Trend 14 - With Limits, No Stops - Down, Up, Down

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: x% on High
Long/Short Trading: Long
Buy Rule:
-7 Day Close > -2 Day Close

-2 Day Close < -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Yet Again, terrible. I am not going to even bother adding comment to these reports if it continues like this! They are all very bad.

Another successfully found way to not make money trading!

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Trend 13 - With Limits, No Stops - Up, Down, Down

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: x% on High
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Well this one is the best of a bad bunch so far. But still it is terrible!

Another successfully found way to not make money trading!

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Trend 12 - With Limits, No Stops - Down, Up, Up

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: x% on High
Long/Short Trading: Long
Buy Rule:
-7 Day Close > -2 Day Close

-2 Day Close < -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Yet again. Nothing. It seems like there is no point looking at these trends. But we can take somehting away from them at least. Limits should be higher, not lower.

Another successfully found way to not make money trading!

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Trend 11 - With Limits, No Stops - Up, Down, Up

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: x% on High
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close

-2 Day Close > -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

This is the worst so far. I am guessing that you, as well as I, are starting to see the trend within this set of trends. They just don't seem to be working.

Another successfully found way to not make money trading!

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Trend 10 - With Limits, No Stops - Up, Up, Down

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: x% on High
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close

-2 Day Close < -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Another true failure. Yet again we see the same trend as before. When we go for quick wins we are less likely to win in the long run. Plus an all round poor average for winning.

Yet another way Not to make money on the stock market, successfully discovered!

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Trend 9 - With Limits, No Stops - Up, Up, Up

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: x% on High
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close

-2 Day Close < -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Well, this is the first true failure. We have lost 82% of our pot in three months by following this trend! So we can see that trying to pin down quick wins really isn't the way forward. At least not with this trend. If we are taking the first set of results as a control, then we cna see a vast amount of difference. The win ratio is lower, the risk to reward is abysmal and of course the financial results are attocious. However, there is one point of interest, which is the results get better the higher the limit leve. It would be interesting to see at what point the limit reached its maximum... but not that interesting.

Yet another way Not to make monye on the stock market, successfully discovered!

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Trends - With Limits, No Stop Losses

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The following idea is that of limits. Using the limits is a way of locking in your profits, to make sure you get your return before it drops back down. In these examples, I am using the following concept:

If a profit for the day exceeds the given limit (x%) then the profit for the for the trade is the limit amount. If it does not exceed it, then the profit or loss is what ever it is at the end of the day. The idea behind this, is that there may be stray shares that will jump up high following a specific trend, before plumeting back down. If we were to look at a candle bar graph it would be displayed as the following:

Now I am not holding much hope for these, since there is an old saying with teh stock market that amatuers tend to ride their losses and limit their profits. By implementing a limit, we are doing just that. So I don't expect to see any big wins, but probably plenty of losses. But let's just try it and find out shall we!

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Trends - No Limits, No Stop Losses

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The following trends can be used as a way of a control. The fact that we have no Limits in place, and no Stops,means that we can see how the trend will work without these factors. Therefore, we can see in the future how these factors will impct upon the results.

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Trend 6 - Follow-Up Report

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So what is the verdict? Did we, after only six experiments, find a trend that is going to make each and every one of us rich beyond our wildest dreams? And the answer is:

NO!

Sorry everyone, but unfortunately this is simply a case of right time, right place. I have done a data check on the data collected as well as report from another, larger data selection for this trend. So that you can see for your records why this is not a Golden Trend I have included snapshots of the relevant data below:

As can be seen from the above image,there is one day when the whole market shifts upwards magnificently. This happens only three days after we start the trend report, which means that the same could have happened  on any of these reports and the results would have been damaged. I was right to worry about the fact that the max was so high, because it was on this day that the results have been changed. I have included the results of the trend if this anomaly was taken out and it can be seen, that we would actually have lost money following it. (These results come from the 7% cut off spreadsheet.)

We can therefore say that this change in market was not likely to be due to the trend of Down, Up, Down. But what actually happened? That day there was a minimum of only -13% and a maximum of 2565%. The average was 69%. Let's look a bit deeper into this so we can say if we can totally dismiss this trend as invalid.

On this day we only had 37 trades, which is very low. The lower the trades, the more impact bigger shifts are going to have on the average. The win ratio, was actually very low here, with only 16 out of the 31 being positive trades. However the average loss for the remaining 21 was -4.74%, which is not the worst result possible. The profit for the 15 without the anomaly was 7.71%. All together this gives an average of 0.45% for the day. Still a profit.

But then there is one giant anomaly: - Ovoca Gold (OVG.L)

But why? Well after a little bit of research. I have found the answer for you.

In a press release distributed on 15th January 2010 following an Extraordinary General Meeting, amongst other items their CEO, Timothy McCutcheon, announced the following:

"a Capital Reorganisation consolidating every 5 Ordinary Shares into 1 New Ordinary Share creating a more appropriate capital structure and share price for the Company."

This means that with the share price being 0.7 in the morning, after close it was then 3.5. However on opening on the 18th when these new prices were due to begin being traded, good news in the company sent the prices soaring from 3.5 to 18.5, the equivalent of 3.7 in the same terms as the previous price without adjustment or 500% return, and then further upwards.

So, therefore, though it looks all rosy and sunshiny on the outside, this trend has also been proved as defunct. And we can say we have successfully found another way not to make money on the stock market. (Sorry!)

PS The test of the extra data is still running on another computer and will most likely take a few days to complete. Once it is, I will add it to the bottom of this entry.

