end we are very pleased with the results of our portfolio. Our profit stands just above 70% (after commissions). If you know Hebrew you can see the screenshot of our brokerage account we took on October. The reason we haven’t updated the screenshot is because we are working very hard on opening an international version of the website. We already bought a domain and if all goes well we intend to launch the site in the beginning of February.

So Merry Christmas all and make sure you visit soon

Open positions for October 13th

2008-10-13T06:25:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
~~IRET~~	~~9/6/08~~	~~10.37~~	~~9.49~~	~~-8.5~~
QNTA	15/9/08	2.75	2.80	0.18

Open positions for September 29th

2008-09-29T06:34:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
IRET	9/6/08	10.37	10.93	5.4
~~CLRT~~	~~25/08/08~~	~~2.19~~	~~1.85~~	~~-15.5~~
QNTA	15/9/08	2.75	2.76	0.03

Open positions for September 22th

2008-09-20T08:20:00.001-07:00

Last week has been very hectic week for me so I didn’t find the time to publish my weekly status. I entered a new position QNTA due to new signal from the system.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
IRET	9/6/08	10.37	10.48	1.06
~~SHLM~~	~~7/6/08~~	~~22.06~~	~~21.73~~	~~-1.49~~
CLRT	25/08/08	2.19	2.09	-4.56
QNTA	15/9/08	2.75	2.70	-1.80

Open positions for September 8th

2008-09-07T23:54:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
IRET	9/6/08	10.37	10.48	1.06
SHLM	7/6/08	22.06	23.35	5.84
CLRT	25/08/08	2.19	2.09	-4.56

Open positions for September 1st

2008-08-31T22:27:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
IRET	9/6/08	10.37	10.33	-0.01
SHLM	7/6/08	22.06	24.22	9.79
CLRT	25/08/08	2.19	2.15	-0.01

Buy signal for August 25

2008-08-25T06:08:00.001-07:00

A new buy signal was received from the system for Clarient (CLRT).

I intend to buy CLRT during the next trading day.

Open positions for August 25

2008-08-23T22:08:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
~~SATC~~	~~05/05/2008~~	~~1.86~~	~~2.24~~	~~20.40~~
IRET	9/6/2008	10.37	10.28	-0.67
SHLM	7/6/08	22.06	23.97	6.06

Open positions for August 18th

2008-08-19T00:40:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
SATC	05/05/2008	1.86	2.11	13.44
~~GILT~~	~~27/05/2008~~	~~10.79~~	~~8.85~~	~~-17.00~~
IRET	9/6/2008	10.37	10.64	2.60
SHLM	7/6/08	22.06	23.25	2.88

Open positions for August 4th

2008-08-03T00:13:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
SATC	05/05/2008	1.86	2.52	35.48
GILT	27/05/2008	10.79	10.95	1.48
IRET	9/6/2008	10.37	10.69	1.48
SHLM	7/6/08	22.06	23.03	1.90

Open positions for July 28th

2008-07-27T20:29:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
SATC	05/05/2008	1.86	2.35	26.34
GILT	27/05/2008	10.79	10.90	1.02
IRET	9/6/2008	10.37	10.25	-1.16
SHLM	7/6/08	22.06	23.07	2.08

Open positions for July 24th

2008-07-23T21:08:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
SATC	05/05/2008	1.86	2.35	26.34
GILT	27/05/2008	10.79	10.91	1.11
IRET	9/6/2008	10.37	10.31	-0.58
SHLM	7/6/08	22.06	23.23	2.79

Open positions for July 8th

2008-07-07T23:07:00.001-07:00

Last week continued the negative movement we witnessed its prior week. SATC took a big hit and dropped to 32.80% but no stop signal was given. RCCC got a time based sell signal. I hold the stock for almost six months in which almost no movement had been seen. I sold the stock yesterday at 44.35.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
~~RCCC~~	~~22/01/2008~~	~~44.13~~	~~44.35~~	~~0.49~~
SATC	05/05/2008	1.86	2.47	32.80
GILT	27/05/2008	10.79	10.86	0.65
IRET	9/6/2008	10.37	9.55	-7.91
EPMD	23/6/2008	2.97	3.01	1.35

Open positions for June 30

2008-06-29T21:15:00.001-07:00

It’s been a volatile week which sadly ended badly. TSYS is about to sell today due to stop loss. IRETS is not looking very good as well and hopefully it will recover during the week. If you followed SATC you probably saw how volatile its behavior has been.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.57	1.00
SATC	05/05/2008	1.86	3.01	61.83
GILT	27/05/2008	10.79	10.87	0.74
IRETS	9/6/2008	10.37	9.64	-7.04
~~TSYS~~	~~16/6/2008~~	~~5.19~~	~~4.61~~	~~-11.18~~
EPMD	23/6/2008	2.97	2.99	0.67

Buy signal for June 23rd

2008-06-23T00:26:00.001-07:00

A new buy signal was received from the system for EP MedSystems (EPMD).

If you’ll look at the chart below you can see it had a major move 11 weeks ago where it gained around 84%. Despite the steep climb the stock has seen higher prices.

I intend to buy EPMD during the next trading day.

Open positions for June 23rd

2008-06-21T00:10:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.79	1.50
SATC	05/05/2008	1.86	3.29	76.88
GILT	27/05/2008	10.79	10.85	0.56
IRETS	9/6/2008	10.37	10.35	-0.19
TSYS	16/6/2008	5.19	4.87	-6.17

How to make sure you’re in a trend?

2008-06-19T06:16:00.001-07:00

My system tries to identify whether the market is currently in a trend. For the human eye discovering whether the market or a specific stock is in a trend is relatively easy. Just look at the graph and if the line goes up or down then chances are it is in a trend.

Discovering whether the stock is in trend helps filter the signals generated when the trend is opposite to your system’s trend. I.e if I build a system which trade only bullish market, I need to disregard all trades generated when the stock was in a bearish move.

When building a computerized system things become a bit complicated and my way of overcoming this problem was to measure the values of two close prices, one for the current day and one in the past x days. If the current’s day closing price was higher than the closing price of the other closing price I assumed I’m in a bullish period.

Running a test for this rule did eliminate lots of false trades however, I encountered another problem. There were times when the closing price of the current day was higher than the closing price of the previous measured period but only due to a peak in the price. Meaning, the stock was in the opposite trend but the system used two prices which gave resulted in a false signal. The way I overcome this problem was to measure the two periods on a moving average of the closing price rather on the price itself.

That did the trick. obviously you would need to find the right period for the moving average since using small period will make the moving average act like the closing price series and large period might be too slow and the system can miss the trend or enter too late.

If you have any other questions about computerized system, please let me know.

Buy Signal for June 16th

2008-06-16T06:23:00.001-07:00

A new buy signal for TeleCommunication Systems (TSYS) has been given by the system. I plan to buy the stock today.

Open positions for June 16th

2008-06-15T00:04:00.001-07:00

Last week encouraged me to the reason I decided to work in weekly timeframe. Last week movements for SATC were as follow:

Monday: –9%
Tuesday: 1.45%
Wednesday: -3%
Thursday: 10%
Friday: –1.68%

Week change: –3.3%

Working on a daily timeframe would not do good to my nerves but when you look at the picture from a week point of view the damage is not so bad.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.77	1.45
SATC	05/05/2008	1.86	2.92	56.99
GILT	27/05/2008	10.79	10.83	0.37
IRETS	9/6/2008	10.37	10.21	-1.54

Buy signal for June 9th

2008-06-09T05:44:00.001-07:00

A new buy signal for Investors Real Estate Trust (IRETS) has been given by the system. I plan to buy the stock today.

Open positions for June 9th

2008-06-08T23:49:00.001-07:00

ASE is going private with ASE Test (ASTSF) and the stock was removed from the NASDAQ. This has happened early in the previous week. At the moment I still see the stock in my active positions but am unable to sell it. When I called my broker I was told it may take several days so I’m still waiting.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.70	1.29
SATC	05/05/2008	1.86	3.02	62.37
~~ASTSF~~	~~05/05/2008~~	~~14.59~~	~~14.77~~	~~1.23~~
GILT	27/05/2008	10.79	10.90	1.02

Bull or bear, who cares?

