12.23.2016

2016: a year in review

It is almost the end to this earth year. 2016 has been very fruitful. I think it's appropriate to give time for some quiet reflection.

It was Year 1 of being equipped with the ZF system. My immersion is still ongoing. And I do believe it is something that will not end soon. I still learn something new in every trade that I make. Ms Market is a hard mistress, she takes away as much as she gives. And it seems that I entered in a long term relationship with Ms Market, for better or worse. 


With the recent launch of the ZF ORACLE, it has provided me with the perfect time to go back to my trades this year. 

Analyzing my trades, I still have a natural inclination to buy breakouts. It really is my bread and butter setup. Aside from breakouts though, there was a small collection of bounce trades here and there scattered once in a while. Then there are the TF trades. I still have to tighten my stops for those. There are still a lot of profit leaks in my trades and I plan to plug them eventually.

Going over my trades, I found out that my hit rate for the year is still pretty low, about 43%, so there is a still a lot of room for improvement.

I was pleasantly surprised to find out that there were only a handful of stocks that gave me most of my gains. 






Those are some of the trades where in I was able to gain multiple times in a single stock. I think I missed a couple of others but I think I was able to milk these stocks for all they're worth. 

So after looking back on the past year, it's now time for some resolutions or goals for the new year. 

One resolution for the new year is to really ramp up my documentation skills. There were a lot of trades that weren't documented properly, real and paper trades. So much potential learning lost. I hope that Excalibur, a tribe project, can help solve that particular weakness of mine. 

Another resolution is to trade less. Focusing on those perfect setups. I have already started on this and have observed that this trait has been lessened this last quarter of 2016 but in the first two quarters, I had to return some gains/profit due to overtrading. 

One more goal is to get some more badges. Seeing one of these bad boys in the palm of my hand has really stoked the competitive flames in me. 

And lastly, will definitely step up my RAK game and have already discussed this with the Mrs Robot. We are now setting goals for this and identifying the potential beneficiaries for each quarter of 2017. That should be something to watch out for. 

Ok, that's enough reflection for this robot. Here is some ear candy for you guys. Happy holidays and let's get ready for 2017!




12.01.2016

Trend Following: LIHC

Trend following. You hear or read it often but ever wonder how it is done? 


Let me try to give a short walk-through on how my neural networks implement a trend following trade. I will be using my latest trade, LIHC as an example. 

The first thing to remember in doing a trend following trade is to watch your entry point or your average price (AEP). The ideal entry is to get in before or right at the start of the trend. How to do that? Read up on the boss's blog about ZS and AOTS. For LIHC, this was easy to spot since it also coincided with a multi year breakout. 

Next comes the hard part. The holding time. 

To get a better idea, watch this. These are the survivor endurance challenges. Where you have to outlast your competition for the chance of a bigger prize. 

For this example, the contestants have to hold their arms up or else they will get splashed with paint. The host can tempt them with some small reward in exchange for stopping out. Or if they get tired, they can just put down their arm. 




To put this in perspective, the rewards or the exhaustion of a person could be compared to someone selling at a certain target price or resistance. 


Or maybe if the chart or price action looks weak. There is nothing wrong with selling at those points. As long as you follow your plan then go ahead. 

For me, I do not set target prices. I'd rather set trail stops. If the price goes down a certain point then that is when I sell. That point could be a previous resistance turned support, the previous close, a MA getting broken. It doesn't matter that I wasn't able to sell at the top. The important thing is I was able to ride the bigger move. 

Another thing to consider when doing trend following trade is fighting the urge to move to the flavor of the day or the week. Like the bear in the GIF below, it's human nature to want to sell and then move to the faster moving stock. For this LIHC trade, there were several missed trades, CPG, BLOOM, FNI, STI, PPC, WEB to list a few. 



But in reviewing my past trades, it was my inactivity that has given me bigger gains. Focusing on just a few trades a month has helped me to reach my quota or targets. My system is not really built for tsupita trades. That mindset or strategy has yielded a bad win/loss ratio over time. The losses negate the wins or just at breakeven. Plus the added mental stress of having to look for good trade setups everyday. 

In reality, I am lazy. I'd rather make just a couple of trades a month then to trade multiple times a day/week. This fits more to my trader profile right now as well since I cannot be in front of the computer the whole day anymore. 

screenshot date was close of 11/25/2016

Not bad for a one month hold don't you think? One trade for the whole of November. Do take note, actual selling was below 1.5 today 12/2/2016. Wasn't paying too much attention to the movement since I was busy doing other things.