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The Three Things
1. What to buy? – Choosing the right position is critical.
2. When to buy? – Timing your entry sets the stage.
3. When to sell? – The exit seals your profit or loss.

Following the system
System trading is straightforward. Buy in ranking order and sell when instructed. The "Stop Type" clearly defines the reason for each exit, making decisions easy to understand and follow. With colour coding to guide you, the system becomes even more intuitive. Stick to the plan, and let the system do its thing.



Skate.
 
The Exit Makes the Money
With system trading, the real key to profitability lies in the exit. Holding a position too long, and it’s all too easy to turn a profitable trade into a loss. Effective exit strategies are your tools to maximise profits while minimising risks.

Exits
1. Trailing Stops: Cut positions loose that move in the wrong direction.
2. Stale Exits: Cut positions that aren’t performing as expected.
3. Maximum Stop Loss: Cap your losses to protect your capital.
4. Take-Profit Exits: Secure profits at predetermined levels.

Selling
It’s the “selling” that determines the profitability of any strategy. Master your exits, and you’ll master your trades.

Skate.
 
Skate said:
Marcus Padley's Answer (shortened answer)
Chickens don't make money so if you're going to do everything in a low risk you're going to wait until there's certainty and by the time there's certainty there's no returns.
Click to expand...
waiting CAN work , but you have to be willing to ignore other potential opportunities elsewhere , but the farm chickens do find the occasional worm
Skate said:
Question (from Graham, the short version)
Can you make money by avoiding risky periods
Click to expand...
avoiding risky periods might reduce capital losses but also the opportunities that might be lurking

they key is balancing the risk level YOU are comfortable with , and the rewards offered for taking that risk ( sometimes a 3 month term deposit , is the better choice )
 
Don't Let Assumptions Derail Your Critical Thinking!
In trading and life, it's easy to fall into the trap of speculation and assumptions. We often make educated guesses based on incomplete information. While that can be a starting point, it's vital to know their limits. Why? Because they can often lead us astray and limit our critical thinking.

Think about it
When we assume something's true without really checking, we bypass analysing, questioning, and looking for evidence that proves us wrong. That can give us a false sense of certainty, blinding us to risks or other perspectives.

Skate.
 
Perception Equals Reaction
Our perception plays an enormous role in trading. The way we interpret market information directly shapes our actions, and a flawed perception can severely hinder our critical thinking.

The Case for System Trading
The potential for faulty thinking is a powerful argument for System Trading. A well-defined system helps you make more informed decisions and navigate market challenges effectively by reducing the impact of misinterpreting signals and making less effective decisions.

Skate.
 


At the Moment
I'm gearing up to launch a new ongoing trading post, and I'll be starting with a strategy I've affectionately named the "Clydesdale." This isn't your flashy racehorse but rather a solid, reliable workhorse - slow and steady, and designed to get the job done. It performs best when the market offers favourable conditions. When the environment gets tough, however, I anticipate it will be a hard grind.

Starting in the New Year
I'll be putting the Clydesdale to the test starting live trading on Monday, the 7th of July, conveniently aligning with the first Monday of the new financial year. My initial capital allocation will be 5 positions, each set at $18,000.

Skate.
 
Why 5-positions rather than 10?
In answering that question, the Clydesdale strategy’s default settings prioritise higher-quality trades that carry some additional risk. The 10-position setup admittedly offers better diversification but can include lower-ranked stocks, potentially reducing expected returns.

For a $18,000 position, a 5% (GTFO) Max Stop Loss, the loss is $900. For a $10,000 position, it’s $500. Also, the 5-position setup is more cost-efficient due to lower relative commissions and fewer trades. Backtesting both scenarios confirms, the 5-position setup is superior based on the current parameters I've selected over every period.

Time will tell.

Skate.
 
Dona Ferentes said:
Many fund managers will rightly argue that buying or selling stocks based on earnings momentum rather than fundamentals is ultimately a fool’s errand.
Click to expand...

After reading @Dona Ferentes recent post, I thought it was a good time to explain why a 'Health Filter' plays a key role in trading.

Market Health Filter
Also known as the Index, Breadth, or PercentageUp Filter. The filter I have chosen as my "Health Filter" is the PercentageUp Filter. This filter gauges market strength by measuring the percentage of rising stocks in a watchlist. A 50% threshold acts as a master switch. If fewer than half are in an uptrend, no trades are triggered.

The "Clydesdale Strategy"
The Clydesdale Strategy employs a Market Health Filter to confirm bullish conditions. Buy signals are triggered only when the filter's ribbon turns green, indicating strong market breadth.

Chart ribbon (explanation)
Green = Bullish (signals allowed)
Red = Weak market (signals blocked)



Skate.
 
divs4ever said:
@Skate

did you retire from your investing adventure or are you also pursuing some trading adventures as well ?
Click to expand...

@divs4ever, my investments still stand (untouched).

Trading is a separate venture
Helping someone reminded me why trading is so exciting. Investing, while essential, doesn’t exactly make for thrilling updates - it’s a bit like watching 'paint dry'.

So, I had an idea
Those interested in following along, whether hoping to learn something, feel inspired, or just watch a train wreck in slow motion, will help me stay connected with the community

Most traders start with limited funds and knowledge, so I’ll be using a 5-position portfolio with modest capital. This setup lets me post once or twice a week, sharing real trades and real outcomes.