2008-06-06T00:09:00.001-07:00

This post has been written following Trader Narrative’s great post about the financial stock leadership.

It may sound a bit harsh but I believe the definition of market status should not influence the average trader. The average trader doesn’t buy the market, he buys stocks which can perform quite differently from the market.

Lets take as an example SATC which is currently in my portfolio. I bought SATC four weeks ago and the stock has gained 68% since. At the same time the NASDAQ barley made 2.9%.

Other example of a signal that was profitable in 2007 is SQNM with 71%. The stock was bought in late August 2007 and was held up to February 2008.

The point I’m trying to make is the market will always have good bargains for a trader who knows where to look no matter whether the pundits consider it bearish or bullish.

The table below shows a simulation on the NASDAQ since the beginning of 2007

Symbol	Entry Date	Entry Price	Exit Date	Exit Price	% Change	MAE %	MFE %
SPPR	03/01/2007	6.35	09/07/2007	7.82	23.25	-4.18	26.22
FCTR	03/01/2007	23.46	26/02/2007	23.96	2.14	-4.87	2.34
DSCM	03/01/2007	3.66	08/01/2007	3.29	-10	-10	0
IMMR	08/01/2007	6.94	16/07/2007	19.3	178.1	-3.31	197.98
ECGI	08/01/2007	2.55	16/07/2007	3.27	28.24	-1.96	59.61
IIJI	08/01/2007	8.74	09/04/2007	9.79	12.01	-4.69	18.76
CSLR	08/01/2007	5.2	26/02/2007	5.49	5.58	-20.58	26.35
RELL	08/01/2007	8.74	26/02/2007	9.08	3.92	-6.69	10.87
SABA	08/01/2007	6.84	12/03/2007	6.16	-10	-10	13.3
CHUX	16/01/2007	21.24	26/02/2007	21.49	1.16	-7.6	4.77
CKSW	26/03/2007	3.42	01/10/2007	5.5	60.82	-17.84	97.66
ALSK	26/03/2007	14.11	09/07/2007	15.04	6.57	-3.82	14.47
HOLL	26/03/2007	4.38	07/05/2007	4.53	3.42	-5.48	8.45
QADI	26/03/2007	9.1	14/05/2007	8.69	-4.55	-15.37	10.5
CNST	26/03/2007	9.96	26/03/2007	8.96	-10	-13.76	0
PESI	02/04/2007	2.31	06/08/2007	2.8	21.21	-7.79	47.19
PCTI	16/04/2007	9.99	29/05/2007	9.2	-7.92	-10.27	3.39
XOMA	21/05/2007	3.3	09/07/2007	3.13	-5.15	-12.42	6.97
RADS	29/05/2007	13.16	03/12/2007	15.77	19.83	-6.46	39.29
ALTI	04/06/2007	3.19	13/08/2007	3.35	5.02	-12.23	28.21
CALD	16/07/2007	8.92	17/09/2007	8.44	-5.38	-8.74	13.34
STBA	23/07/2007	32.12	24/09/2007	33.17	3.27	-9.95	10.25
ASYT	23/07/2007	7.4	30/07/2007	6.66	-10	-10	0
IMGN	23/07/2007	5.63	23/07/2007	5.07	-10	-21.85	0
CEVA	23/07/2007	9.02	06/08/2007	8.12	-10	-10	0.22
ACTU	13/08/2007	6.34	31/12/2007	7.94	25.24	-8.68	41.8
SQNM	27/08/2007	4.81	19/02/2008	8.26	71.73	-1.25	141.79
ARTG	27/08/2007	3.1	14/01/2008	3.96	27.74	-11.61	56.13
BABY	27/08/2007	16.83	10/09/2007	15.15	-10	-10	0
CHKP	04/09/2007	23.31	05/11/2007	24.51	5.15	-4.8	14.93
PCOP	17/09/2007	5.68	29/10/2007	5.73	0.88	-10.92	7.39
INTV	24/09/2007	9.41	10/12/2007	9.05	-3.83	-11.9	17.22
CYTX	01/10/2007	6.05	12/11/2007	5.45	-10	-10	7.44
SNWL	08/10/2007	9.53	07/01/2008	9.85	3.36	-8.81	20.99
DYII	05/11/2007	6.13	12/11/2007	5.57	-9.12	-9.12	7.5
CTGX	19/11/2007	4.72	14/01/2008	4.36	-7.52	-7.52	28.18
IDEV	19/11/2007	7.33	31/12/2007	6.65	-9.26	-9.26	5.05
TQNT	26/11/2007	5.86	07/01/2008	5.27	-10	-10	20.82
RCCC	24/12/2007	44.35	Open	Open	1.01	-3.47	1.08
SATC	28/04/2008	1.83	Open	Open	61.2	-1.09	63.39
GILT	19/05/2008	10.88	Open	Open	0.09	-1.38	1.47

Links of the week

2008-06-05T11:13:00.001-07:00

John Forman of The Essentials of Trading share with us why sticking with your method is the best thing you can do.
Brett Steenbarger launched new blog for his new book.
Advisory Group write a column analyzing guru’s performance. This time they analyze the “fast money” gurus and apparently they don’t excel in making fast money or as Advisory Group put it:
”In summary, the Fast Money experts probably do not offer fast money with their stock picks, but they do as a group mostly outperform the broad stock market over the short term during recent months. The sample is not long enough to determine whether the outperformance is peculiar to recent market conditions.”

Open positions for June 2nd

2008-06-01T21:09:00.001-07:00

NUCO was acquired by Aurora Capital Group and the stock was removed from the NASDAQ. This has happed before and since my system cannot follow the stock anymore I am forced to exit the position on the next trading day.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.76	1.43
SATC	05/05/2008	1.86	2.88	54.84
ASTSF	05/05/2008	14.59	14.77	1.23
~~NUCO~~	~~19/05/2008~~	~~29.56~~	~~29.77~~	~~0.71~~
GILT	27/05/2008	10.79	10.99	1.85

Buy Signal for May 27th

2008-05-27T03:00:00.001-07:00

A new buy signal from the system for GILT. I intend to buy the stock during the day.

Open positions for May 27th

2008-05-27T02:57:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.64	1.15
SATC	05/05/2008	1.86	2.37	27.42
ASTSF	05/05/2008	14.59	14.76	1.65
NUCO	19/05/2008	29.56	29.77	0.71

Buy signal for May 19th & keeping up the faith

2008-05-18T10:13:00.001-07:00

A new buy signal has been issued by the system for NUCO. This buy signal and last week's portfolio results had me thinking about the recent period. If you've followed my blog in the past few months you probably saw that as time went by I sold most of the stocks in my portfolio, all but one. These selling's were a result of sell signals from the system and not the affect of fear caused by macroeconomic events. Ever since I opened this blog I have decided to stay true to my beliefs in the system and follow it no matter what happens.

Three weeks ago, due to changes in the NASDAQ which the system monitored, I started getting buy signals. And hopefully they'll turn into something great :)

I believe that the most important thing in trading, or any other area is believing in yourself. The rest will follow.

Open positions for May 19th

2008-05-18T00:57:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.53	0.90
SATC	05/05/2008	1.86	2.32	24.73
ASTSF	05/05/2008	14.59	14.72	0.89

Open positions for May 12th

2008-05-12T01:24:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.40	0.61
SATC	05/05/2008	1.86	1.82	-2.15
ASTSF	05/05/2008	14.59	14.70	0.75

Buy signal for May 5th

2008-05-04T23:07:00.001-07:00

After several months of dry season we're starting to get buy signals from the system. This week we have two new signals for the following stocks: SATC, ASTSF.

I intend to buy them during the next trading day.

