Sunday, August 10, 2008

Triangles - Part II

"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?

The premise underlying the Triangle trading signals is a price breakout basis the Daily, or Weekly, or Monthly, or Quarterly time period. Some stocks and/or indexes are more reliable trading vehicles based upon that premise, then others. For example, Apple works very well following weekly breakouts, much better then say a FSLR, or say the US Dollar Index. As we have seen, NNVC works very well on the Daily prices, but maybe it wouldn't be as profitable on the Weekly prices. It's a matter of trial and error with whatever stock or index that is being tested.

Here are a couple of indexes-etf's, one on the Nasdaq (QLD) and one on the DOW (DDM) for comparison:

If you held the QLD Long since April, 2007, you would be down about 10%. But if you traded the Weekly QLD signals, you would be up 61.84%. QLD also trades options, which with 66% winning trades might be a leveraged alternative. In my testing, the QLD performed much better then the QQQQ, so I adopted the QLD for when I want to trade the Nasdaq.


These are the results from trading the DDM, a leveraged DOW 30 ETF. I have not looked at this one before writing this blog, so have only tested it year-to-date. Note that the DDM has lost about 20 points, or about 25% year-to-date. But trading the DDM with Triangle signals has netted +12 DDM points, or +14.35%. Again, for some reason these leveraged ETF's do better with Triangle signals, i.e. 3-wk breakout signals, then the underlying index.

All of this data is gleaned from trial and error testing of the Triangle signals, which is easy to do, but does take some time. What I have found is that this trading system works better with some stocks, indexes, ETF's then others. I never know ahead of time which ones it works better with, only with testing and observation does that information come to light. Overall, the system works well across the board, but it does seem to stand out with lower priced stocks and with ETF's.

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?

I'm unaware of a Market Club message board, which actually is a good thing because it makes you dive into the program and figure stuff out for yourself, which is also a good thing.

As for a quick start idea, let me suggest the Market Club Scans. My favorite scan, one in which several of the trade ideas that I have published here have originated from, is as follows:

(1) 4-week Highs;
(2) Stocks priced under $20;
(3) Average daily volume above 500,000;
(4) US Stock Excahnges only.

From this scan, you will get a list of stocks, usually numbering to between 20-60 stocks. First, eliminate any stocks with large gaps, that cuts the list in half. Now with a quite managable 15-30 stocks, flip through each stock chart, I like candlesticks as opposed to bar or line charts because candles add information, and look for solid uptrends that are breaking out of longer term bases. This should leave you with anywhere from 1-5 stellar charts. You can stop right there and buy them all, or take a look at fundamentals, i.e. Confirmatory Analysis
and try to whittle the list down again to the best one or two stocks.

Bottom Line: I like Market Club and use it everyday, but it is not in and of itself any Holy Grail. You have to put some effort into understanding Technical Analysis, which MC really makes rather easy. But it is a tool, as is your brain and your imagination. The scanning exercise described above is the closest thing I can think of to putting my expertise in your hands every day, without me being there. Your first big winner that comes from your own effort, instead of waiting for a blog from some stranger on the Internet, will be quite an accomplishment. It will be a giant step on your way to self-sufficiency.

Just don't forget your old coach and mentor, AllAllan..........drop me a line just to let me know you made it.


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