The whole reason I got into systems testing and design is to answer the elusive question - how much (profit) do you give back in order to ride the longer term trend?
With CEY (shown above), it's obvious the exit was too tight.
But that's okay -- I'm interesting in using the exit which works best MOST of the time, over hundreds of different trades and over long periods of time.
There will always be exceptions, but you have to be willing to let those go, and move on to the next trade.
But congrats to anybody who caught this one, its a real winner.
11 comments:
you are right about the tight exit. I feel it was too early to switch from initial stop to trailing stop if you are riding on long term trand.
Hi newage,
Actually my system doesn't have an initial stop. I tried several but none improved profit/drawdown stats.
But I still wanted to used fixed percent risk for position sizing so I made the initial stop = trailing stop.
Thanks for your comments.
Nizar.
I think intial stop is a must wheather you have fix percentage or ATR one or anthing else ( I prefer ATR one).
Bad traders initially do tight stop and when they are in profit they have wide stop hoping more porfit. It should be opposite.
initial stops are there to be wide to allow plenty of room and give the trade a chance to become profitable. Once trade is profitable trailing stops come to play so we dont lose the profit.
I feel your exit stop in the chart was too tight. I am sure backtesting will show what I wanna say.
Hi Newage,
Thank you again for your opinion about initial stops, but I'm not going to argue with my results ;)
I actually think initial stops are system specific, and its hard to make generalisations in such a way as you did.
My system has been well tested. You can see some of the results in the early parts of this blog.
Best regards,
Nizar.
I would have had the stop tighter :), and would have been out 1 bar earlier, but would also have been in much sooner, like around open on the week beginning 1/12.
I guess that the difference between medium-to-long term trend following and long-to-very-long.
ASX.G
Hi ASX.G,
I guess when it comes to stops it "horses for courses" then.
The same could be said of systems in general.
Note that I had some entry triggers for CEY as far back as October.
Thanks for dropping by.
Nizar.
Hi Nizar,
Just curious about re-entry.... can you get back into it? has another entry point been triggered?
Jeton
Hi Jeton,
Since I was stopped out, there hasn't been a re-entry triggered on this one, though it does seem to be heading in the right direction.
All the entry triggers are identified by the blue arrows.
Nizar.
Woulda, coulda and shoulda - I see the hindsight traders are out in force. You were exactly right to exit CEY when you did because it's what your system told you to do. In the long run, THAT is what will reward you.
"Woulda, coulda and shoulda - I see the hindsight traders are out in force. You were exactly right to exit CEY when you did because it's what your system told you to do. In the long run, THAT is what will reward you."
You were probably referring to my comment Mr Anonymous.
The purpose of my comment was not to glorify any hind-sight trade, but to compare systems. Following a system will not reward you in itself. Having a system worth following is the pre-req here.
Nizar's system, from what I can tell, buys stocks that are breaking out to new all time highs. One of the key objectives appears to be to identify the big winners whose price action is developing into very long term uptrends and pyramid into them.
This technique could be expected to back test well on the ASX over the last 15 or so years because most indexes and their constituents have repeatedly broken out to new all-time-highs.
I wonder how it might work in a market where the index and associated stocks have halved (a la the S&P500 at the end of the dot-com boom), and then recovered into a new rally, but one where there were much fewer stocks making new all-time-highs.
I question whether the "all-time-high" look-back is too far, and given a change in market conditions on the ASX whether a system that can capture medium-to-long term trends wouldn't be more adaptable.
Time always tells, but I think the topic is still worth discussing.
Hi ASX.G,
You said:
Nizar's system, from what I can tell, buys stocks that are breaking out to new all time highs.
Actually, this is incorrect.
The breakout component of the entry uses 10-week highs (current bar high is higher than the highest high of the previous ten bars) for precisely the reasons you have mentioned.
Nizar.
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