Open positions for May 5th

2008-05-04T23:04:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.40	0.61

Open positions for April 21

2008-04-21T05:08:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.28	0.34

Open positions for April 14th

2008-04-14T04:40:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.32	0.43

Open positions for April 7th

2008-04-07T00:39:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.24	0.25

Open positions for March 31th

2008-03-31T23:02:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.23	0.23

Open positions for March 24th

2008-03-24T04:05:00.001-07:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
RCCC	22/01/2008	44.13	44.04	-0.20

Open positions for March 16th

2008-03-19T07:06:00.001-07:00

Is been a while since my last post. I guess the recession has finally caught me and as the economy slows my actions diminish as well. The system works as expected and trades are getting closed one after the other. As you can see from the table below I'm left with only one position. New signals will occur only when the QQQQ's Moving average crosses over from below.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
~~INFA~~	~~28/09/2007~~	~~15.72~~	~~16.95~~	~~7.82~~
~~AMSG~~	~~26/10/2007~~	~~26.68~~	~~23.60~~	~~-11.54~~
RCCC	22/01/2008	44.13	43.98	-0.34

Open positions for February 2nd

2008-03-02T10:08:00.001-08:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
INFA	28/09/2007	15.72	17.46	11.07
AMSG	26/10/2007	26.68	24.09	-9.71
RCCC	22/01/2008	44.13	44.03	-0.23

Open positions for February 24th

2008-02-24T11:07:00.001-08:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
IDEV*	~~24/09/2007~~	~~6.62~~	~~5.20~~	~~-21.45~~
INFA	28/09/2007	15.72	18.08	15.01
AMSG	26/10/2007	26.68	24.45	-8.36
RCCC	22/01/2008	44.13	44.05	-0.18

I use a stop lose rule which is to sell the stock if it loss 10% or more. However, since I trade on a weekly basis the loss on IDEV ended in 21.45%. This was a result of a steep decline which occurred last Thursday. Usually after a strong move downwards we witnessed correction of different magnitudes. A day later the stock went up 0.8% but unfortunately the week was over. Nevertheless the stock was sold as the system ordered.

What would you do?

2008-02-21T11:38:00.001-08:00

Since trading at this point is just a hobby which I tend to change and become a full time trader I set myself a workout plan which include staying late two to three times a week and study the markets as much as I can by reading books on the subject, subscribing to various RSS blogs, developing and perfecting different systems and last but not least, writing this blog.

You could say I knew technical analysis was my cup of tea since the beginning. Graphs and different oscillators fascinated me from the beginning and since I come from the software industry I guess develop computerized systems was just an evolution thing. Developing computerize system takes a lot of time where one develop, test, tweak and do the whole thing over and over again but once you are done all there is to do is follow the system signals, which most of you know, is not an easy task :).

Now here's my dilemma: I strive to improve myself by reading blogs, newsletters and books and thus hope to improve the way I trade. But since I follow the systems signals I find that reading about the current recession or the credit crunch or looking at a graph explain why I should buy gold is irrelevant to me.

I feel I have reached a point where reading few more posts in various blogs wont expand my knowledge in the direction I need.

Let me know what would you do in my place.

Keep track of the changes you make to your system

2008-02-19T04:20:00.001-08:00

In the early stage of the system development I was a bit absentminded. Lots of idea went trough my mind while I was going to sleep and were hastily tested in the following day. I jumped from one setup rule to the other while trying to find my golden egg. As time passed and the system started to mature I have noticed I occasionally repeat testing the same rules I tested before. The reason for this was because I didn't keep track of the changes I made to the system. The funny part is that I work as software developer for more than 10 years. In the software industry you have no choice but to use Source Control Management (SCM) tools which allows you to keep track of the changes one or more developers have made to the application during its development stage. SCM is also useful for branching which is the act of going back to a previous version and start a different version. For example when you go from version 1.0 to version 2.0 but still need to support version 1.0 by writing fixes and updates.

To overcome the problem, what I did was keep track of the changes I made to the code in Excel file. I created a table with the following columns:

Version - I've decided to keep every change I made in the script to a new file and label it with a new version number for example 1.57, 1.58.

Based on version - as described above, a script might branch into several different scripts as you test different ideas based on the same version. This is why it's important to know what version your current code is based upon so you can track the changes made between two scripts incase you want to incorporate them later on.

Changes Made - a short description of the changes made to the script. This should be one or two sentences long and only need to remind you what was changed. For example Modified the SMA to use 50 days period instead of 100 or Added another check to make sure the stock is liquid enough by checking the volume over a period of 3 months.

Using Monte Carlo tool I also collect the following statistical data regarding the performance of the system:

No of trades - The total number of the trades issued by the system. You need to remember that the simulator generates numerous trades which are not used in the final simulation as they might overlap with each other. For instance a simulation might use 140 trades (for a given period) while the there are over 500 raw trades. When using Monte Carlo simulation, the program randomly uses all the raw trades in order to generate new simulations and thus make sure the system performance well if other trades were chosen.

Total Average Profit - used to measure the average profit of all the simulation runs. I use 2000 runs to check each version of the script to minimize the random effect. This means the program generate 2000 different simulations based on the raw trades and only then it calculate the average profit.

Yearly average profit - using the Monte Carlo program I can switch to different periods and check how the system performed in each of them.

Total Average Drawdown -one of the most important parameters you want to know about your system is how much money it might lose on average. This should suite your mental capabilities and should not be overlooked.

Yearly Average Drawdown - same as above but only on a yearly basis.

Probability to achieve X% Profit - using the average profit and average drawdown the program calculate the probability to achieve X% profit.

I believe keeping track of your work methodology is one of the most important steps bringing you closer to become a professional trader. In my mind tracking the changes signal you understand that becoming a trader takes time and effort and not working upon impulse.

For sample screenshots you might want to visit this blog entry.

Open positions for February 19th

2008-02-18T23:41:00.001-08:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
IDEV	24/09/2007	6.62	5.96	-9.97
INFA	28/09/2007	15.72	18.31	16.48
AMSG	26/10/2007	26.68	24.85	-6.86
RCCC	22/01/2008	44.13	43.98	-0.34

Technorati Tags: Computerized system,Stock Market,Weekly status,sell signal,nasdaq

When to keep out of the market

2008-02-11T07:38:00.001-08:00

When developing a system based on a bullish trend following one needs to make sure the system doesn't trade in a bearish market. This will help minimize the false trades which are bound to happen in opposite trends. To overcome this problem I needed to identify the market direction. My idea was to use one of the indexes as a gauge. Since the main market I trade (although the system performed well in other markets as well) I tried to use the Nasdaq composite (^IXIC) and its SMA to determine if we are in a bearish or bullish period. If the index moved under its SMA I would stop buying until the index moved back above its SMA. I also checked whether I should also close all my position when the market is turning bearish but that turned to be wrong and this is why I am keeping my current positions. The results were outstanding. The system's total profit for the test period improved by 100%. (the simulated period last between November 2002 and November 2007). I was trying to further improve the result by using the QQQQ instead of ^IXIC which turned out to be a good bet as you can see from a previous blog.

I was looking at historical data for the QQQQ to see how long did it stay under its SMA using my current system settings for the SMA period. In the crisis of 2000 the QQQQ had stayed below its SMA from September 2000 to November 2001, went up for 2 months and then dived for another 10 months. That's a long period were you're not buying anything and hopping you wont need to sell anything due to stop loss. But one cannot argue with historical data and statistics.

I hope the current recession will not hold that long but if it does I will have to find something else to do with my spare time (as if trading on a weekly basis takes too much of my time).

Technorati Tags: nasdaq,computerized system,recession,stock market

Open positions for February 10th

2008-02-10T10:21:00.001-08:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
IDEV	24/09/2007	6.62	6.13	-7.40
INFA	28/09/2007	15.72	18.41	17.11
AMSG	26/10/2007	26.68	25.25	-5.36
RCCC	22/01/2008	44.13	44.03	-0.23

Technorati Tags: Computerized system,Stock Market,Weekly status,sell signal,nasdaq

Expand your knowledge

2008-02-05T11:12:00.001-08:00

Know your Federal Reserve Chairman - An interesting piece on Ben Bernanke's track toward the long awaited job.

Brett Steenberger share his favorite posts for 2007

Excellent blog by John Forman of The Essential of Trading about how to take the long view when trading

According to The Institutional Investor it seems everyone, including the big players had their share in the last market turmoil.

Trader's Narrative believe we are in the beginning of our way up, back on the trend's back.

Barry Ritholtzl post in "TheStreet" reveal What Investors Need to Know About Historical Data.

