Que,
"I wonder what the charts were saying the week before PTEN climbed from $19 to $26?"
From a trend following point of view I can tell you exactly.
On 1/26 the stock gave a signal to go neutral (from its previous downtrending signal), this would mean close shorts, close out puts and put structures.
On 1/28 at the open it gave a buy signal (or you could have taken the one 2 days later, on 2/1) as it broke above the previous fractal set up on 1/21 at 19.45.
On 2/10 an add-to buy signal was given (at 20.78).
On 2/24 a further add-to buy signal was given (at 24.79).
On 3/4 a further add to buy signal was given (at 25.83).
On 3/10 an exit signal (note, not "sell")was given (at 24.44).
[Note, many trend followers will combine signals with certain % stops, for example hard stops at 5% off a trading high; such a trailing stop would have triggered at 24.64 allowing for the following gains:
24.64/19.45 +26.7%
24.64/20.78 +18.6%
24.64/24.79 -1.6%
24.64/25.83 -4.5%
If you assume equal positions, then it's easy to calculate total gains. Many traders will add in increments of 1/2 an original position though, when a trend is working out, so that Position one is 2,000 shares, Position two is 1,000 shares, Position three is 500 shares (with 500 shares probably being the minimum), which would yield a better final profit position.
As to the future, if PTEN closes down on Monday or any day after without taking out the 3/4 fractal, a sell signal will be given. If PTEN continues to rise, a buy signal will be given when the stock trades above 26.
The question here is not % returns, though, but % returns measured against some feeling for risk. As we all discovered in 1998 and 1999, not having a good feeling for the risk of a play is the biggest gamble of all.
Kb |
