your opinions on this?

[rainman050]

a few months ago i was talking to someone here on this board, i forget who.. but they gave me a funny strategy which seems to let me trade with no emotion and ive been doing pretty well with it...

basically the gist of it is... find a cheap broker, take your money, buy 9 or 12 (multiple of 3 but make sure the positions arent too small or the fees work against you) stocks across the board and put even dollar amounts into each, buy them at about 10 to 10:30 in the morning

put in limits to sell at -1% and +3% or slightly higher, depending on what your taste is but he said he normally uses 3-5%

every loser you end up losing 1%, every winner you make 3% or better, so every winner basically replaces 3 losers

ive been using the strategy since about february and my stock trading account is up about 42% after fees.. giving me more time to do other things and learn more about other trading strategies

whoever gave me this tip, thanks!

what do you guys think of it? its simple except you get knocked out at 1% pretty often, i was thinking of changing the limits to maybe -2% and +5-6% but it seems to be working fine the way it is now

[smartinvestor30]

a few months ago i was talking to someone here on this board, i forget who.. but they gave me a funny strategy which seems to let me trade with no emotion and ive been doing pretty well with it...

basically the gist of it is... find a cheap broker, take your money, buy 9 or 12 (multiple of 3 but make sure the positions arent too small or the fees work against you) stocks across the board and put even dollar amounts into each, buy them at about 10 to 10:30 in the morning

put in limits to sell at -1% and +3% or slightly higher, depending on what your taste is but he said he normally uses 3-5%

every loser you end up losing 1%, every winner you make 3% or better, so every winner basically replaces 3 losers

ive been using the strategy since about february and my stock trading account is up about 42% after fees.. giving me more time to do other things and learn more about other trading strategies

whoever gave me this tip, thanks!

what do you guys think of it? its simple except you get knocked out at 1% pretty often, i was thinking of changing the limits to maybe -2% and +5-6% but it seems to be working fine the way it is now

What happens in the instance when the market has a bad day and stocks all across the board are down for that day? So in this scenario each of the 9-12 stocks could be down 1% for that day and your "stop loss" would be triggered. This means that for that day your portfolio is down 12%:dong:

And about this method...

Do you have, let's say, 3 stocks in 3 different sectors (e.g. energy, defense, agricultural)? How do you pick the stocks is what I'm trying to ask? Is it random? By sector? Or 9 different stocks in the hottest sector that the smart money is going into?

Also have you back-tested this strategy? I would be interested to hear and see the results if you could post them here.

[Gzapper]

imo i say that you take a west coast yarn slide and funagle a glee essence zooberance pop with the low down waist of a vector salad structure. at least with more efforts we can forsee the power in Bologna Grains in Yort then blow out a fryer for grandpa does not like to show a vision of great new yardwork. OH please please Gary, show some more power to the hat that shines with all the breeze functions a pot plant can give. Even by licking more resources we can show the young people of america a suit to wear for the ..... MORE MORE YES MORE IF YOU CANT GET IT OUT THEN WE CANT SSHOVE IT IN MORE GARY COME ON USE YOUR HEAD! PLEASSSE YOUR YOUR HEAD, WE HAVE THIS DONT MESS IT UP!!! :santaclaus: THEN much more fans can wave and cheddar cheese will be happy in the sands. homey dont play that!!!!!!!!!!!

[Stin]

BTW if you get stopped out at 1% in all your positions, you are only down a total of 1% (not 12%) for the portfolio.

Sounds like an interesting strategy. Probably best for hot stocks.

[Gzapper]

imo i say that you take a west coast yarn slide and funagle a glee essence zooberance pop with the low down waist of a vector salad structure. at least with more efforts we can forsee the power in Bologna Grains in Yort then blow out a fryer for grandpa does not like to show a vision of great new yardwork. OH please please Gary, show some more power to the hat that shines with all the breeze functions a pot plant can give. Even by licking more resources we can show the young people of america a suit to wear for the ..... MORE MORE YES MORE IF YOU CANT GET IT OUT THEN WE CANT SSHOVE IT IN MORE GARY COME ON USE YOUR HEAD! PLEASSSE YOUR YOUR HEAD, WE HAVE THIS DONT MESS IT UP!!! :santaclaus: THEN much more fans can wave and cheddar cheese will be happy in the sands. homey dont play that!!!!!!!!!!!

certainly

[cramerica1972]

imo i say that you take a west coast yarn slide and funagle a glee essence zooberance pop with the low down waist of a vector salad structure. at least with more efforts we can forsee the power in Bologna Grains in Yort then blow out a fryer for grandpa does not like to show a vision of great new yardwork. OH please please Gary, show some more power to the hat that shines with all the breeze functions a pot plant can give. Even by licking more resources we can show the young people of america a suit to wear for the ..... MORE MORE YES MORE IF YOU CANT GET IT OUT THEN WE CANT SSHOVE IT IN MORE GARY COME ON USE YOUR HEAD! PLEASSSE YOUR YOUR HEAD, WE HAVE THIS DONT MESS IT UP!!! :santaclaus: THEN much more fans can wave and cheddar cheese will be happy in the sands. homey dont play that!!!!!!!!!!!zapper,have you been watching.......................TOO MUCH spongbob squarepants or jimmy neutron boy genius?