Open positions for February 3rd

2008-02-03T23:38:00.001-08:00

It seems the decline was restrained and we might hit market bottom. This does not mean we'll see the market soar in the following days or even weeks but I believe we will not see steep declines as well.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
~~ARTG~~	~~24/09/2007~~	~~3.00~~	~~4.24~~	~~41.33~~
IDEV	24/09/2007	6.62	6.45	-2.57
INFA	28/09/2007	15.72	18.54	17.94
AMSG	26/10/2007	26.68	25.87	-3.04
RCCC	22/01/2008	44.13	44.25	0.27

Technorati Tags: Computerized system,Stock Market,Weekly status,sell signal,nasdaq

How does it feel to be on the wrong side?

2008-01-21T22:41:00.001-08:00

Watching the video above brought some bad memories from my previous trading period. A period which led to a year break from the stock market. A year in which I went back to basics and tried to understand where did I go wrong and what needs to be done so these mistakes wont repeat.

My heart goes to this guy and I hope he recover from the loss and find the mental strength to sit back and try to figure out what has he done wrong.

One thing that I have noticed about the guy's trading method was the lack of stop loss. In the video he mention how he thought it might gap 100 point but it went down 300 and then another 500. WHERE ARE YOUR STOPS dude?

I urge you to read Brett's response to this video

Expand your knowledge

2008-01-20T13:21:00.001-08:00

Investors begin to see the light at market bottom.
Daily Option Report tries to figure why the VIX isn't moving with the market.
Debris from the subprime blast exposed in the form of $100 Billion writedowns.
Intra day and stock picks blog

Open positions for January 20th

2008-01-20T10:45:00.001-08:00

As the market goes through a healthy cleaning process the system act as expected and positions getting closed one after the other. Since the beginning of the month, 7 stocks out of the 13 stocks which I had in my portfolio have been closed. The portfolio has suffered a drawdown of 14% during that period.

In these periods I find it helpful to read any information talking about periods like the one we're now experiencing. I find that there is a common ground with all the books/blogs and it is to stay focus and remember to look at longer time frames than the current day, week or even month. As history repeat itself, even when discussing the financial markets, periods like this happened before and at the end of them the market returned to its natural direction.

As I mentioned in my previous post, we might already hit market bottom but a confirmation for this will only be available in the following week or two.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	3.72	24.33
IDEV	24/09/2007	6.62	6.80	2.72
INFA	28/09/2007	15.72	15.94	1.40
~~LWSN~~	~~16/10/2007~~	~~10.15~~	~~9.46~~	~~-6.80~~
ANDW	19/10/2007	14.36	15.04	4.74
AMSG	26/10/2007	26.68	27.24	2.10
~~SDIX~~	~~13/11/2007~~	~~5.24~~	~~4.75~~	~~-9.28~~
~~CTGX~~	~~26/11/2007~~	~~4.93~~	~~4.95~~	~~0.41~~

Technorati Tags: Computerized System,Stock Market,Weekly status,Nasdaq

Bulls, start your engine

2008-01-18T12:27:00.001-08:00

Looking at the chart taken from Fusion IQ we can see that currently, only 20% of the NYSE stocks trade above their 200 MA.

Historically speaking, it usually signaled the end of the bear period and was a sign for the bulls to begin their buying spree.

So, can us bulls warm up our engines?

Technorati Tags: Stock Market,NYSE,Bear,Bullish

The making of a support line

2008-01-13T23:10:00.001-08:00

If we look in the chart above we can see how a new support for the Nasdaq composite index is being created around 2440. This tells me that bears who try to lower the price find resistance by the bulls who struggle to slow the momentum and reverse its direction.

The RSI position at 32 indicates the Nasdaq is overbought. We can see that 40 which was used as a support line since August was recently broken. Breaking the support usually turns the line to a resistance and if we look at previous times, in the last couple of years, when the 40 became a resistance we can see that it took the Nasdaq between 2 to 3 weeks until the resistance became support once again. This statistics is correct in bullish periods were corrections periods last about 2 weeks. If the RSI will get back above 40 in 2 weeks I'll consider the last month as a correction or should I say one deep plunge.

Technorati Tags: Stock Market,Nasdaq,Tehcnical Analysis

Open positions for January 13

2008-01-13T11:18:00.001-08:00

It seems we are officially in a bear market and as you can see in the table below, my positions are getting closed one by one. The system is programmed not to trade in a bear market. this is done by checking the position of the QQQQ relative to its moving average. I.e, while the QQQQ is positioned below it's moving average no buy signals will be generated. Since this is the situation for the present, I do not expect any buy signals until the trend reverses. To answer your question as to why using the QQQQ, you might want to read this post.

I'm a bit disappointed from the way last year ended for me. I had expected last year to be profitable and until two weeks ago it has, but when the Nasdaq drops nearly 11% in just two weeks, computerize systems don't have enough time to adjust. Having said that I am determined to follow the system's alerts. I found that whenever doubts starts to pervade there is nothing like watching my system's simulation results to overcome it.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	3.97	32.33
IDEV	24/09/2007	6.62	6.22	-6.04
INFA	28/09/2007	15.72	15.63	-0.57
LWSN	16/10/2007	10.15	9.46	-6.80
ANDW	19/10/2007	14.36	15.04	4.74
AMSG	26/10/2007	26.68	28.66	7.42
SDIX	13/11/2007	5.24	4.75	-9.28
~~CTCH~~	~~19/11/2007~~	~~2.13~~	~~2.02~~	~~-12.80~~
~~TQNT~~	~~26/11/2007~~	~~5.90~~	~~5.18~~	~~-12.20~~
CTGX	26/11/2007	4.93	4.95	0.41

Technorati Tags: Computerized System,Stock Market,Weekly status,Nasdaq

Did the Nasdaq hit market bottom?

2008-01-10T23:22:00.001-08:00

The first days of the new year hasn't being easy for us bullish advocate. The market once again used it's bearish wake up call to remind us all that rallies don't last forever and what goes up must come down. As my trades are managed by the system, I believe my inner conflicts diminish as opposed to the average discretionary trader when it comes to close a losing position.

Looking at the chart above we can see two consecutive days were the Nasdaq made new highs. The RSI indicator's current value is 36 and is leaning to the positive direction.

The Twiggs Money Flow indicator also appears to change it's momentum direction after eight consecutive days and is heading up.

Looking at the price graph we can see Tuesday and Wednesday touched the red support line which was tested before in mid August and early in April of last year.

Lets hope that today's behavior will be the same as the last couple of days.

Open positions for January 6

2008-01-07T05:12:00.001-08:00

Last week was very hard for bears and as the system trade only long positions it also got hit by the sharp decline the market witnessed. Three of my positions got a sell signal which I intend to execute today. Hopefully this week will compensate for last week but I say it with little hope.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.30	43.33
IDEV	24/09/2007	6.62	6.34	-4.23
INFA	28/09/2007	15.72	17.11	8.84
LWSN	16/10/2007	10.15	9.41	-7.27
ANDW	19/10/2007	14.36	15.04	4.74
~~TYL~~	~~19/10/2007~~	~~14.08~~	~~12.35~~	~~-12.29~~
AMSG	26/10/2007	26.68	27.66	3.67
~~VGR~~	~~05/11/2007~~	~~21.55~~	~~19.33~~	~~-10.30~~
SDIX	13/11/2007	5.24	4.83	-7.75
CTCH	19/11/2007	2.13	2.02	-5.16
TQNT	26/11/2007	5.90	5.98	1.36
CTGX	26/11/2007	4.93	5.28	7.10
~~PEGA~~	~~03/12/2006~~	~~12.46~~	~~10.64~~	~~-14.61~~

Technorati Tags: Computerized System,Stock Market,Weekly status,Nasdaq

Buy signal for Rural Cellular Corporation (RCCC)

2007-12-31T03:07:00.001-08:00

RCCC got a buy signal in the end of last week according to the system. I'm planning to buy it during today's trading session.

Technorati Tags: Buy signal,Nasdaq,Computerized system

Open positions for December 23

2007-12-31T01:44:00.001-08:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.37	45.67
IDEV	24/09/2007	6.62	7.09	7.10
INFA	28/09/2007	15.72	17.79	13.17
LWSN	16/10/2007	10.15	10.30	1.48
ANDW	19/10/2007	14.36	15.04	4.74
TYL	19/10/2007	14.08	13.24	-5.97
AMSG	26/10/2007	26.68	27.26	2.17
VGR	05/11/2007	21.55	20.20	-6.26
SDIX	13/11/2007	5.24	5.22	-0.31
CTCH	19/11/2007	2.13	2.06	-3.29
TQNT	26/11/2007	5.90	6.85	16.10
CTGX	26/11/2007	4.93	6.61	13.79
PEGA	03/12/2006	12.46	11.67	-6.34

Technorati Tags: Computerized System,Stock Market,Weekly status,Nasdaq

The system's performance for 2007

2007-12-31T00:12:00.001-08:00

As we reach the end of 2007, I've decided to run a simulation for the current year and see how well the system performed had I used it throughout the year.

