Technical Trading Exercise (Pavilion103 and tech/a) Discussion

pavilion103 · 22 May 2013

tinhat said:
I'm looking forward to this because:

1. I was thinking about tech/a whilst lying in bed unable to sleep the other night. Actually, I was re-reading Nick Radge's "Unholy Grails" in bed and reading about tech/a.

2. I'm very interested to learn about tech/a and pav's continuation pattern identification because, having started with a fundamental/value investing approach I've found it difficult to hop onto stocks which seem "fully priced" only to have missed out on them rising substantially more through the cycle. Examples are DMP, IVC, NVT, MTU, RHC - oh, it's a long list. Conversely, I have had a knack of picking stocks which are at "deep discount to value" and well, you can imagine some of the disappointments.

I took note of Pav's comment the other day in the TPM thread. In the past I wouldn't look at TPM as a potential trade because, although it is an investment grade company with sound balance sheet and business prospects, it is "over-priced". Rereading Radge's book the other night highlighted to me that I want to be riding stocks that are going up, not going down!

TPM has been a big winner for me. I've added to the position since the initial entry and also have a current buy-stop order in place to add another parcel.

The trades produced in this thread will show the importance of moving the initial stop to break even as quickly as possible and trailing the stops to lock in profit. For me, this ensures peace of mind and as the stock continues to rise, I ride the wave of momentum, content that I won't have to give too much of my profit back to the market!

I feel much safer swimming with the tide than against it!

tech/a · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

Gringotts Bank said:
Yes, and the same will hold true here on this thread. People will read what you say, go to apply it and fail. This is because you won't address the missing element, which is psychology. To you, "psychology" is a dirty word, but you don't realize this is how and why you have succeeded. It's not about "trade management" or "position sizing" nearly so much as you think.

Pavillion is a very unique case. His success has only come because you have held his hand every step of the way on every single trade he's ever made. He's also a guy who accepts things at face value without questioning, so long as the message is delivered with authority (which you provide). Many find it hard to have that blind faith in something that is easy to see through with a little bit of questioning. It's evident on the religion thread. If you were to say "well his faith has served him well", I'd have to agree, since he's up 50%. But this is my point - it all comes back to psychology.

Hmm

Don't know about that GB

While the portfolio we will be putting up is mainly full of my setups Pavs actual portfolio has a spread on mine and those which he has included.
Some I haven't even passed my eye over.
He has also traded his stocks in some cases a little differently to me.

Strangely he is still profitable!
I dont think it ALL comes back to Psychology.
If you know what your doing you never question it---you just know.

Knobby22 · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

I'm interested. Thanks for putting in the effort.

pavilion103 · 22 May 2013

Gringotts Bank said:
Yes, and the same will hold true here on this thread. People will read what you say, go to apply it and fail. This is because you won't address the missing element, which is psychology. To you, "psychology" is a dirty word, but you don't realize this is how and why you have succeeded. It's not about "trade management" or "position sizing" nearly so much as you think.

Pavillion is a very unique case. His success has only come because you have held his hand every step of the way on every single trade he's ever made. He's also a guy who accepts things at face value without questioning, so long as the message is delivered with authority (which you provide). Many find it hard to have that blind faith in something that is easy to unravel into nothing with a little bit of probing. It's evident on the religion thread how his mind works. If you were to say "well his faith has served him well", I'd have to agree, since he's up 50%. But this is my point - it all comes back to psychology.

Bullcrap!

I am one of the most open minded people on this forum and I swim against the tide in that regard.

I have read over 300 books on psychology, trading, personal development etc. And I question EVERYTHING.

I am able to identify truths and when Tech speaks them I listen, not because he has been trading for 20 years, but because they make sense, having read a wide range of views.

Maybe the one advantage I have over others is that I've read hundreds and hundreds of books and psychology is hardly an issue for me now.

Your posts in here are utterly desperate, embarrassing and reek of jealously. Honestly grow up and let the rest of us enjoy this thread. Without spouting your propaganda and personal agenda!

