I have another few questions. Currently I am reading the following books. Ho to make money in stocks - Oneil, Trade like a stock market wizard - Minervini, secrets to profiting in bull and bear markets - Weinstein.
Now although all the books differ to a certain degree they all share one common principle trading with the trend.
Thus the thing that makes Weinstein's book even more appealing is that fact that I work full time and its tough for me to follow Minervini's method to the T by watching the relative volume through out the day and then buying on the break out if the volume is there.
But what seems attractive w.r.t Minervini's method its seems more precise with regrads to position sizing... if I can call it that.
Look at the example of FCX since copper is breaking out.
Lets say you have a $20,000 account thus risking 1% per trade equals $200.
Now with a ATR of 1.63 and a stop loss of 3x of ATR = 4.89
Thus you trade will look like this:
Entry: 13.89
Stop: 8.95 (No round numbers)
Position size = $200/4.94 =40 shares *13.89 = $555.50
Now this is what I do not get your position size is not even 3% of your total capital?
Or would you do this trade and then add to the position (Pull backs to 10 week sma) and as the stock moves in your favor you average up and your position will get bigger with time?
FCX
The position size is so small becuase the ATR value is very large on this particular stock. i.e. almost 12% movement a week. So the position size is much smaller because of this.
However, you are using the ATR value that I use for the investor method that focuses on weekly charts, whereas Minervini's method is for the trader method that uses daily charts, so I'd recommend looking at a daily ATR value such as the 20 day ATR, as you are going to be using much tighter stop losses than that, and hence your position size will be larger.
Thank you Isatrader! Now the next question what is your min position size % based on ATR and Stops that you would consider a worth while trade?
(2016-11-10, 03:42 PM)Ponki Wrote: Thank you Isatrader! Now the next question what is your min position size % based on ATR and Stops that you would consider a worth while trade?
I would guess 5% of capital?
I trade much bigger sizes in the O'Neil style of thinking. So tend to only have a max of 5 or 6 positions when fully invested. But my minimum position size I consider is roughly 7-8% of the account with 2% account risk.
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
(2016-11-10, 03:42 PM)Ponki Wrote: Thank you Isatrader! Now the next question what is your min position size % based on ATR and Stops that you would consider a worth while trade?
I would guess 5% of capital?
I trade much bigger sizes in the O'Neil style of thinking. So tend to only have a max of 5 or 6 positions when fully invested. But my minimum position size I consider is roughly 7-8% of the account with 2% account risk.
(2016-11-21, 12:16 PM)Smellypunks Wrote: I have been tempted by BSTH.L but its still in the cloud. Should I wait?
It's just one factor. You need to decide whether the other characteristics we look are good enough. As always find all of the negatives first, calculate the risk including spread etc, and then you'll be in a better place to make a decision. As the first thing to consider with every trade is what can you lose.
isatrader
Fate does not always let you fix the tuition fee. She delivers the educational wallop and presents her own bill - Reminiscences of a Stock Operator.
I hope everyone is fine here. I've been aside from here for some time, because I had to much work. But I kept working on my trading skills, and for the first time since I started, I'm seeing my portfolios beginning to have a shape which looks like a bull trend.
Now, I'm still working on my system and, more and more, I ask myself about sectors. To put it simple: I'm having the feeling that including the sectors into the decision making raises more problems than it helps. So, I wonder what you think about that.
More specifically, here are the problems I'm seeing:
- it takes a lot of time to consider and define sectors trends and their relative strenght. As a weekly work, it is quite an investment. This wouldn't be a problem if this investment were efficient, but:
- really often, the more interesting stocks in a sector start their bull/bear trend before the whole sector gives clear signs of a new trend evolution. I often feel as I miss an interesting move, because of sector considerations.
- worse: a lot of stocks don't follow the general move of a sector. That can be because they are on some "niche"-economic sector, it can be because their activity can't be really classified in classical sectors, and so on... The result is that I miss interesting moves in which I could have been.
- in the European market, it isn't easy to find accurate data about sectors. At the moment, I use the Stoxx Europe 600 and Stoxx Europe TMI series. This means I can only have an insight at the level of the "Super-Sectors" and "Sectors" in the ICB classification. I haven't any way to work with "Sub-Sectors". Which is not cool, because the Super-Sectors and Sectors are still quite broad classifications.
All of this is making me thinking that all the work I put in sectors studying is maybee quite useless, specially in respect to the practical result it gives.
I do agree with your opinion. In my trading sectors are now one of the key but I mainly make decision with the pattern.
I don't buy if the sector is falling.
Actually, I search for stocks nice patterns and,then, I check the sector.
However in some market configuration (beginning of rising or falling) I check which sectors are the leaders.
I use Waldata "investor" to check the sectors, which is very expensive but very eficient too.
Of course, it's easier with the US market, but it's also, as you quoted, very time consuming.
Since I posted about sectors, I have initiated some positions which were successful until now. More and more I think about it, and more and more I have the feeling that sectors are interesting to make "positive" selection (find out the more powerful sectors and choose stocks in them), but not so much as a "negative" selection criterium (exclude stocks because of sectorial considerations).