AS always I start with 100,000 and my position sizing is based on maximum risk of 1% per trade.

The simulation shows a profit of 27% achieved by 7 profitable trades out of 28 in total. The Nasdaq gained around 10.7% in the same period.

Performance:

List of trades:

Technorati Tags: Stock Market,Computerized System,Nasdaq,Technical Analysis

Is Fridays behavior an indicator to Mondays behavior?

2007-12-27T06:05:00.001-08:00

As I mentioned in my previous post, I'm currently reading a book titled "How I Trade For A Living". In his book, the author reveal some of his trading methods and even going through some of his past trading positions. According to the author, a bullish Friday has influence on Monday behavior meaning bullish Friday will usually result in a bullish Monday.

I've decided to conduct a small research on the Nasdaq. I went back to January 1985 and counted the number of days where a bullish Friday ended up in a bullish Monday. Out of 627 bullish Fridays, 357 Mondays ended up bullish as well which is ~59%.

Trying to improve the ratio between winning and losing Mondays I decided to check Monday only if Friday gain was above 0.5%. Out of 310 bullish Fridays, 195 Mondays (approximately 69%) ended up bullish as well. The average gain for Monday was 1.02% and the average loss 0.13% as opposed to the previous test were the average gain was 0.84% and the average loss was 0.07%.

Looking back at the results it seems the author has a valid point and one can use this knowledge to increase the probability of a short-term profit by examining Friday's momentum.

Technorati Tags: Knowledge,Stock Market,Nasdaq

The usage of seasonality

2007-12-25T04:00:00.001-08:00

Technorati Tags: Seasonality,Bullish,Stock Market

I'm currently reading a book titled "How I Trade For A Living" written by Gary Smith. The book expose you to many of the author's insights in the stock market.

One of the chapters in the book deals with seasonality and how to take advantage of it. The author write about a research conducted by Norman Fosback which shows that the market has bullish bias during the last trading day and first four trading days of each month. Further more, this bias is evident in the two days before each holiday. These days sum up to 28% of all trading days a year. Fosback run a simulation which traded only during these days from 1928 to 1994. The hypothetical account grew from 10,000 to 4.6 million dollar.

In his book, Gary note that even though this research is old he uses this knowledge and it still works for him. What puzzles him (and me) is that patterns like this are usually evaporate in the course of time as people take advantage of them, however the seasonality pattern seems to be still valid. If we examine yesterday's behavior we can see that it is exactly what happened. Lets wait till the end of the month and see if it will work as well.

Open positions for December 23

2007-12-24T01:17:00.001-08:00

Technorati Tags: portfolio,system,computerized system

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.60	53.33
~~INTV~~	~~24/09/2007~~	~~9.34~~	~~8.38~~	~~-10.28~~
IDEV	24/09/2007	6.62	7.15	8.01
INFA	28/09/2007	15.72	17.80	13.23
LWSN	16/10/2007	10.15	10.24	0.89
ANDW	19/10/2007	14.36	14.93	3.97
TYL	19/10/2007	14.08	13.69	-2.77
AMSG	26/10/2007	26.68	27.51	3.11
VGR	05/11/2007	21.55	20.52	-4.78
SDIX	13/11/2007	5.24	5.30	1.22
CTCH	19/11/2007	2.13	2.12	-0.47
TQNT	26/11/2007	5.90	6.70	13.56
CTGX	26/11/2007	4.93	5.73	16.23
PEGA	03/12/2006	12.46	11.97	-3.93

Open position for December 16

2007-12-16T10:22:00.001-08:00

Technorati Tags: portfolio,system,computerized system

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.60	53.33
INTV	24/09/2007	9.34	8.69	-6.96
IDEV	24/09/2007	6.62	7.34	10.88
INFA	28/09/2007	15.72	17.25	9.73
LWSN	16/10/2007	10.15	9.79	-3.55
ANDW	19/10/2007	14.36	14.82	3.20
TYL	19/10/2007	14.08	14.93	6.04
AMSG	26/10/2007	26.68	25.37	-4.91
VGR	05/11/2007	21.55	22.25	3.25
SDIX	13/11/2007	5.24	5.39	2.94
CTCH	19/11/2007	2.13	2.20	3.29
TQNT	26/11/2007	5.90	6.43	8.98
CTGX	26/11/2007	4.93	5.36	8.72
PEGA	03/12/2006	12.46	11.58	-7.06

Diversification - is it really essential?

2007-12-10T01:25:00.001-08:00

Portfolio diversification means one should hold assets from different markets or sectors in order to reduce the risk.

I believe that in all the books I have red, no one question the necessity of diversification in a portfolio. Further more, the sample portfolio constantly contains equities along with commodities and I find this very confusing. Even in a bear market there are a few stocks which rise. So, instead of looking at other markets I try to improve my stock picking in a specific market. Building a mechanical system which perform well in different markets is very hard. I have tested my system in different markets like the FTSE, DAX, VSE and The Shanghai stock market and it worked well but since I concentrate on the Nasdaq I made several changes which showed great results on this market in particular.

So, is using one market acceptable? Let me know what you think of diversification.

Open positions for December 9

2007-12-09T03:25:00.001-08:00

As in the previous week, the first days didn't look too good but as days were passing by the decline turned its way to rise which continued until the end of the week. Last week helped to minimize the portfolio drawdown which occurred during the last couple of months.

If anyone is interested, I keep a demo portfolio built on signals produced by my system. You can follow my progress in my Invetopedia account.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.49	49.67
INTV	24/09/2007	9.34	9.09	-2.68
IDEV	24/09/2007	6.62	7.42	12.08
INFA	28/09/2007	15.72	17.82	13.36
LWSN	16/10/2007	10.15	10.17	0.20
ANDW	19/10/2007	14.36	14.85	3.41
TYL	19/10/2007	14.08	15.62	10.94
AMSG	26/10/2007	26.68	26.08	-2.25
VGR	05/11/2007	21.55	22.23	3.16
SDIX	13/11/2007	5.24	5.32	1.60
CTCH	19/11/2007	2.13	2.25	5.63
TQNT	26/11/2007	5.90	6.24	5.75
CTGX	26/11/2007	4.93	5.02	1.83
PEGA	03/12/2006	12.46	12.31	-1.20

Test results for the system

2007-12-04T03:29:00.000-08:00

After reading the research mentioned in my previous entry, I thought I might be able to improve the system by checking the the Nasdaq Composite Index (^IXIC) performance as another measure before getting into a position. So now system checks whether the Nasdaq is positioned above its moving average. This tells me that we're in a bullish trend which is the only market the system trade.

Simulation results revealed big improvements. I thought I might check and see if I can improve the results even more, so I checked the same concept but rather than using the Nasdaq Composite Index to use the QQQQ. The Results were even better and here are a few screenshots from the Monte Carlo simulation.

Simulation period: November 11, 2002 - November 12, 2007
Starting capital: 100,000
Maximum risk percent: 1%
Commission: 0.01$ per share
Slippage: 2% of the base price
Number of raw trades: 547
Number of simulation: 2000

	Average profit: 623%
	Average yearly profit:48%
	Average Drawdown: -12.5%
	Average yearly drawdown: -7.61%
	Chance of achieving Profit Level
	Chance of achieving Profit Level - Yearly

Expand your knowledge

2007-12-02T07:34:00.001-08:00

I came across an interesting research which examined whether profit can be improved using moving averages crossover as a replacement for BAH (Buy and Hold). The research examined the QQQQ in the years between 1991 and 2001. At this point some of you may say of "course SM is better than BAH", which is also true according to the research, but the interesting part is by how much.

The research shows using MA crossover resulted in up to twice the profit for the same period.

This gave me an idea how I can try and improve the system. I will publish the results in the following week.

