Saturday, August 09, 2008

Triangle Trading System

I often refer to "Triangle Buys/Sells" and provide charts with automated trading signals in support of various trades discussed. This refers to a mechanical trading system embedded in the Market Club trading charts, an advertiser by choice (my choice) on this site.

The triangles represent Daily or Weekly breakouts in the underlying security, including stocks, indexes, etf's, futures, on virtually any tradable that can be charted and for which data is available. If you're looking for a simple, automated, objective trading system, one that does all the thinking and is based on solid trend following criteria, the Triangles are worth consideration.

Note: My advertising deal with Market Club is based on traffic to and business generated from the ads on my site, but rest assured I have been using Market Club charts and Triangles for years now, far longer then they have been advertising on my site.

Here is an example of the past four months of Triangle Signals on NNVC (all signals are generated intraday and emailed to MC subscribers):


To illustrate the worth of these signals in a short-term trading regimen, here is a table that represents all of the above trades:

In summary, a Buy & Hold strategy on NNVC for the past four months would have resulted in a gain of $0.74, or 140%. Trading these signals for the same period would have resulted in a gain of $1.32, or 250%. But the big advantage here, is compounding. There are 15 trades and the average gain per trade is 10.91%. That's about 11% per week, trading about once per week.

The Triangles seem to work better on some stocks rather then others and I like using the Weekly chart signals which tend to trade less frequently. But I wanted to provide here an example of what can be done with simple, objective signals, for those so inclined.

A

10 comments:

Anonymous said...

That average is awesome and really minimizes your risk nicely.

Eric

Anonymous said...

Allan,does this system work better than 50/50 on the vast majority of stocks?
Thanks,Ron

Allan said...

does this system work better than 50/50 on the vast majority of stocks?

Ron, yes it does. I keep meaning to write a blog about trading and how to look at trading systems so as to make money consistently, but my readers seem to prefer weekly picks that go up 10% to 100% instead.

I can't blame them, no one else seems to be providing winning picks on their blogs. It is because I so eschew all the pontificating in stock market related blogs, that I hesitate to go there.

But maybe just this once.....

A system that can essentially break even or even lose a small amount in choppy markets, but then log onto a big fat trend for weeks at a time and generate triple digit returns is the best way I know of, other then day-trading, to make money trading. But you have to be of a mind set that you will accept those choppy periods, sometimes lasting months, and continue to trade the system waiting for that big payoff trend to compensate for all that choppiness, and then some.

Looking at the NNVC trade table, there is that one trade, gaining 68%, that really sticks out. But in order to have gotten into that trade, you had to endure a series of smaller gains, 3%, 9%, 3% again, then bingo, a huge win. Those small gains could easily have been small losses, three in a row in which less disciplined traders, or would-be traders, would just get frustrated and give up, thus missing the big payoff.

The Triangles by definition, are guaranteed to catch every big move in the stock, index, etf or futures.

This is an essential mindset for successful trading, i.e. keep losses small and let winners run. The Triangle signals are not the only way to do this, but they are easy to follow and like a third base coach waving you home, keep you on the right path to profits.

Lecture over.

Anonymous said...

I love and appreciate your lectures, keep them coming.

Anonymous said...

Allan,thanks for your insight.I am starting to think that if you are going to be wrong half the time,why do we need to spend a great deal of time on stock analysis? If we just throw darts at a list of stocks with high beta and cut losses and let profits run,wouldn't we do just as well?
Thanks,Ron

Allan said...

Ron, the analysis stacks the odds in your favor, (1) that you will achieve at least 50% wins and maybe much more, and (2) those picks that you are right on can go up significantly more then the market averages.

Remember, it was analysis that found us NNVC, a multi-thousand percent winner for those of us who bought at 10 cents; or more recently, SCA at 163%. Those kinds of wins are unlikely to come from throwing darts.

Anonymous said...

Allan:
You mentioned:
"The Triangles seem to work better on some stocks rather then others and I like using the Weekly chart signals which tend to trade less frequently"

Can you please elaborate and classify on which type of stocks it works better and doesn't?

Thanks
Sam

susan said...

Allan,

I signed up for Market Club - through your link - and I'm already hooked. Can't wait to get going.

Is there a Market Club message board? Can't seem to find one.

Without having to take weeks of data, I'm wondering what % of new "Recent Trade Triangles", (with + score, decent volume), actually turn sour right away. My thinking is that as soon as a new one pops up, I buy it and then sell at a predetermined %, say 5. What do you think?

Thanks again for all your efforts and generosity. I'm also long NNVC.

Anonymous said...

Allan,

I am thinking about giving MC a try. Do think it is better to trade the same stock over and over?
You mentioned some stocks are better candidates then others. Do you know if MC can sort the list of buys or sells by how they performed in the last year based on the triangles buy and sells.
Thanks.

LB

Allan said...

LB, I think you get 30 days to decide if MC is for you or not and it has a whole lot more in the way of bells and whistles then I have described. The only way to do MC justice is to try it and see if makes you a better trader or not. That's what it's all about.