[Gzapper]

zapper,have you been watching.......................TOO MUCH spongbob squarepants or jimmy neutron boy genius?

i see hinderance because toys shed volcanic appliances

[Rynn]

This seems like the exact opposite of a winning strategy.

Prices will often vary by 1% in a day, if your stop loss is only -1%, you will hit your stop loss very often. I generally sell at +1% or +2%, with stop loss at -3% to -5%. And very rarely hit the stop loss.

Also, I never buy with a market order, I always put in a limit and try to get a better price. There are usually many more sell orders in the market than buy orders, so you can get a much better price when buying.

The only way I can possibly see this working is if you're trading penny stocks with high volatility, because if you do this with large cap stocks or ETFs, you will rarely get your 3%. It's extremely rare that DIA or SPY will go up 3% in one day. It hasn't happened in several months.

I would strongly advise testing this strategy with historical data before you put real money into it.

[ChartShark]

It's extremely rare that DIA or SPY will go up 3% in one day. It hasn't happened in several months.

Not true. There are many large cap stocks with tons of volume that move at least 3 to 5% in a day. It is more rare for any of them to actually close with such a large gain or loss (though not unreasonable) but some of them typically have 3-5% ranges that they travel on a regular intraday basis.

[netwrangler]

This seems like the exact opposite of a winning strategy.

Prices will often vary by 1% in a day, if your stop loss is only -1%, you will hit your stop loss very often. I generally sell at +1% or +2%, with stop loss at -3% to -5%. And very rarely hit the stop loss.

Also, I never buy with a market order, I always put in a limit and try to get a better price. There are usually many more sell orders in the market than buy orders, so you can get a much better price when buying.

The only way I can possibly see this working is if you're trading penny stocks with high volatility, because if you do this with large cap stocks or ETFs, you will rarely get your 3%. It's extremely rare that DIA or SPY will go up 3% in one day. It hasn't happened in several months.

I would strongly advise testing this strategy with historical data before you put real money into it.
Good post, Rynn. Those are my concerns too.

Also, what's this 'multiple of three' business about? Is the OP suggesting that opening 9 or 12 positions is good, but opening 10 or 11 positions is somehow, what, 'inauspicious'?

BTW: The advice you give about avoiding market orders is right on the money - at least in my experience.

[Supreona]

i see hinderance because toys shed volcanic appliances

Ok that made me laugh, I tried not too, I promise.

[netwrangler]

Not true. There are many large cap stocks with tons of volume that move at least 3 to 5% in a day. It is more rare for any of them to actually close with such a large gain or loss (though not unreasonable) but some of them typically have 3-5% ranges that they travel on a regular intraday basis.
DD, what you say is true, but so is what Rynn said. Rynn cited large cap ETFs [DIA and SPY] in his example, and ETFs are inherently less volatile than individual stocks.

And what you point out - that a large cap can move 3-5% on occasion - supports Rynn's point that the 'system' as presented is likely to get stopped out a lot - very likely too much.

Does the OP's system work? I doubt that it does with trios of random stock selections. You still need to select trades where you have reason to believe the stock is going up. Doesn't matter if you develop that reason through technical analysis or through [your 'fundy' namesake] DD. The point is, you don't do your selection by throwing darts.

But if you have reason to believe a stock is going up, and that reason is based on solid analysis ... well then, there are lots of ways to make money. :wink:

[ChartShark]

Woops. I quoted the wrong text in my reply. I meant to quote the following:

if you do this with large cap stocks or ETFs, you will rarely get your 3%.

Which makes more sense in the context of my previous post. While Rynn only uses ETF's as examples, he/(she?) does say large cap stocks would fail also.

I do agree with the fact that this one is likely to get stopped out more often than not, and likely more often than the 3:1 ratio needed to maintain profitablility.

It seems there is or should be more explanation to the system. I think the purchase time-frame of 10-10:30 may be in place because it is a typical reversal time-frame. To take advantage of this you would have to watch your stocks from open until purchase to get a feel for which are likely to reverse and which are likely to continue. Doing this would allow you to get the best price on those stocks that reverse, get in on strong trends that started at the open, and avoid heavy stocks that are likely to continue downward. There's likely even more to this system than this that makes it less simple than stated by the OP.

I also notice that there isn't a stated hold period for the stocks, but it seems like it's intended to be a pretty short-term swing strategy, perhaps even closing out at EOD because overnight holding could void any benefit you've afforded yourself by using the 10-10:30 buy period. I would expect that a 3-5% target would be hit within the day anyway with the proper research, which brings me to the following:

Does the OP's system work? I doubt that it does with trios of random stock selections.

(I think I got that quote right)

I agree with this also; you would definitely have to do some sort of pre-market research in order to find stocks that you expect to make predictable upward moves (whether they start out that way from open, or make a readable reversal during 10-10:30).