Reference: SUPERIOR RETURNS FROM AVERAGE INDICATORS

Buy signal for Pegasystems Inc (PEGA)

2007-12-02T03:52:00.001-08:00

PEGA triggered buy signal in the end of last week. looking in the weekly chart I believe the stock is on the verge of setting a new high.

Open positions for December 1st

2007-12-01T10:27:00.001-08:00

Last week started bad and the portfolio suffered 2% loss. Nevertheless, with Tuesday and Wednesday rally the loss was covered and my portfolio ended up with a small profit.

My insight for this week is believe in the system and stay strong during bad days. If the results of the simulation are correct (which I believe are), the system had overcome events like we saw in the last week and at the end came out very profitable. To be honest, I am very pleased with the way I dealt with last week: I didn't panic during Monday and knew this is part of the game. If I need to credit someone for this mental strength it's Brett Steenbarger who's profound blog entries accompanies me each day.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.18	39.33
INTV	24/09/2007	9.34	9.78	4.71
IDEV	24/09/2007	6.62	7.49	13.14
INFA	28/09/2007	15.72	17.15	9.10
LWSN	16/10/2007	10.15	9.72	-4.24
ANDW	19/10/2007	14.36	14.66	2.09
TYL	19/10/2007	14.08	15.06	6.96
AMSG	26/10/2007	26.68	25.86	-3.07
VGR	05/11/2007	21.55	22.02	2.18
SDIX	13/11/2007	5.24	5.38	2.75
CTCH	19/11/2007	2.13	2.05	-3.76
TQNT	26/11/2007	5.90	5.93	0.51
CTGX	26/11/2007	4.93	5.20	5.48

Expand your knowledge

2007-11-30T02:39:00.001-08:00

Results of a study shows the important of self esteem with relation to the achievements one may have in his life.
Stay true to your beliefs and don't sell your soul - Brett Steenbarger confesses his dilemmas.
TraderFeed on turning setbacks into goals
Trader's Narrative waits for seasonality to kick in
Kevin explains what reverse divergence is.
Barry Ritholtz from "The Big Picture" has a different view on Q3's GDP=4.9%

Buy signal for Computer Task Group (CTGX)

2007-11-26T06:54:00.001-08:00

CTGX got a buy signal by the system. Looking at the weekly chart, we can see the stock is on the verge of breaking a strong resistance around 4.82. The resistance has been broken before during the last weeks but could not hold for too long. The stock had no real movement since the beginning of the year but looking few years back, around 2000 we can see the stock was once around 20 so there is quite a potential here. having said that one cannot say when will this happen.

The MACD indicator is positioned above it's signal line. The Chaikin Money Flow indicate the stock was aggressively bought during the last weeks but then sold in the last two week like most of the stocks during the steep decline of the last two weeks. The bearish behavior which the stock witnessed however, didn't bring it to the initial level prior to the bullish movement and it was only a partially sold.

Buy signal for TriQuint Semiconductor (TQNT)

2007-11-26T00:51:00.001-08:00

TQNT got a buy signal by the system. Looking at the weekly chart, we can see the stock broke a very strong resistance around 5.7 which has been tested and a result became a support.

MACD positioned above it's signal line and CMF shows strong buying power.

BTW, I use Twiggs Money Flow as a replacement for CMF. it has the following advantages over CMF:

To solve the problem with gaps, Twiggs Money Flow uses true range, rather than daily Highs minus Lows.
Rather than a simple-moving-average-type formula, Twiggs Money Flow applies exponential smoothing, using the method employed by Welles Wilder for many of his indicators.

Open positions for November 26

2007-11-25T23:21:00.000-08:00

del.icio.us Tags: Sell signal,Weekly status,Computerized system,Stock Market

Last week's bearish behavior ended up with two sell signal as seen in the following table. Looking at the High / Low indicator on the SPX, it seems it is highly oversold and I hope we'll see some bullish behavior this week.

As for the sell signals. I intend to close my positions for CERS and GPX during today's trading day.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.13	37.67
INTV	24/09/2007	9.34	9.99	9.67
IDEV	24/09/2007	6.62	7.26	9.67
~~CERS~~	~~28/09/2007~~	~~8.9~~	~~7.59~~	~~-14.72~~
INFA	28/09/2007	15.72	16.40	4.33
LWSN	16/10/2007	10.15	9.41	-7.29
ANDW	19/10/2007	14.36	14.53	1.18
TYL	19/10/2007	14.08	15.82	12.36
AMSG	26/10/2007	26.68	25.95	-2.74
VGR	05/11/2007	21.55	21.84	1.35
~~GPX~~	~~05/11/2007~~	~~10.88~~	~~9.77~~	~~-10.20~~
SDIX	13/11/2007	5.24	5.04	-3.74
CTCH	19/11/2007	2.13	2.15	0.94

Reminiscences from a recession

2007-11-23T01:29:00.001-08:00

Reading Paul B. Farrell column on MarketWatch and the comments that followed brought up some memories from the last years here in Israel.

It seems most people fear recession and its consequences. As someone who lives in a country which just came out of a rough period caused by a recession I can understand and relate to some of the emotions arise upon hearing the word "recession". As you might have guessed, I live in Israel. I work in the High Tech sector now and have been working as a developer in one of the public universities during the beginning of the recession period.

Following the Intifada back in 2000 (war between Israel and the Palestinians), economic growth had fallen from 8% in 2000 to 0% in 2001. Three years later, on 2004 following a deep recession, the government decided to execute a health plan. Among the steps which has been taken:

Cutting monthly salary by 5% for all public workers (myself included) for a period of 2 years. This act was called "Economy encouragement wage".
Raising the VAT for a period of one year.
Budget cut for all public offices.
Job cut in all public offices including government offices, universities, local council...
Cutting health care allowance.
Cutting national insurance allowance.
Major cut in the security budget which you may not know, but here in Israel, due to the regular tension between Israel and its surrounding neighbors, security budget relative to western countries is big.

The predictions of the ministry of finance office talked about a rough period of three to four years which in the end will get us out of the recession and improve the financial state of all sectors.

Those years weren't easy for me and my family. I have lost my job as more than 15% of the working population had. Luckily I was able to find a new job soon enough but there were lot of people which were unemployed for a period longer than a year. A lot of families found themselves under the poverty line and organization who aim to help those in needs sprout all over the country. Many factories and companies were bankrupt and things didn't look too promising.

Looking back, these weren't happy days but I believe they were necessary to bring us to where we are today with an economic growth of 6.6% only after three years.

It's a painful process but at the end of it lies a brighter future for all. I believe recession is cyclical in western economic societies and thus inevitable. All you can do is plan ahead for these times.

Subprime???

2007-11-21T12:01:00.001-08:00

If you ever asked yourself what does it all mean?

Watch this hilarious video taken from "The Last Laugh" show by John Bird & John Fortune

Test results for my improved system

2007-11-21T04:01:00.001-08:00

During the last weeks I have tried to improve the system by fine tuning different parameters I use. One example is to modify the value of the total volume traded in the last 20 days. Previously I have watched stocks that traded with a volume above 1,000,000. I have tried to reduce the number and found that 300,000 resulted in higher profit. The reason I used 1,000,000 in the first place was to make sure the stock is liquid enough. I believe that a stock trading with 300,000 shares in 20 days is still considered liquid.

In the process of tweaking my system, I was able to improve the average profit for 5 years by more than 100 percent. From 345% to 463%.

Here are some statistics regarding the improved system:

Simulation test period: November 9, 2002 - November 11, 2007
Maximum Risk Percent per trade: 1%
One way slippage: 0.2% of the price
I run the simulation on the complete Nasdaq Composite stock list

After running the simulation I moved the raw trades(559) to the Monte Carlo application and used 2000 runs which produced the results below.

Total trades: 559
Average profit: 463.58%
APR: 39.54%
Probability for win 300% profit in 5 years: 72.8%
Probability for win APR of 30%: 55.12%

Here are few screenshots from the Monte Carlo application:

Profit

Drawdown

Probability

APR Probability

Buy signal for November 17, 2007

2007-11-18T11:59:00.001-08:00

CTCH got a buy signal. At the moment the MACD is above it's signal although it looks like it is going to cross it on it's way down. The "Twiggs Money Flow" indicator is positioned above zero at 0.18, which shows that money is flowing into the stock.