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Trend 8 - No Limits, No Stops - Down, Down, Down

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close > -2 Day Close

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Damn! I was hoping to use a phrase like "well what did you expect from something that goes down, down, down!" but I can't really. Yet again it is a quick wins one. Doesn't look like it is worth while following up though, becuase even at the quick wins stage you only get 2% return. There are bound to be more riper fruits that are easier to pick.

We will have to come back and test the 1% - 3% marks to see if it works well over a longer timeframe or with a random selection of stocks from the ones that are following this trend.

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Trend 7 - No Limits, No Stops - Down, Down, Up

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

No, no, no! This is just no good. We are losing money hand over fist here. We definitely can get rid of this trend and say we have successfully found one more way not to make money on the stock market!

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Trend 6 - No Limits, No Stops - Down, Up, Down

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close > -2 Day Close

-2 Day Close < -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Wow!! OK, three months return of 48%! OK. Now I have to breathe! So we might have found our first golden trend. The Avereage trades is good at 54 each day which means we get a good selection. It also means that any huge trades are evened out by the low trades However, I am slightly worried by the maximum trade being nearly 2500% and the minimum beng only -39%. However the risk to reward is obviously good and the return speaks for itself.

Now I don't want to jump right in here head first without doing a bit more scouting. This one will be first on my list for some more rigorous testing to see about timeframes, percentages, random selections and more. Keep yourselves posted because I will make sure we get some good data on this and if it works out well. Well, you can do what you want with the information.

Let's chalk it up and we will definitely revisit this later! (Read here for the full report on this trend!)

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Trend 5 - No Limits, No Stops - Up, Down, Down

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Now this is an interesting trend. We seem at last to have some sort of trend determined by the percentage cut off. Yet again, as with the previous find, it only gives us a 3% return. Similar to that of the FTSE over the same period. But we have growth. This is definitely a good one for us to push the percentages higher and see if they pay off. Also I would like to test this over a longer period to see if it gives better results.

Over all, let's chalk this up and come back to it later.

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Trend 4 - No Limits, No Stops - Down, Up Up

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close > -2 Day Close

-2 Day Close < -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Ok so this is the worst so far. up to 62% losses over a 3 month period. That is as bad as having your money in a pension fund from Novermber 2008 to March 2009! I think we can steer clear of this trend.

Another way successfully found not to make money on the stock market! 

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Trend 3 - No Limits, No Stops - Up, Down, Up

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close

-2 Day Close > -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Ow! This one definitely looks like a no. 50% losses across the board no matter what % cut off we use. Well thats what you get if you lose 1% a day for three months! I think we can chalk this one up as another way successfully discovered not to make money on the stock market.

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Trend 2 - No Limits, No Stops - Up, Up, Down

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close
-2 Day Close < -1 Day Close
-1 Day Close > 0 Day Open
Sell Rule:
If Day 0 Profits at Close > x% then take Profits; else
If Day 1 Profits at Close > x% then take Profits; else
If Day 2 Profits at Close > x% then take Profits; else
If Day 3 Profits at Close > x% then take Profits; else
Day 4 Close take Profits/Loss

Results:

Report:

Now this trend is a little more intersting. It shows some progress when the return percentage trigger is 1%, but tails off towards the higher ends. But this kind of hit and run tactics can be dangerous. It takes a long time to build up your gains when they are so small, and it can take one loss to wipe them out. But with a win average of 56% and a risk reward ratio of over 3 it may be worth looking futher into.

This trend actually beat the FTSE 100 which rose only 3% over these three months, but did not beat the FTSE 250 or FTSE AIM which both rose at just under 7%. At a growth rate over this period, which did include a Correction, of 5% this is never going to give amazing results, but for steady growth I am sure no one would complain if they had their money in a bank account that returned 5% per quarter.

All in all, this actually might be worth looking into. I will flag it up and go over it with more data at another time.

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Trend 1 - No Limits, No Stops - Up, Up, Up

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close
-2 Day Close < -1 Day Close
-1 Day Close < 0 Day Open
Sell Rule:
If Day 0 Profits at Close > x% then take Profits; else
If Day 1 Profits at Close > x% then take Profits; else
If Day 2 Profits at Close > x% then take Profits; else
If Day 3 Profits at Close > x% then take Profits; else
Day 4 Close take Profits/Loss

Results:

Report:

So this trend is obviously not a winner.It shows that over the time frame selected, the results are negative. Even though the previous trend for all of the selected stocks is up over all three time periods, there is no guarantee that money will be made.  Additioanlly, it can be seen that the changing of percentages ranging from 1% to 10% has little or no impact on teh average return, minimum or maximu returns and end % gain/loss.

Overall, we have successfully discovered a way not to make money on the stock market.

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Trends - Introduction

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Originally this blog was going to be started at the stage of Technical analysis. But I realised before I began that section that I had actually started this experiment many months ago before I really knew what I was doing. Back then, I had a theory that there was some undefined truth behind the buying and selling of shares. Even before I had heard about technical analysis or fundamental analysis, I believed that everyone watching the ups and downs of these charts will be seeing the same thing as me and would be looking for the best time to get in to the market. It was the start of this experiment even if I didn't know it then.

In the beginning I used excel to perform a number of different calculations to work out what would happen based on a stock price trending up, down or sideways over a given time period. So I have given over the beginning of this blog to testing my trends theories for everyone to see.

In this section I will test these theories and work within the parameters we have set, but I will set additional rules so we can see if these basic almost neanderthal premises can have some substance in our experiment.

Even as I write this Excel is ticking away behind this screen. I can see from sudden flashes along my task bar that Excel is working. It is working to pull off the data I has asked it to, and soon enough I will be able to once again take up the figures and see if they will work for us in the days of post recession boom...

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