Boggo · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

pavilion103 said:
Your posts in here are utterly desperate, embarrassing and reek of jealously. Honestly grow up and let the rest of us enjoy this thread. Without spouting your propaganda and personal agenda!

Yes please.

Gringotts Bank said:
I can post all my good trades from last year if anyone is interested. It won't help anyone one bit.

We all agree with that comment GB

pavilion103 · 22 May 2013

In terms of psychology I'll ask this:

Which gives you more confidence:

1. Driving a new latest model car? or
2. Driving a beat up car that breaks down every week?

It's a lot easier to drive a car that you know works. You don't even stress about it breaking down (but you've got RAA membership incase).

Same with trading psychology.

pavilion103 · 22 May 2013

Back on topic....

burglar · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

pavilion103 said:
...
1. Driving a new latest model car? or
2. Driving a beat up car that breaks down every week? ...

Hi pavilion,

3. I drive a beat up car that gives and gives and gives! :
(but I've got RAA membership just incase).

@ tech/a
Where and when can we see the chart thread, please?

Gringotts Bank · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

pavilion103 said:
In terms of psychology I'll ask this:

Which gives you more confidence:

1. Driving a new latest model car? or
2. Driving a beat up car that breaks down every week?

It's a lot easier to drive a car that you know works. You don't even stress about it breaking down (but you've got RAA membership incase).

Same with trading psychology.

That always comes up as a counter-argument, and while it sounds valid, I don't necessarily agree completely with it. The question is: "Is confidence a primary or secondary phenomenon?" I tend to think that the confidence factor is circular, meaning that confidence gives rise to good decision making, but that good decision making can also give rise to confidence. However I'd say the former is far more powerful and more reliable. It's difficult, though not impossible to prove, although i do have one snippet of evidence to go towards showing it's primary.

Years back I had a work experience student with me, (I don't work in finance). He was both fairly bright and reasonably suggestible, so i did a little experiment without him knowing. He knew nothing about the stock market, which is perfect, so I basically taught him candles, price and volume. Took 10 minutes and he understood a chart. Then I induced some confusion so as to enhance his suggestibility and implanted the idea that he would find this easy and he would be a naturally good trader (I have studied hypnosis). Then I pulled up all the sub $1 charts and asked him to scroll through them an find the stocks which were going to go up the most in the next day. I left him to it while I went off to do other things. Over the next two days he did the impossible, basically. Had all his picks been traded, the total capital gain was around the 20% mark...in two days. There were about 10 picks from memory, 5 on each day. The losers were miniscule. The winners were not ones you'd necessarily have seen coming.

Just a note to anyone reading, tech's chart thread will be locked, so there won't be any diversions from me or anyone else, but just let me have my say for a minute. This is the missing element.

chops_a_must · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

There are already several threads on breakout trading and so on.

Not sure what the value is in this one.

BUT. My experience in being predominantly a breakout trader - the entries and setups are easy to enter and identify. It is the exits that are the hard part.

I'd really like to hear other people's strategies on the matter.

sinner · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

chops_a_must said:
I'd really like to hear other people's strategies on the matter.

Short holding times: Time based exit
Long holding times: Technical based exit

tech/a · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

burglar said:
Hi pavilion,

@ tech/a
Where and when can we see the chart thread, please?

I want to give a background at the beginning of the thread to help anyone who comes across it in future.
The background should set the scene for what I want to get across with the analysis and management of positions.
That I hope to have up and running within a week.
By then the week will be up and the charts and commentary I'm sending to Joe and Pav will be a week old and ill post them up a week behind.

Patience "B".

Kalaika · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

Hi tech/a & Pav,

Count me in please, I'm v keen to have the opportunity to listen and learn.

Thanks.