According to some research I have conducted regarding the MACD value at times of a buy signal, it seems there is no correlation between the two. This means that a positive MACD which crosses it's signal from below just as a buy signal is generated, doesn't improve the chance of the trade to become profitable. Trying to add an MACD rule into my system resulted in fewer trades and lower profit.

A few modification I have made to the system in the last few weeks, improved it's result substantially. I intend to post the results in the following week.

Close signal for CLWT

2007-11-18T00:39:00.001-08:00

The stock was closed during the last week with a loss of -4.13%.

Open positions for November 17, 2007

2007-11-18T00:38:00.001-08:00

It's been another week where mental endurance was tested to it's extent. The markets experienced high volatility which in the end resulted in 0.59% for the Nasdaq. The Dow, as the Nasdaq, saw great volatility and ended up with 1% gain.

As you can see from the table below the portfolio hasn't suffer greatly from last week and profit/loss shifted from one position to another.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.17	39.00
INTV	24/09/2007	9.34	10.15	8.67
IDEV	24/09/2007	6.62	7.39	11.63
CERS	28/09/2007	8.9	8.24	-7.42
INFA	28/09/2007	15.72	16.17	2.86
LWSN	16/10/2007	10.15	9.61	-5.32
ANDW	19/10/2007	14.36	14.62	1.81
TYL	19/10/2007	14.08	15.85	12.57
AMSG	26/10/2007	26.68	26.91	0.86
VGR	05/11/2007	21.55	21.94	2.81
GPX	05/11/2007	10.88	10.04	-7.72
SDIX	13/11/2007	5.24	4.99	-4.70

Stay tuned for next week's update.

Open positions for 10/11/2007

2007-11-11T23:24:00.001-08:00

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.17	39.00
INTV	24/09/2007	9.34	9.96	6.64
IDEV	24/09/2007	6.62	7.07	6.80
CERS	28/09/2007	8.9	9.06	1.80
INFA	28/09/2007	15.72	16.00	1.78
LWSN	16/10/2007	10.15	10.06	-0.89
ANDW	19/10/2007	14.36	14.74	2.65
TYL	19/10/2007	14.08	15.31	8.74
AMSG	26/10/2007	26.68	26.03	-3.82
VGR	05/11/2007	21.55	21.48	-0.32
GPX	05/11/2007	10.88	10.03	-7.81

Stayed tuned for next week's update.

Buy signals for November 3rd

2007-11-05T04:58:00.001-08:00

The scan for the previous week resulted with 2 buy signals:

NTWK which was sold 3 weeks ago due to stop loss signal and gained ~30% since, got a new buy signal. This example demonstrates one of the problems with computerized trading system. For the trained eye, the exits signal was a result of a natural and predicted behavior of the bulls who became restless after a 3 weeks rally which yielded ~70%. As a result the stock went down 10.86% to which the system responded with a stop loss signal. Since I'm bound to follow the system I closed my position. A closer look at the volume for the that week confirmed my analysis as it showed that the volume was much lower than the average volume. This tells me the major trend is still bullish. I will try to find a way to take into consideration the analysis above. This is not as simple as it may seem. This might work for NTWK, but running the modified system on different markets may result in a less attractive system (which is usually the case when you try to generalize a rule).

I was able to fine tune the system so it now ignores signal such as the above.

VGR got a buy signal. Looking at the Twiggs Money Flow indicator shows the stock is being bought for the last two weeks. The stock is currently on the verge of breaking the resistance of 21.8. I intend to buy this stock during the following trading day.

GPX also got a buy signal and I intend to buy it as well.

Open positions for November 3rd

2007-11-04T03:34:00.001-08:00

Thursday was a real killer. Luckily, no sell signal were executed as Friday came.

A week like the one we saw builds my confidence regarding the system's stability. If it passed a day like Thursday without any sell signal (which means no stock lost more than 10 percent throughout the week) then we're doing fine.

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.54	51.33
INTV	24/09/2007	9.34	9.61	2.89
IDEV	24/09/2007	6.62	7.55	14.05
CERS	28/09/2007	8.9	9.17	3.03
INFA	28/09/2007	15.72	16.69	6.17
LWSN	16/10/2007	10.15	10.77	6.11
ANDW	19/10/2007	14.36	14.68	2.33
TYL	19/10/2007	14.08	15.58	10.65
AMSG	26/10/07	26.68	25.66	-3.82

Stayed tuned for next week's update.

Buy signal for AmSurg Corp. (AMSG)

2007-10-28T10:55:00.001-07:00

AMSG got a buy signal during the week and for some reason I decided to buy the stock during the trading day on Friday instead of waiting until the end of the day. As a result I bought the stock at a price much higher (26.68) than the closing price (26.07). I have no idea why I've done it but it's done and I'll have to live with it :).

Theoretically, I would rather buy the stock in the following week and "lose" few percents than to buy too early and discover that the signal was gone as result of a drop at the end of the day.

Open positions for October 27th

2007-10-27T09:46:00.001-07:00

Last week was pretty good with ARTG rallied to 4.37 setting the profit to 45.67%. TYL gaining 11.2% on Friday bringing the profit to 12.22%. The trend sure was my friend this week.
Unfortunately EPIC is out of the game with ~18% loss (stock is sold if price drops 10% below the entry price).

Here is the status of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit %
ARTG	24/09/2007	3.00	4.37	45.67
INTV	24/09/2007	9.34	9.80	4.93
IDEV	24/09/2007	6.62	7.83	18.28
~~EPIC~~	~~26/09/2007~~	~~13.63~~	~~11.12~~	~~-18.45~~
CERS	28/09/2007	8.9	8.9	0.00
INFA	28/09/2007	15.72	17.06	8.52
LWSN	16/10/2007	10.15	11.03	8.67
ANDW	19/10/2007	14.36	14.45	0.67
TYL	19/10/2007	14.08	15.80	12.22

I would like to remind you that I am a long term trader and my system is built around weekly charts, so open positions can stick around for quite a while.

Stayed tuned for next week's update.

Buy signal for Euro Tech Holdings Co. Ltd. (CLWT)

2007-10-26T09:01:00.001-07:00

While getting ready for this week, I run the screener on the Nasdaq and discovered another buy signal for CLWT. I wasn't near a computer so I was unable to post anything.

Expand your knowledge

2007-10-20T15:58:00.001-07:00

If you have the patience and mental strength - find your 40,000% return stock.
Brett Steenbarger of TraderFeed publish his prediction for the following week and it looks a bit depressing.
Interesting article about Nassim Taleb (also available in PDF) taken from one of the TraderFeed's posts.
Trader Mike post a link regarding Lifeway Foods, Inc. (LWSN) which I bought last week due to a buy signal from my system.
After reading the first link. It seems Google is still a bargain at 600+$
Advisory Group's research shows there is no point trying to predict the economy's direction with the "Anxious Index".

Open positions for October 20th, 2007

2007-10-20T13:22:00.001-07:00

Last week had a very bearish behavior and Friday ended up to be real massacre. luckily, the system didn't issue any sell signals.

Here is the status of my current holdings:

Symbol	Entry Date	No. of weeks	Entry Price	Current Price	Profit %
ARTG	24/09/2007	4	3.00	3.36	14
INTV	24/09/2007	4	9.34	10.03	-2.03
IDEV	24/09/2007	4	6.62	7.81	19.03
EPIC	26/09/2007	4	13.63	13.59	-6.46
CERS	28/09/2007	3	8.9	10.18	2.47
INFA	28/09/2007	3	15.72	16.67	6.49
LWSN	16/10/2007	1	10.15	10.19	0.39
ANDW*	19/10/2007		14.36	14.34	-0.14
TYL*	19/10/2007		14.08	13.79	-2.06

ANDW and TYL had a buy signal 3 weeks ago which I somehow missed. since both stocks were losing around 1% I decided to take the chance and buy them.

I would like to remind you that I am a long term trader and my system is built around weekly charts, so open positions can stick around for quite a while.

Stayed tuned for next week update.

A psychological war

2007-10-15T23:57:00.001-07:00

In my last post I mentioned I was going to sell my holdings for NTWK since I received a sell signal from the system. I sold it for 3.15 which is exactly 10% below my entry price. If any of you followed the stock you probably saw it closed on 3.79 which is 21.47%.

