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Multiple Stock Positions

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coyotte

coyotte

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27 April 2006
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Wondering how others handle the the situation of when two or more unrelated selection methods select the same stock --- eg:

Triangle target method (short term)
GMMAs (medium term)
TechTrader (long term)

If say for instance that the above three methods selected the same stock -- how would you handle the situation -- 1 position only or would each system have it's own position or 1/3 allocated to 3 positions?


Thanks for any replies.

Coyotte
 
Whats your timeframe.

I definately wouldnt take a single buy on a techtrader stock unless it was part of a portfolio being traded under the system.

I wouldnt trade a Guppy MMM as its lagging so badly there is a good chance you'll get whipsawed.

The triangle well that depends on the context of the pattern relative to the trend being traded.

Coyotte no matter how you chose a trade you must aim at a positive expectancy.(Over many many trades not just an individual trade).
As rule of thumb the longer the timeframe the greater the R/R.

T/T is around 10:1 and you wont get that taking a T/T prospect on a short term trade.
 
Tech/a

I was simply using the the stated methods as a example as they are unrelated and over different time frames

The question is :

If unrelated selection methods have selected the same stock , would each selection method have it's own position.

In thoroughbred racing as each selection method has it's own bank, so this is generally so, but in share trading I wonder if it's getting akin to putting to many eggs in the one basket


Cheers
 
Coyotte.

Each signal could be traded differently,so dependant on timeframe you could have multiple positions which could be exited as exit signals for each entry signal (Wether they be the same exit or different exits) are reached.

The beauty of Stocks is that unlike horse racing you can increase your "bet" as you notice the stock 5 lengths in front and 500 meters to go.

Ive had 3 positions on the one trade at the one time in the one day---doing just that.
 
Thanks Tech

Presume then that maybe the SAFEST road as "money management" goes is to have a separate BANK for each SELECTION method.

But is this approach the BEST use of the overall trading bank, as cash could be laying idle whilst awaiting a selection?


Cheers
 
It's a good question Coyotte.

If I understand correctly you are asking what happens if two analysis methods lead to an entry but for trades that would be over different time frames?

Personally, I trade both of them. Something to consider is that your aggregate risk exposure at the point of entry is going to be higher than if you were trading two positions and had received an entry now and an entry a week later. Additionally, as both positions are 100% correlated, even if you have individual stoplosses for each position, the likelihood of a single event creaming both positions is going to be higher than for lower or non-correlated trades.
 

Coyotte.

Thats certainly the way I look at Pyramiding. If I see another signal intraday or during an EOD analysis in a trade I'm in I will set a stop for THAT trade triggered. It may well be the case that it could be stopped out while the other longer trade is still live. This has happened---annoys me though!!!


IF however they are different triggers at the same point of time I would treat them as Confluence and trade one position.

Different and subtle.
 
Classic example
CPU -- Long/ Medium / Short term

If the graph will load

Cheers
 

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