Yes good point, I will review all the closed trades to learn from.A good start, aus_trader is to look at all those losses and especially were you got out and why. Or even all those wins and where and why you got out.
Was it technically based or emotional?
Yes, a good place to get started with analysis. Thank you.Hope that helps aus_trader, a place to start anyway.
Oh yeah, I felt the pain today! The general market fall + the small cap addition fall + that individual stocks are more volatile than an index, all adds up to plenty of fun.Small Caps are taking a fair hit and underperforming the All Ordinaries by quite a margin !
Good to hear that you have allowed sufficient wiggle room, I have been caught out too many times not doing this only to see stocks rising higher without meOh yeah, I felt the pain today! The general market fall + the small cap addition fall + that individual stocks are more volatile than an index, all adds up to plenty of fun.
I give my stocks sufficient wiggle room, and I've been pleased to see that even with the recent drops we've been having, none of my stocks have hit any safety barriers I have in place. But they know where the chopping block is if they underperform.
And that's a grey area between cutting your losses early and being a hero in a severe downturn, and cutting too early and being stopped out unnecessary in a momentary dip. I don't think there's an "best answer" to how much wiggle room you should leave.I have been caught out too many times not doing this only to see stocks rising higher without me
You're right it has been a long time. I've spent some time of late, mulling over future bear markets and tweaking my plan.Just make sure you stick to your plan though in case things go into a bear market territory which we haven't had in a long time...
Yes it's easy to forget that market can go in both directions especially when we have had a fairly good run since GFC and globally (e.g. US) markets have been soaring.You're right it has been a long time. I've spent some time of late, mulling over future bear markets and tweaking my plan.
Hi Zaxon , using a index filter will at least stop you from getting into more trades when it turns south if you use a system to pick the stocks to enter. Also can signal when to tighten your trailing stop or change the type of stop you would use in those conditions as stated in other threads.And that's a grey area between cutting your losses early and being a hero in a severe downturn, and cutting too early and being stopped out unnecessary in a momentary dip. I don't think there's an "best answer" to how much wiggle room you should leave.
You're right it has been a long time. I've spent some time of late, mulling over future bear markets and tweaking my plan.
I think that's a good idea. If you're in a bear market, it's no use entering the market on the hopes that some shiny stock will buck the trend. In sideways markets, however, it becomes this grey area of making profits with one stock, then giving it all back with another.Hi Zaxon , using a index filter will at least stop you from getting into more trades when it turns south
I think an indicator such as a moving average is ideal. A MA, by definition, is a lagging average. So if the index retraces all the way back to below a MA, then you can argue the trend is over.what do you guys reckon about using a moving average type simple indicator as the index filter ?
That's right. You could wait until the market fell below the MA sufficiently to "prove itself" before reacting. For instance, if the market trends below the MA for a week or two and continues downward, you could retrospectively call the MA cross the start of a "real" correction or bear market. Kind of like The Fed gives an initial GDP figure, and then confirms or retrospectively revises it a month later.Problem is as Zaxon mentioned, it's going to chop up and down like crazy and pretty useless in a sideways market.
That's the official definition. I'd argue it's really no better. What do you call a market that drops by 20% from its peak, and then sideways trends for 3 years. Is it a bear market? Yes. But also it's not going down anymore, so no. I feel it has the same limitations at the moving average cross.Is there a better way e.g. % drop ? I've read in many forums and articles that a 20% drop in the index is considered as the start of a bear market.
Excellent response to the question too Zaxon. I think moving averages and other indicators are warning signs and could be used to manage individual stock positions. The 20% drop on the index is the last line of defence for deciding drastic action such as portfolio liquidation. I am putting a plan together along these lines to avoid the pain experienced during the GFC. The lessons learnt from GFC should not be forgotten otherwise I will make the same mistakes again next time.I think an indicator such as a moving average is ideal. A MA, by definition, is a lagging average. So if the index retraces all the way back to below a MA, then you can argue the trend is over.
The only question is how many days should that MA be? I don't think you'll find consensus on a particular figure.
That's right. You could wait until the market fell below the MA sufficiently to "prove itself" before reacting. For instance, if the market trends below the MA for a week or two and continues downward, you could retrospectively call the MA cross the start of a "real" correction or bear market. Kind of like The Fed gives an initial GDP figure, and then confirms or retrospectively revises it a month later.
That's the official definition. I'd argue it's really no better. What do you call a market that drops by 20% from its peak, and then sideways trends for 3 years. Is it a bear market? Yes. But also it's not going down anymore, so no. I feel it has the same limitations at the moving average cross.
I guess a better definition of a bear market is one where each month's low is lower than the previous month. Or something along those lines.
An excellent question btw.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?