Now comes the big war between the mind and my instincts:

The mind tells me I should sell since I received a sell signal from the system. I have tested the system hundreds of times and I'm positive it works best as it is. Having said that and to be on the safe side, I run a few tests over the weekend trying to increase the value of the stop loss from 10% to 15%. The results were conclusive and proved that setting the stop loss to 10% yield more profit and reduce the drawdown.

My instincts on the other hand, told me last Friday's drop was just a normal adjustments fueled by the general market behavior for the same day. I have searched the interment and could not find any news to support the decline.

I try to educated myself and learn to trust my system. To be honest, it is very hard once you start to trade with real money. I believe that eventually I will be able to control the "what if ..." questions flooding me every time I encounter a similar situation.

Let me know what you do to overcome this dilemma.

Come into my trading cubicle

2007-10-14T12:22:00.001-07:00

I decided to share the signals generated by my system with the readers of this blog. I'm currently invested in 8 stocks, all from the Nasdaq stock exchange.

Here is a list of my current holdings:

Symbol	Entry Date	Entry Price	Current Price	Profit % (After commission)
ARTG	24/09/2007	3.00	3.36	12
INTV	24/09/2007	9.34	10.03	7.39
IDEV	24/09/2007	6.62	7.81	17.98
EPIC	26/09/2007	13.63	13.59	-0.29
CERS	28/09/2007	8.9	10.18	14.38
INFA	28/09/2007	15.72	16.67	6.04
NTWK*	05/10/2007	3.50	3.12	-10.86

* A stop loss signal was received for NTWK as it dropped below 10% from it's entry price. I intend to sell it on Monday around the middle of the day.

At the end of last week I received a buy signal for LWSN. I intend to buy it on Monday.

If you recall, my system works on weekly charts, so all trading activities are done on Friday at the end of the trading day. Since I'm a long term trader, I give my self the luxury of executing my trades in the beginning of the following week so I can verify that the data I download from Yahoo is correct.

I intend to keep the signal service updated on a weekly basis, so stay tune.

Test results for my system

2007-10-08T05:56:00.001-07:00

I thought I should publish some statistics regarding my system. The system was build using a technical analysis software called WealthLab.

The system is build around the concept of trend following and as such uses moving averages with additional factors to determine the entry price. Once a signal has been accepted the system "ride" the trend as much as it can. This means, a trade can last from one week to several years. I know this sounds like a lot of time, but when the profit for a long trade can pass 1000% I think it is acceptable. As a precaution not to trade illiquid stocks, the system filter any stock with average volume less than 1,000,000 shares in the last 3 months.

Stop loss signal received if the price drops 10% below the entry price. For money management I use the "Percent Risk Model".

The system performed well on different markets but the market which performed best was the NASDAQ. I believe that even in a flat market, like we see this year with the NASDAQ, there are stocks which outperform and my goal is to find as many of them as possible. for example, watch SSTR on a weekly chart. The stock climbed more than 100% in two weeks. A move that was caught by the system.

I run a simulation using the complete NASDAQ Composite stock list (~3000 stocks) for the last 10 years.

The following parameters were used:

Starting capital: 1,000,000
Maximum risk percent: 1%
Commission: 0.01$ per share
Slippage: 2% of the base price

The raw trades (443 trades) where then passed to a Monte Carlo simulation application developed by the makers of WealhLab.

Here are some screen shots taken from the Monte Carlo simulation run.

Profit Analysis

Drawdown Analysis

Probabilities

Performance tab within Wealth Lab

Equity Curve tab within Wealth Lab

Drawdown tab within Wealth Lab

This Stock Ready to Explode

2007-10-05T15:51:00.001-07:00

As a diligent reader of Brett Steenbarger's blog, I followed one of the links he posted on the subject of emotions and their affect on trading. A specific link that caught my eye was "Spam Spasms: This Stock Ready to Explode!".

I believe I get around 20 pink sheet's spam related emails a week, not including the ones which get caught by Gmail's spam filter. While reading this article I was amazed to find how many people fall for this scam. It appears that about 100 Millions emails are sent every week. "Spam touting also produces a significant increase in trading volume. On days when there is touting (no touting), a touted stock is the most actively traded stock 81% (6%) of the time."

I'm wondering why is it that people cannot distinguish spam email from a true email. Why is it people trust someone they don't know and use their well earned money to buy stocks which they know nothing about?

History doesn't change and people don't learn from there mistakes. At least some of them don't.

I'm planing to upload some statistics about my system in the next week. I'd love to hear your comments about the results.

To sell or not to sell

2007-10-04T11:09:00.001-07:00

As my trading system works on weekly charts, signals are received on the last day of the trading week which is Friday. I believe a sell signal will be generated by the system tomorrow for SSTR (see this my previous entry for more info). The reason for this, is my stop loss rule which sell a position if the closing price drops below 10% of the entry price. On the first day of this week SSTR dropped more than 20%. My assumption was that the stock will recover during the week, and if the price wont get back to last week levels, it will at least go back into the range of -10% or above. I bought the stock on 4.15 so I'm not worried about the loss my portfolio will suffer (if any as the current price is around 4.05), but whether I should have entered this position in the first place.

Actually, the real question is whether I should add another filter to the system so it will ignore signals for stocks which gained more than X% on the entry bar.

This calls for further investigation which I intend to do tonight. I'll post my results tomorrow.

As for whether I should sell or not? Of course I will. As I said earlier, There is no discretion with computerized system. My endless tests showed that on the long term my system win and as I am here for the long term so I'll stick to what the doctor ordered.

Problem you might encounter going live with your system

2007-10-03T01:25:00.001-07:00

You work hundreds of hours developing a system. Test it hundreds of times using various markets, Monte Carlo computational tests etc. After six months of developing and testing you decide to go live and events you didn't foresee begin to unfold.

Let me share with you two of these events:

1. The case of the missing symbol:

Last Friday I got a buy signal for "Greater Bay Bancrop" (GBBK). I had bought the stock and was eager to see how it will perform on the following week. Yesterday, as the market opened, I was watching to stock and something very strange had happen. It seemed the stock was not moving for almost two hours. I searched for news about the company and it appeared the company was bought by another company called "Wells Forgo & Company" (WFC). According to the news article, share holders of GBBK will get WFC shares instead. So far so good. Well, no quite.

As I use a computerized system, my buy signal was for GBBK. Now that the stock is not valid any more, the trade remains open and the system doesn't know it should be closed. I can close it manually by placing a sell order according to the exit rules of my system. Only problem is the system's exit rule doesn't apply to WFC as there is no "buy" signal for this symbol. I think I will just try to cover my trading costs for this trade and close the position.

2. Don't count on free historical data

Following a "buy" signal for "BioDelivery Science International Inc" (BDSI) I bought the stock a week ago. Today, while looking at the trading volume of the stock, something caught my attention. It seems like the volume was considerably low than last week volume. To be sure I run my system on the stock again and to my surprise, no buy signal appeared on the screen. I doubled checked the data and it seemed to be correct. My only suspicion was that while I updated the historical data for my stocks this morning, I noticed some stocks had incorrect data for the previous week. After running the update for last week for the entire list, the problem disappeared. I'm guessing that the historical data for BDSI was incorrect as well, and as a result I received a false buy signal.
The moral from this event is to check and double check the historical data of a stock when a buy signal is received.

Hard day (relatively) for a trader

2007-10-03T01:17:00.001-07:00

The market was going my way for most of the day. Most of my positions were gaining profit and it all seemed great. However, in the last hour of the market one my positions (SSTR) flipped and was declining fast. It ended losing 5% on that trade.

As I use a computerized system, I bought this stock even though it gained ~90% last week. My trading philosophy is that I act according to the signals I receive from the system. That means, no discretion is involved. Yesterday, I was able to buy SSTR at the bottom after waiting for the middle of the day. The stock lost about 20% yesterday and I was sure (still am) it was for the bearish feelings people had after the steep move in the previous week. Today, the stock traded for most of the day between 5% to 7%. Suddenly, is started to decline rapidly, and ended losing about 5%.

I need to remember it's all part of the game, and as I have no discretion while using a computerized system, I need to relax and hope the system knows what it's doing :)