Archive for the ‘Trading Strategies’ Category

TradeNagger – My Latest App

Monday, February 6th, 2012

TradeNagger is an app that will give you advice while you are day-trading using your computer’s text-to-speech capability. I invented TradeNagger to remind me of important things while day-trading instead of having to keep looking at my written notes. The download links are on the TradeNagger home page.

Click for a sample of what TradeNagger sounds like.

TradeNagger is my third app on this site, along with Fractal Stock Grapher and Rank-O-Matic.

Elliot Wave Refuted

Tuesday, September 20th, 2011

On page 183 of the Elliot Wave Principle, Frost and Prechter write:

“To sum up our view, then, the market, for forecasting purposes, is the news.”

In other words, the trader need not follow any news outside of the market. You don’t need to know if the Tea Party will force the federal government to default on the national debt. You don’t need to know if S&P will downgrade US treasury bonds. You don’t need to know if Greece will default or not. You don’t need to know if Lehman Brothers will collapse. That’s just noise that is already baked into market movements.

But this assertion is easily disproved. The Federal Reserve Bank has been following a policy of “transparency” – bending over backward not to surprise the markets. Chairman Bernanke often just tells us what he will be doing well before the official announcement. And Fed actions are leaked to the news media beforehand. If you want to know what the Fed will almost certainly do, just read Jon Hilsenrath in the Wall Street Journal.

And yet, when the Fed makes its announcements, the markets make huge gyrations – even when the Fed does nothing. Here is an intra-day chart of the S&P 500 on August 9, 2011 when the Fed made its scheduled interest-rate policy announcement (click chart to enlarge):

Elliot wave refuted

Wavers assert that that massive 75-point swing would have happened anyway, and that I am just blaming it on the FOMC announcement. Right? The market does something, and then reporters scramble around looking for “news” they can use to explain the event.

Which is total BS.

The Fed causes those waves.

Note to wavers: deal with it.

This ridiculous concept is analogous to diet books that tell you: “Eat all you want and still lose weight!” They are just telling you what you want to hear. They know you are a fatty, and love food. Otherwise, why would you need a diet? So, they tell you that you can eat all you want because they know that, deep down, you don’t really want to stop eating. You just want somebody to tell you that it’s okay to “eat all you want” – preferably some fifty year-old guy with gray hair in a doctor outfit looking all authoritative.

The wavers know that you are lazy. They know that you don’t want to follow events in Greece, or read business news, or understand what credit-default swaps are. So, they tell you what you want to hear. That you can take a chart, any chart, draw a few lines on it with your crayon, and know the future.

Preposterous.

Wavers tell you the exact opposite of reality. That trading easy. But they are not the only ones, of course. Everybody hawking “the ultimate theory” does the same thing. The guru game is a con. A successful guru has got to rope-in the suckers, and quickly sell them their book, newsletter, and seminar before the suckers lose all their money.

And they will.

Because only 1% of traders are consistently profitable. The rest are shark-bait, and the sharks have to keep on swimming, constantly roping in fresh suckers with absurd claims.

George’s 9-36-15 Strategy

Saturday, February 19th, 2011

I did some back-testing with George’s 9-36-15 strategy using SPY and SH, and it is definitely a technique you want use. Believe it or not, bears could have shorted this historic rally by trading SH (the inverse S&P 500 ETF) and lived to tell about it.

Since the rally began in September, if you had gone long SH on every 9-36-15 cross-up, and gotten out before the bell, you would have only lost 2%. That’s pretty miraculous, and way better than having your face completely ripped off. Of course, trading SPY would have made profits instead, showing that it’s always a good idea to trade in the direction of the primary trend no matter how good your techniques are.

I used a longer 1,000 day period for the results that you can see on the 9-36-15 Cross page.

The rules that I used were suitable for a computerized strategy. For example, after a cross, it just goes long. In reality, you could probably get better entry points by waiting for a dip on the 1-minute chart, or using additional signals from the stochastic, MACD, etc.