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The HappyCat Strategy
Displaying the logo denotes the strategy I'm discussing.

When and Why Do We Exit a Position?
Exiting a trade is where the money is “made or saved”. The HappyCat Strategy has four exit mechanisms to either lock in profits or limit losses. Over the next few posts, I will discuss each exit strategy and explain its purpose.

(1) Take Profit Stop
(a) What does the TakeProfitStop do? - If a stock rises significantly (based on a multiple of its average price movement, or ATR), the strategy sells to lock in gains.

(b) Why use a TakeProfitStop? - Holding onto a stock too long can turn a profitable trade into a loser if the price reverses. Taking profits secures your gains when the stock has made a strong move.

# Example of using a TakeProfitStop
If you buy a stock at $10 and it rises to $14 based on the strategy’s target, you sell to pocket the profit before the price potentially drops.

Skate.
 

When and Why Do We Exit a Position?
The first exit strategy was the "TakeProfitStop", now we move on to the next.

(2) Trailing Stop
(a) What does a TrailingStop do? - This is like a safety net that follows the stock’s price upward. If the stock price falls a certain percentage (as an example, 10% when the market is up, 5% when it’s down) from its highest point, the strategy sells the position.

(b) Why use a TrailingStop? - A trailing stop protects profits by allowing the stock to keep rising but exits if the trend reverses, preventing significant losses.

# Example of using a TrailingStop
If a stock rises from $10 to $15, the trailing stop might be set at $13.50. If the price drops to $13.50, you sell, keeping most of your gains.

Skate.
 
I Agree with the Stop Loss on locking in Profits, but i Don't like Stop Losses when entering a trade because i have found that when buying stocks in general they almost always fall on buying, mine anyway...lol

Any Thoughts?
 

When and Why Do We Exit a Position?
The first two exit strategies were the "TakeProfitStop", and the "TrailingStop", and now we move on to the third exit, the "StaleStop".

(3) Stale Stop
(a) What does a StaleStop do? - If a stock hasn’t made a new high within a set period (like 3 weeks), the strategy assumes the trend has stalled and sells the position.

(b) Why use a StaleStop? - A stock that stops moving upward is no longer trending strongly, increasing the risk of a downturn. Exiting prevents you from holding a stagnant position.

# Example of a StaleStop
If you buy a stock and it hovers around the same price for 3 weeks without climbing, the strategy sells the position to free up capital for better opportunities.

Skate.
 

When and Why Do We Exit a Position?
The first three exit strategies were the "TakeProfitStop", "TrailingStop", and the "StaleStop". Now we move on to the fourth exit, the "Maximum Loss Stop".

(4) Maximum Loss Stop (GTFO)
(a) What does a Maximum Loss Stop do? - If a stock’s price falls 5% below your entry price, the strategy sells immediately and “gets the funds out”.

(b) Why use a Maximum Loss Stop? - This caps your loss to a small, manageable amount, protecting your portfolio from big hits.

# Example of a Maximum Loss Stop
If you buy at $10 and the stock drops to $9.50, you sell to limit the loss to 5%.

The four exits work hand in glove
The four exits discussed work together to ensure you either take profits when things go well or cut losses quickly when they don’t. The strategy also avoids trading delisted stocks (those removed from the exchange) to prevent unexpected losses.

Skate.
 

Why These Exits Matter
The HappyCat Strategy’s exit rules are designed to keep you disciplined. Beginners often hold onto losing trades, hoping they’ll recover or cling to winners too long, only to see profits evaporate. By using systematic exits, the "HappyCat Strategy" removes emotion from the equation, helping you stay consistent and avoid the common pitfall of turning a good trade into a bad one.

Skate.
 
ShareSuccess said:
I Agree with the Stop Loss on locking in Profits, but i Don't like Stop Losses when entering a trade because i have found that when buying stocks in general they almost always fall on buying, mine anyway...lol

Any Thoughts?
Click to expand...

@ShareSuccess, you’ve touched on a really important point. As traders, we all have different approaches, and the outcomes we experience often come down to the decisions we make.

It’s worth remembering
You’re not trading against me or anyone else in the forum. You’re trading against the entire market, which includes professionals and institutions, like fund managers, all operating with their own edge.

