I have not written much this month as I have been on holiday in Devon. A nice quite B and B with no internet connection and miles and miles of fields and sunshine. I stayed in the heart of Dartmoor in a place so remote you feel like you have gone back 500 years.
I did of course take my laptop. And in the evening whilst my wife was reading, I took upon myself the task of completing my homework and choosing some random trending stocks and working out how many points I would have made (or lost) with the strategy given by the Traders University.
It was quite fascinating to see that different sectors and different stocks have completely different outcomes when using the strategy. For example Barclays stocks consistently lose you money using the strategy but most mining stocks win you loads.
By going through the stocks of 21 different companies over the last 2 years I have learnt the following:
1. All of the markets changed drastically between June and September last year from Bull to Bear. I want to investigate why this was. What changed everything last summer? Surely the ‘credit crunch’ and Sub American prime cant have affected the entire FTSE 350.
2. Not all stocks are equal. Even in Technical analysis each stock has its own peculiarities. By tracking these stocks for over 2 years and marking different key indicators against certain points I have been able to determine where the strategy works consistently and where is doesn’t.
3. I can now track back through a particular stock in about 10 minutes and learn enough to know if that stock is good with the strategy or not. When I first started it took over an hour for one stock.
4. One of the most important indicators I am now using is the ADX filter. There is a definite correlation between this indicators positions and whether the strategy works or fails. Using this indicator over the last 2 years would have increased the amount of points won by 15%.
All of this comes in very handy now when I am determining whether to place a trade or not.
I have continued to read the book ‘The financial spread betting handbook’ by Malcolm Prior. This book is very good and his strategy for spread betting is IDENTICAL to the one given by the traders university. He also adds information about the ADX filter, which as I mentioned above is a massive bonus.
I would recommend this book to anyone and I will add it to the list of recommended books on this site.
When I came back, I eagerly updated my daily data download for Sharescope as although I love the countryside, a week without the internet for me is like being cut off from civilisation!
I checked my filters for the stocks which match the strategy and then for each one, I mapped back through the last 2 years to see if it worked for these stocks or not.
For some it did, others consistently made a loss. There was no way to know this without going back through the stocks data. The signals are all the same for different stocks but the outcome very different.
I then placed those trades that matched the ADX values and had consistently made a profit and whose sectors trended with the stock.
So far this week all the trades have made a profit and I am up 2% on my capital value. Not bad for 4 days, and much better than the consistent losses I was making before.
My plan is to make 10% per month of my capital. As my capital is 2K, this month I am hoping to make just £200. If I can do that, then next month I will try to make £220 and so on. In 17 months I would have over £150K and be able to live of the money I make. So far out of £200 I have made £45 so on track as it is now day 4.
All the bets are still open and I will tell you how they go.
