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Strategies & Market Trends : Strictly Buy and Sell Set Ups -- Ignore unavailable to you. Want to Upgrade?

To: chowder who wrote (12100)	4/14/2007 6:32:53 PM
From: Zincman	Read Replies (1) \| Respond to of 13449

<<20% gain over 2 months based on 31 trades>> Congrats. Great trading. How do these numbers compare to your longer term avg. IOW's is 20% in two months about avg, or an anomaly for you? tia, ZM

To: chowder who wrote (12100)	4/22/2007 12:34:13 AM
From: chowder	Read Replies (1) \| Respond to of 13449

FOOD FOR THOUGHT ... Trading Strategies ...................... Let's take the time to talk about trading strategies or the style of set ups we should be looking for. I have spent a lot of time studying the trading styles of other people. I'm sure all of you have seen many different styles exposed on other message boards. As I was trying to develop a style for me, it seemed that everyone but me was having success. As you peruse these message boards, you'll see many various people sharing their winning trades with you. It will appear that nearly everyone is outperforming the market. What we won't see, as they tell us about their double and triple gainers, is the size of their positions or how the rest of their trades have done. Someone may be up 400% on one trade and still be underperforming the market due to a series of other trades that have lost them money. Often times you will see people get excited about a 30% move in a stock they own, but what they won't tell you, is that they are still down on the position. What I have attempted to do here, is to show you every trade in advance, so you can judge for yourself if it's a winning system. I don't buy a stock and then come here to pump it. Every trade listed here is shown before I get into the trade. There are only a few examples of where I got in and then showed the set up here. Occasionally I see an intraday set up and jump on it. I present it here while it is still within the low risk entry point. I have enjoyed a lot more success in the past two months than I normally achieve. I owe that to the strong uptrend in the market. Last week I showed where I had presented 31 trades and only had 6 losers. The percentage of the winning trades were much larger than the percentage of the losing trades. Most people would tell you that all it takes to be successful in the market is to win on 51% of your trades. Others think it takes more than that. I recall reading this from BigTrends.com ............... The reality is that even the best traders win less than half of the time .... it's just that their winners are much bigger than the losers (we'll get to that in a second). I'd say shoot for a system that wins about 40% to 50% of the time. Is your tested system showing wins more than 65% of the time? That's great, but I'd be skeptical of those results. We've been doing this a while, and when the success rate of a system starts to outperform everybody else's by that much, there's usually something very unique about it ..... and it's usually something that won't be part of the equation going forward. In other words, if it's too good to be true, it probably isn't. This is often the case when a system is tailor-made for a certain timeframe or certain chart. All the criteria and parameters of a system are optimized for all the little nuances and unusual movements that occurred during that specific period. Those nuances and movements, though, may never occur again. If you're winning 40% to 50% of the time, and you're doing so in several different timeframes (as mentioned in the 'profitability' comments), then you've got a good system. I took those comments to heart when trying to identify buy and sell set ups. I had to try and identify patterns that worked in all time frames and did so in a timely manner. The one set up that continued to repeat itself more than any other, with consistency, was the high volume, wide range bar break out. This pattern can be seen in any time frame from monthly, weekly, daily and even on the intraday charts. When you see this pattern in various time frames, you adjust your profit target and stops within that time frame. Not all break outs are successful though. This is where we must have the discipline to keep our losses small. Since break outs are the beginning of a Stage 2 uptrend, as identified by Weinstein, it only makes sense that your gains will outweigh your losses if you keep your loss within 8% of the break out point. You can look at chart after chart after chart and not see the beginning of a Stage 2 uptrend. This is where patience comes into play. Most charts are ambiguous. Wait for one that is compelling. Don't force the issue. You may have to close out trades early that looked like they were going to break out only to reverse. Keep the losses small. Knowing in advance that most of your trades won't work out, we are looking for trades where we can ride the trend and add to them as they grow. Every trade can't be a winner. Learn to know when to cut them loose. Studies have shown that the most successful trades are the ones that are successful immediately and never show a loss. That means we must cut loose of trades that initially showed a gain and are now turning red. The best way to get into a trade that is profitable immediately, is to buy break outs. The upside price momentum has you earning a profit right away because price is rising to hit your entry target. If you will note, every buy set up here shows an entry target "ABOVE" the current price. It's that upside momentum we are hoping will continue because the bulls are in charge at that point. Come to the realization that you only have to be successful 40% of the time as long as you buy strength, minimize losses and let your winners run. Just some food for thought.