Pascal
03-09-2015, 04:48 AM
I just received the folloiwng email from a subscriber to the EOD database with the daily comments.
I found that the questions asked were interesting for everybody who follows this site.
Hi Pascal,
I am extremely impressed by your weekly analysis and technique. I've read your book twice and made lots of margin notes, but I have a problem that I hope you can help me with me with.
The first way I've tried to use your service is to buy ATM calls in stocks that have a strong LEV increase that isn't reflected as a recent rise in price, and that are in the bottom half of the active boundaries. I had a few terrific winners, but the success rate was below 50% and it didn't turn out well after a few months of trying. I often tried to look at favorable industries as well, but I didn't apply that filter perfectly every time.
The other thing I try to do is read your weekly comment for actionable trade ideas. But they don't often seem to have comments for the market tomorrow, and I may forget your report by the time the markets move into the regime that you identify. For example, today's comments talk about a possible drop in SPY come mid-year.
I understand you don't want to use the word "recommendations" but I wish there was some creative way you could provide us with actionable information, e.g. perhaps mention trades that you have opened.
Or is there a better filter recipe I could apply to the LEV technique to increase reliability?
Please help. I want very much to be successful with your service and I'm anxious to read your new book.
Sincerely,
Signature
Hi My Friend,
I try to issue some executable trading ideas either on the daily comments, the Stock Selection forum or the Portfolio analysis.
http://www.effectivevolume.com/content.php?714-comment-of-the-day
http://www.effectivevolume.com/forumdisplay.php?5-Stocks-trading-ideas-for-the-Pyramid-method
The weekly analysis is also opened to non-subscribers and hence, I prefer to provide fewer executable trading ideas there. It is more for a general market direction feeling.
Also, my investment timing is about 5 days, which makes "recommendations" difficult to follow if they are not together with the exact timing of entries and exits, which is something I do for portfolio management subscribers, since I send them by email all my trades as I execute them.
You might have not noticed, but today's daily comment includes a specific trading plan.
http://www.effectivevolume.com/content.php?2608-Comments-for-Match-9-2015
Even with all my deep knowledge of the EV data/tools and my trading experience, I only have a 57% win ratio in the past 18 month, but twice the gain of the S&P500
http://www.effectivevolume.com/content.php?2015-short-term-trading-performance
Regarding your trials to use the EV/AB combination, if you kept a track record, you should try to sort the results depending on the 20DMF market direction model that I post here attached for the year 2014.
28872
In 2014, you can see that the 20DMF outperformed the S&P500. So, if you traded in the 20DMF direction, you should have also outperformed.
If you were long the specific trades while the 20DMF was in a short mode, and the trade failed, this is normal. It is always best to follow the market direction and then select the sectors/stocks that follow the same direction.
You might use the Pyramid data here and see if your trade idea meets what the Pyramid says:
http://www.effectivevolume.com/content.php?2357-the-pyramid
The most important is to keep trying, keep a log of your trades at least in the trial phase and see if each trade follows the Pyramid steps (Market direction, sector direction, stock ).
Then, did your entry produced positive R/R using the Breakout Calculator?
This is something you can check in hindsight: you download data for each of your trades, then you erase the data so that the last data is the day BEFORE your entry and then calculate the R/R ratio setting the BC in order to exactly match your entry price and the stop that you used. Then see what happens. Maybe your entry setting was not ideal.
Trading is not easy. This requests much work until you find a system that works for you, but also with your available time. The markets are very very competitive and you will need much work to fine tune the tools and see what works best. To my knowledge, the Pyramid method is what works in the current environment.
I checked your member status and noticed that you did not request the Breakout Calculator. So I am emailing it to you here attached, together with the user guide.
All subscribers to the EV system have the right to receive this free tool, even before the book is out.
The Pyramid Investment book will explain how to use it in great detail, but still it would be good that you start using it now.
Pascal
I found that the questions asked were interesting for everybody who follows this site.
Hi Pascal,
I am extremely impressed by your weekly analysis and technique. I've read your book twice and made lots of margin notes, but I have a problem that I hope you can help me with me with.
The first way I've tried to use your service is to buy ATM calls in stocks that have a strong LEV increase that isn't reflected as a recent rise in price, and that are in the bottom half of the active boundaries. I had a few terrific winners, but the success rate was below 50% and it didn't turn out well after a few months of trying. I often tried to look at favorable industries as well, but I didn't apply that filter perfectly every time.
The other thing I try to do is read your weekly comment for actionable trade ideas. But they don't often seem to have comments for the market tomorrow, and I may forget your report by the time the markets move into the regime that you identify. For example, today's comments talk about a possible drop in SPY come mid-year.
I understand you don't want to use the word "recommendations" but I wish there was some creative way you could provide us with actionable information, e.g. perhaps mention trades that you have opened.
Or is there a better filter recipe I could apply to the LEV technique to increase reliability?
Please help. I want very much to be successful with your service and I'm anxious to read your new book.
Sincerely,
Signature
Hi My Friend,
I try to issue some executable trading ideas either on the daily comments, the Stock Selection forum or the Portfolio analysis.
http://www.effectivevolume.com/content.php?714-comment-of-the-day
http://www.effectivevolume.com/forumdisplay.php?5-Stocks-trading-ideas-for-the-Pyramid-method
The weekly analysis is also opened to non-subscribers and hence, I prefer to provide fewer executable trading ideas there. It is more for a general market direction feeling.
Also, my investment timing is about 5 days, which makes "recommendations" difficult to follow if they are not together with the exact timing of entries and exits, which is something I do for portfolio management subscribers, since I send them by email all my trades as I execute them.
You might have not noticed, but today's daily comment includes a specific trading plan.
http://www.effectivevolume.com/content.php?2608-Comments-for-Match-9-2015
Even with all my deep knowledge of the EV data/tools and my trading experience, I only have a 57% win ratio in the past 18 month, but twice the gain of the S&P500
http://www.effectivevolume.com/content.php?2015-short-term-trading-performance
Regarding your trials to use the EV/AB combination, if you kept a track record, you should try to sort the results depending on the 20DMF market direction model that I post here attached for the year 2014.
28872
In 2014, you can see that the 20DMF outperformed the S&P500. So, if you traded in the 20DMF direction, you should have also outperformed.
If you were long the specific trades while the 20DMF was in a short mode, and the trade failed, this is normal. It is always best to follow the market direction and then select the sectors/stocks that follow the same direction.
You might use the Pyramid data here and see if your trade idea meets what the Pyramid says:
http://www.effectivevolume.com/content.php?2357-the-pyramid
The most important is to keep trying, keep a log of your trades at least in the trial phase and see if each trade follows the Pyramid steps (Market direction, sector direction, stock ).
Then, did your entry produced positive R/R using the Breakout Calculator?
This is something you can check in hindsight: you download data for each of your trades, then you erase the data so that the last data is the day BEFORE your entry and then calculate the R/R ratio setting the BC in order to exactly match your entry price and the stop that you used. Then see what happens. Maybe your entry setting was not ideal.
Trading is not easy. This requests much work until you find a system that works for you, but also with your available time. The markets are very very competitive and you will need much work to fine tune the tools and see what works best. To my knowledge, the Pyramid method is what works in the current environment.
I checked your member status and noticed that you did not request the Breakout Calculator. So I am emailing it to you here attached, together with the user guide.
All subscribers to the EV system have the right to receive this free tool, even before the book is out.
The Pyramid Investment book will explain how to use it in great detail, but still it would be good that you start using it now.
Pascal