Trembling Hand · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

Gringotts Bank said:
Yes, and the same will hold true here on this thread. People will read what you say, go to apply it and fail. This is because you won't address the missing element, which is psychology. To you, "psychology" is a dirty word, but you don't realize this is how and why you have succeeded. It's not about "trade management" or "position sizing" nearly so much as you think.

Pavillion is a very unique case. His success has only come because you have held his hand every step of the way on every single trade he's ever made. He's also a guy who accepts things at face value without questioning, so long as the message is delivered with authority (which you provide). Many find it hard to have that blind faith in something that amounts to basically nothing much - ie. 'buy the pattern, watch for reversal'. It's evident on the religion thread how his mind works. If you were to say "well his faith has served him well", I'd have to agree, since he's up 50%. But this is my point - it all comes back to psychology.

GB you keep telling everyone why they have the outcome that they do. Funny how no one has seen the outcome of your trading.

I would seriously like to see just how successful or other wise your ideas and application is.

tech/a · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

chops_a_must said:
There are already several threads on breakout trading and so on.

Not sure what the value is in this one.

BUT. My experience in being predominantly a breakout trader - the entries and setups are easy to enter and identify. It is the exits that are the hard part.

I'd really like to hear other people's strategies on the matter.

Chops can you point me to one--perhaps I missed yours?

If it/they show how to manage your trade/portfolio and has all the numbers you need to know to monitor your viability then I agree it will save me a lot of time and there is no point duplicating something that has been already shown. I must have missed them as I haven't seen anything other than singular charts with no follow up.

Other strategies--what have you in mind ? I know people often speak of mean reversion methods
Id like to see one demonstrated as well.
Anything else?

chops_a_must · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

tech/a said:
Chops can you point me to one--perhaps I missed yours?

If it/they show how to manage your trade/portfolio and has all the numbers you need to know to monitor your viability then I agree it will save me a lot of time and there is no point duplicating something that has been already shown. I must have missed them as I haven't seen anything other than singular charts with no follow up.

Other strategies--what have you in mind ? I know people often speak of mean reversion methods
Id like to see one demonstrated as well.
Anything else?

This one tech:

https://www.aussiestockforums.com/forums/showthread.php?t=20906&highlight=breakout

It's yours.

I meant strategies for exits.

For the most part I use outside reversals to exit. I've also used Stop and Reverse indicators previously, which is similar to what Sinner suggested above.

And for longer time frame positions I've used old fashioned lower lows to exit.

So that area is what I'm most interested in looking at.

Cheers.

tech/a · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

Ah I see.

Basically we have been working with micro patterns and
Smaller patterns for entry as you will see. Technically to get an entry
Price has to " breakout" of the pattern.

One aspect I use in this shorter term trading is an initial stop which generally
Is used for position sizing and then a trailing stop to allow the market to take me out.
It's positioning is again technical and discretionary. I have used pivots,gap fills,resistance/another pattern failure during the trade-- as you will see there are many.

But one feature I like and so does PAV is moving the initial stop to B/E as quick as possible.
Sure we get taken out prematurely but we preserve capital very well.

Anyway I'll post all as time permits
Charts make it easier.
The main goal is to apply analysis to a number of trades to return a profit.

This is but one method and some features maybe adopted by others to add to their method.
It maybe a missing link or two as PAV found.

Off for a 10 k plod

Kalaika · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

Tech/a

With the trading style you've described, it sounds like you have a fairly strong risk management mechanism (i.e. moving stops to BE as soon as poss).

How do you model the expected performance of this approach across a wider universe of stocks (other than your system real time performance?), to know that its better than, say, giving a little xtra breathing space with original stops (perhaps even shifting half way from original to break even) and potentially getting more run out of them?

More interested in your philosophy than anything else...

Thanks,
K

AlterEgo · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

I'm also interested. Thanks Tech and Pav.

statmech71 · 22 May 2013

Re: Technical Trading Exercise---Discretionary, (Pavilion103 & tech/a)

I'm also extremely interested. Good on you Tech and Pav - your generosity is much appreciated. Thank you

Paul

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