It's up to you
That’s why it’s so crucial to find what works for you, whether that’s using stop losses on entry, avoiding them, or adjusting your strategy as your experience grows. It's the actions you take that will determine the outcome.

Skate.
 
Successful Trading
@ShareSuccess, successful trading is a lot like getting pregnant - everyone congratulates you when it works out, but no one asks how many times you got fu¢ked along the way.

Losses are part of the process
You need to mentally prepare for them, and at times, even be ready to take a few larger hits. It’s not failure - it’s the cost of learning and staying in the game. You’re competing against traders with more experience, better information, and deeper pockets. So, forget the fantasy of quick, easy money. Focus instead on survival.

Your first and most important goal
Learn how to stay in the game. Everything else comes after that.

Skate.
 

The Clydesdale Strategy (A Robust, Workhorse Approach)

What is the Clydesdale Strategy Trying to Do?
The Clydesdale Strategy is a heavy-duty trend-following system for a $75,000 portfolio, divided into five positions of $15,000 each. It’s named after the Clydesdale horse, strong, steady, and built for those with more capital to invest. Its goals are simple:

(1) Ride Strong Trends
Like HappyCat, the Clydesdale Strategy seeks stocks with strong upward momentum, but it uses a broader set of conditions to identify opportunities.

(2) Trade in Bullish Markets
Clydesdale Strategy only enters trades when the market is favourable, using stricter filters to ensure quality trades.

(3) Protect Capital and Secure Gains
Clydesdale Strategy employs multiple exit strategies to lock in profits or limit losses, tailored for larger position sizes. The Clydesdale Strategy is like a powerful workhorse - it carries a bigger load but moves methodically to get the job done.

Why Trade Only in Bullish Markets?
Similar to HappyCat, the Clydesdale Strategy only trades when the market is bullish to increase the likelihood of success. It uses a market breadth filter (requiring 50% or more of watchlist stocks to be rising) and an index filter (based on the $XAO.au index’s short and long moving averages) to confirm an upward market trend. This ensures you’re trading with the market’s momentum, reducing the risk of fighting against a downturn. It’s like planting crops in the right season - you’re more likely to see growth in favourable conditions.

Skate.
 

When does the Clydesdale Strategy Exit a Position?
The Clydesdale Strategy uses four exit mechanisms, similar to HappyCat but with slight differences in execution:

(1) Take Profit Stop:
(a) What does the TakeProfitStop do? It sells a position when a stock reaches a profit target based on a multiple (example 2x) of its average price movement (ATR).

(b)Why use a TakeProfitStop? Simply to capture gains when a stock has made a significant move, preventing you from holding too long and risking a reversal.

# Example of a TakeProfitStop
If you buy at $50 and the stock hits $60 based on the profit target, you sell to secure the profit.

Skate.
 

When does the Clydesdale Strategy Exit a Position?

(2) Trailing Stop
(a) What does the Trailing Stop do? - The TrailingStop adjusts dynamically based on the stock’s price, selling if it falls a percentage (like -15% when the market is up, 8% when down) from its peak.

(b) Why use a TrailingStop? - The TrailingStop has an important job, and that is to lock in profits as the stock rises but exits quickly if the trend weakens, balancing growth and protection.

# Example of a Trailing Stop
If a stock rises from $50 to $70, the trailing stop might be $59.50. If the price drops to $59.50, you sell, keeping most of the gain.

Skate.
 

When does the Clydesdale Strategy Exit a Position?

(3) Stale Stop
(a) What does the Stale Stop do? The StaleStop executes an exit by selling a position if the stock hasn’t made a new high in a set period (Example, 2 weeks) or if its momentum (measured by RSI) weakens significantly.

(b) Why use a StaleStop? - For one reason, to prevent holding onto positions that have lost their upward drive, freeing capital for better trades.

# Example of a StaleStop exit
If a stock stagnates for 2 weeks without hitting a new high, the strategy sells to avoid a potential decline.

Skate.
 
