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What Is In Your Stock Trading Strategy?

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 Guy R. Fleury, Independent Computer Software Professional

 Thursday, November 9, 2017

My last article: Trading a Buy & Hold Strategy. A Game You Can Play might have had a better subtitle as: A Game You Can Win. Was made a demonstration that a well planned long-term stock trading strategy can be designed to survive and thrive for years and years. I had my preferred strategy (DEVX8) do its third walk forward, this time for almost a year. See article for details. If DEVX8 would not have been able to continue and maintain close to its previous CAGR level, then it would also have fallen in the category of trading strategies that eventually do fail simply by giving it more time to do so. DEVX8 is designed to be sustainable, maintainable, marketable and malleable over extended periods of time as its portfolio size grows. It is very similar to many trading systems out there, and yet quite different, unique in some ways.


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6 comments on article "What Is In Your Stock Trading Strategy?"

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 William Stocki, Independent Consultant and Business Professional

 Saturday, November 11, 2017



Once again I will post the answer that was recently deleted! My Strategy is to win 7 out 8 of all my open positions!


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 Guy R. Fleury, Independent Computer Software Professional

 Sunday, November 12, 2017



William, sorry about that. But, your message is still live in another post. Just in case, here was my reply:

That's great, an impressive average. It should make your trading strategy profitable. It is an 87.5% hit rate after all. Care to provide a long-term simulation on it?

For the DEVX8 strategy, all its closed positions are at a profit (100%). See chart #1 for instance. This outcome is simple: no positions are sold (closed) unless they are at a profit. And, as such, the strategy just waits for its profit to materialize, even if it takes years to do so. The strategy benefits from playing swings in the market and by holding on to some of its shares which it tends to accumulate over the years using the generated profits to do so. Its prime objective is to build, share by share, its long-term portfolio holdings.


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 Guy R. Fleury, Independent Computer Software Professional

 Tuesday, November 14, 2017



There are some trading ideas in DEVX8 making it a different kind of strategy than what we usually see. For instance, it trades entirely using a number of biased random-like functions for either entry or exit of a trade. Hence, no lag and no indicators since none were needed. It also says, due to the randomness of things, that some indicators could have been used successfully. I did not find the time or the inclination to test any. I liked the way the strategy behaved.

The strategy cannot pretend to know what is coming next. It makes its bets not knowing if they will be profitable or not. On the other hand, using trade behavior reinforcement, the strategy will reward prices that are going up. It starts by never buying below its initial trading price which in itself will assure making only small bets on the lesser performers.

… continued … 1/3


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 Guy R. Fleury, Independent Computer Software Professional

 Tuesday, November 14, 2017



The 3-walk forward tests, as well as the strategy itself, are there only to show that a set of trading procedures can be a reasonable surrogate for our participation in the market. Since the trading rules have been set in code, we could now take them out of the program and operate them as if on a discretionary basis, if desired.

Future prices will be different, none will behave the same as in the past. But, the trade mechanics themselves do not need to change. Your trading procedures are part of the program, the methodology. Going forward, they will extract profits as prices continue to fluctuate following their average secular market trends which are themselves biased to the upside. In essence, I see Mr. Buffett's bet on America: betting that stock prices of the best companies, on average, will rise in a rising market. It is the same message that has been in my writings for the past 10 years. Could anyone do better? Absolutely.

… continued … 2/3


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 Guy R. Fleury, Independent Computer Software Professional

 Tuesday, November 14, 2017



You design a meritocracy portfolio. Deserves to be considered are stocks you view as having positive prospects. Those are stocks you think are part of the best out there. You can find hundreds of such listed companies. For your selected stocks to stay in your portfolio, they have, in turn, to show you that they merit to be there in the first place. The only way you accept their participation is if their respective prices rise over time. You want these stocks to show you, with rising prices, that your confidence in them was not misplaced. And if they break that confidence by not rising, you can throw them out. You certainly can find better prospects out there than non-performers.

… 3/3


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 Guy R. Fleury, Independent Computer Software Professional

 Wednesday, June 6, 2018



The link to that file has been changed, use: http://alphapowertrading.com/index.php/12-research-papers/5-what-is-in-your-stock-trading-strategy

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