Skate.
 
awesome
both that you persisted with the investing and still looking for extra solid trading strategies

if i was to try dedicated trading i would still be using ( relatively ) small positions until more experienced and am sure my ducks are lined up

good luck
 

I have an idea
My next series of posts is written especially for a family member and a friend who have shown curiosity about my trading. I want to share what trading is all about for me in a way that’s clear, relatable, and personal, especially since they’re keen to understand how trading works without diving into the deep end themselves.

My goal is to walk them through the basics to explain how I trade
I will also be explaining why preparation and caution are key. Trading can be exciting, but it’s also a game where you can lose money fast if you’re not ready. I’ll be showing how I approach trading to avoid big losses. Winning money will be considered a “bonus”.

Skate.
 

Real Money, Real Trades
In this thread, I’m not just talking theory, I’m going to trade two strategies live, sharing every step with charts, metrics, and pictures to make it easy to follow.

Instead of one experiment, I’m running two systems at once
(1) The HappyCat Strategy ($25,000 portfolio, with five $5,000 trades) for a cautious start, and
(2) the Clydesdale Strategy ($75,000 portfolio, with five $15,000 trades) for a bigger approach.

These are like two different cars driving to the same destination. By showing two different trading systems, I hope to prove that whether you start small, modest or go big, a disciplined system can give you a fighting chance.

Skate.
 

My goal is to demystify trading
This thread is designed for beginners to learn about trading without risking their hard-earned money. The goal is to demystify trading, emphasising the importance of self-education, preparation, and only using funds you can afford to lose.

Trading is a challenging game
Where losses can happen quickly, so I’m going to show how to give yourself a fighting chance by demonstrating two trading strategies in real-time. By following along with the HappyCat Strategy and the Clydesdale Strategy, displaying live trades, complete with charts, metrics, and visuals, you’ll see how systematic trading works and why disciplined exits are key to success.

Skate.
 
Running two trading experiments
I’ve decided to trade two strategies simultaneously to cater to different starting points. The HappyCat Strategy uses a modest $25,000 portfolio with five positions of $5,000 each, ideal for those with smaller accounts or lower risk tolerance.

The Clydesdale Strategy
A workhorse approach starts with a $75,000 portfolio and five positions of $15,000 each, suited for those with more capital to deploy. Both strategies aim to achieve profits, but they use different approaches to get there, proving that there are multiple paths to trading.

In the next series of posts
I’ll explain each strategy in simple terms, focusing on what they do, why they only trade in bullish markets, how and why we exit trades, and the key differences between the two strategies. These two trading experiments should be self-explanatory, designed to follow along and understand the process without needing to know the technical details.

Skate.
 
Really looking Forward to this Skate being an absolute Numpty to trading, i look forward to digesting all the information you have to offer & are willing to share!

Cheers!
 
DaveTrade said:
Hi @Skate , why new strategies, are the strategies that you've used in the past still working or do all strategies have a lifespan. If so what are the conditions to support life for these strategies?
Click to expand...

@DaveTrade, these two older strategies have been dusted off and polished specifically for the trading exercise. They’ve worked in the past, but as with all strategies, there are no guarantees they’ll continue to be effective - time will tell.

The goal is to spark enough interest to see how they perform
Whether they turn out to be profitable, or whether some might prefer to watch them crash and burn. Either way, there’s value in the process. @ShareSuccess has already shown interest in following along, hoping to learn and perhaps be inspired.

I’ll also be explaining each strategy as we go, so others can understand how they work and follow the logic behind the trades.

Skate.
 

The HappyCat Strategy
This strategy is a beginner-friendly approach.

So, what is the HappyCat Strategy Trying to Do?
The HappyCat Strategy is a systematic trend-following approach designed for a $25,000 portfolio, splitting it into five equal positions of $5,000 each. It’s built for beginners who want to start small and manage risk carefully. The strategy aims to do three things

(1) Capture Upward Trends
The “HappyCat Strategy” identifies stocks that are showing strong upward momentum, meaning they’re moving higher in price with good market support.

(2) Trade Only in Favourable Conditions
The strategy only takes positions when the broader market is bullish (going up), as this increases the chances of success.

(3) Minimise Losses and Lock in Profits
It uses strict rules to exit trades quickly if things go wrong or to secure profits when the trend weakens.

The HappyCat Strategy is like a cautious cat
It waits for the right moment to pounce (enter a trade) and knows when to scamper away (exit) to avoid trouble.

Skate.
 

Why Trade Only in Bullish Markets?
Trading in a bullish market, when prices are generally rising, stacks the odds in our favour.

Market Health Filter
Also known as the Index, Breadth, or "PercentageUp" Filter. The filter "The HappyCat Strategy" uses is a market breadth filter. The "Breadth" filter is my "PercentageUp" filter. This filter checks if more than 40% of stocks in a watchlist are rising, combined with an index filter (based on the $XAO.au index) to ensure the overall market is trending upward. This is like checking the weather before going for a walk, you only set out when the conditions are favourable, whilst taking an umbrella for the unexpected. Trading in bullish conditions (going up) reduces the risk of buying into a falling market, where losses are more likely.

Skate.
 
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