ShareSuccess said:
I Agree with the Stop Loss on locking in Profits, but i Don't like Stop Losses when entering a trade because i have found that when buying stocks in general they almost always fall on buying, mine anyway...lol

Any Thoughts?
Click to expand...
The problem with stop losses is that it sets a data field within the broker you use, and they can target the stock for a cheap price.

Then you have other problems when they totally miss your target price or get a half order complete. I've had a lot of stop losses hit, and then the SP goes up so fast that you can't get back in under your selling price.
 

When does the Clydesdale Strategy Exit a Position?

(4) Maximum Loss Stop
(a) What does a Maximum Loss Stop do? - The Clydesdale Strategy sells if the stock falls 5% below your entry price.

(b) Why use a Maximum Loss Stop? - The 'MaximumStopLoss' limits losses to a small percentage, protecting your larger portfolio from significant damage.

# Example of a Maximum Loss Stop
If you buy at $50 and the stock drops to $47.50, you sell to cap the loss at 5%.

Why These Exits Matter
The exit strategies of both the Clydesdale and HappyCat are designed to work in a bullish market and protect your capital when conditions change. The strategy also checks for delisted stocks to avoid unexpected risks. The Clydesdale exits are critical for managing larger positions. With $15,000 per trade, losses can add up quickly, so the strategy uses tight controls to minimise downside risk while capturing gains. It’s built to be steady and reliable, like a Clydesdale horse pulling a heavy load without faltering.

Skate.
 

@TimeISmoney, thanks for sharing your experience - it's a valid concern, and many traders have been caught in similar situations.

Personally
I trade exclusively during the pre-auction, and I avoid using broker-supplied tools like stop losses for exactly those kinds of reasons. I prefer to stay in full control of my orders and execution, even if that means being more hands-on. Everyone’s approach is different, and it’s all about finding what works best for your style and risk tolerance.

Skate.
 

Key Differences Between HappyCat and Clydesdale Strategies (over 4 posts)
While both strategies are trend-following and aim to trade in bullish markets, they differ in ways that make them suitable for different traders. Here’s a breakdown of the key differences and why I’m running both:

(1) Portfolio Size and Position Sizing
(a) HappyCat: $25,000 portfolio with $5,000 per position (5 positions). Ideal for beginners or those with smaller accounts who want to start cautiously.

(b) Clydesdale: $75,000 portfolio with $15,000 per position (5 positions). Suited for traders with more capital who can handle larger trades.

# Why it matters
By showing both, I demonstrate that trading can work with different account sizes. HappyCat is accessible for those starting small, while Clydesdale shows how to scale up responsibly.

Skate.
 
Skate said:
I’ll be showing how I approach trading to avoid big losses. Winning money will be considered a “bonus”.
Click to expand...
i read this as you are expecting increased volatility and trying to reduce losses ( that would scar your friends ability to persist through difficult times and retain enough cash to improve their trading skills later )

i assume your friends are relative novices and therefore less skilled in controlling their emotions


it should be interesting to watch

cheers
 

Key Differences Between HappyCat and Clydesdale Strategies
Here’s a breakdown of the other key differences and why I’m running both strategies for this exercise.

(2) Entry Conditions
(a) HappyCat: Uses a single set of entry signals focused on a breakout above a recent high, combined with momentum (RSI, ADX) and market filters.

(b) Clydesdale: Employs multiple entry conditions (four distinct setups) based on price support, moving averages, and momentum indicators, making it more selective.

# Why it matters
HappyCat is simpler, making it easier for beginners to understand. Clydesdale’s complexity allows it to capture a broader range of opportunities, showing that different approaches can achieve similar goals.

Skate.
 

Key Differences Between HappyCat and Clydesdale Strategies
Here’s a breakdown of the other key differences and why I’m running both strategies for this exercise.

(3) Market Filters
(a) HappyCat: Uses a 40% market breadth threshold and a single moving average for the index filter.

(b) Clydesdale: Requires a stricter 50% market breadth threshold and compares short and long moving averages for the index filter.

# Why it matters
Clydesdale’s stricter filters reduce the number of trades but aim for higher-quality opportunities, while HappyCat’s looser filters allow more frequent trading. This shows how risk tolerance influences strategy design.

Skate.
 
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