Phaedrus
30-05-2009, 04:48 PM
It is interesting to compare different investment/trading approaches and ETC affords us an excellent opportunity to do just that.
For the purposes of this discussion, I have assumed that all 3 traders featured here entered ETC at around 22 cents, as I did.
Short-term traders like AA bailed out at the first sign of weakness. Many different systems would have signalled an exit at around the same level. This was a well-timed exit, in that the ETC shareprice then fell quite markedly - at least in the short term. Gain 30% (15% per day)
Good Thinking. "I don't mind leaving some gains on the table. I've learnt not to be greedy, better to be safe than sorry. I'm on to the next thing now after locking in that profit.
Bad Thinking. Aaarrgggghh! Look at how much I could have made had I just hung on a little longer. I could have more than doubled my money! Next time my system gives a sell signal, I will ignore it. Look how well Footsie is doing - buy and hold is the answer!
"Medium-term" traders such as myself might use weekly candles. Doji candlesticks show indecision in the market (from all participants) and often mark turning points. That was the case here and both Doji's were followed by weakness - at least in the short term. Two separate trades gave gains of 42% and 102%. Average gain 72% (2.3% per day)
Good Thinking. These were both logical exit points. They were reasonably conservative and gave a nice compromise between risk and return. I am glad that I kept to my system and acted on these signals, regardless of what ETC might do in the future.
Bad Thinking. This "medium-term" lark is no good. It falls between two stools - I don't get the big "% per day" gains of short-term traders and I don't get the potentially bigger gains that long-term traders might. I think I will toss my whole system out and start again. I'll move into short-term, or longterm - maybe both! Anything would be better that what I am doing right now.
"Long-term" traders such as Footsie could use even longer period candlesticks as shown here - and still be holding. Longer-term candles smooth out minor fluctuations and have left a nice series of bullish white candles. No Sell signals here! Footsie is not stuck with this unusual system standing on its own. These candlesticks could be supplimented by conservative indicators such as the Slow (50,3) Stochastic oscillator and the Relative Momentum Index (20,5) as already featured in previous ETC posts such as this (http://www.sharetrader.co.nz/showthread.php?p=249425)one. Neither of these oscillators have signalled a sell yet. Footsie's gain so far (as at Friday's close) is 116% (1.9% per day).
Good Thinking. I'm doing really well on this one, and have made a good profit, so far. I must ensure that I don't end up giving it all back to the market in the event of future weakness. I will update my exit strategy and keep it to the forefront of my mind. This is no time for complacency.
Bad Thinking. See how those TA mugs have all bailed out too early! Not me! The fundamentals of ETC are really good. This is a "Buy and Hold Forever" stock! Mine are going into the bottom drawer for my kids. Exit strategies are for idiots.
You should all (I hope) be able to see from this that each of us are implementing our own individual system and we are each pleased with the results. For any stock monitored over a specific timeframe, one of these systems will always prove to be superior. Which one it is depends solely on the stock and the timeframe selected.
http://h1.ripway.com/78963/ETCx3.gif
Candlesticks for all!
For the purposes of this discussion, I have assumed that all 3 traders featured here entered ETC at around 22 cents, as I did.
Short-term traders like AA bailed out at the first sign of weakness. Many different systems would have signalled an exit at around the same level. This was a well-timed exit, in that the ETC shareprice then fell quite markedly - at least in the short term. Gain 30% (15% per day)
Good Thinking. "I don't mind leaving some gains on the table. I've learnt not to be greedy, better to be safe than sorry. I'm on to the next thing now after locking in that profit.
Bad Thinking. Aaarrgggghh! Look at how much I could have made had I just hung on a little longer. I could have more than doubled my money! Next time my system gives a sell signal, I will ignore it. Look how well Footsie is doing - buy and hold is the answer!
"Medium-term" traders such as myself might use weekly candles. Doji candlesticks show indecision in the market (from all participants) and often mark turning points. That was the case here and both Doji's were followed by weakness - at least in the short term. Two separate trades gave gains of 42% and 102%. Average gain 72% (2.3% per day)
Good Thinking. These were both logical exit points. They were reasonably conservative and gave a nice compromise between risk and return. I am glad that I kept to my system and acted on these signals, regardless of what ETC might do in the future.
Bad Thinking. This "medium-term" lark is no good. It falls between two stools - I don't get the big "% per day" gains of short-term traders and I don't get the potentially bigger gains that long-term traders might. I think I will toss my whole system out and start again. I'll move into short-term, or longterm - maybe both! Anything would be better that what I am doing right now.
"Long-term" traders such as Footsie could use even longer period candlesticks as shown here - and still be holding. Longer-term candles smooth out minor fluctuations and have left a nice series of bullish white candles. No Sell signals here! Footsie is not stuck with this unusual system standing on its own. These candlesticks could be supplimented by conservative indicators such as the Slow (50,3) Stochastic oscillator and the Relative Momentum Index (20,5) as already featured in previous ETC posts such as this (http://www.sharetrader.co.nz/showthread.php?p=249425)one. Neither of these oscillators have signalled a sell yet. Footsie's gain so far (as at Friday's close) is 116% (1.9% per day).
Good Thinking. I'm doing really well on this one, and have made a good profit, so far. I must ensure that I don't end up giving it all back to the market in the event of future weakness. I will update my exit strategy and keep it to the forefront of my mind. This is no time for complacency.
Bad Thinking. See how those TA mugs have all bailed out too early! Not me! The fundamentals of ETC are really good. This is a "Buy and Hold Forever" stock! Mine are going into the bottom drawer for my kids. Exit strategies are for idiots.
You should all (I hope) be able to see from this that each of us are implementing our own individual system and we are each pleased with the results. For any stock monitored over a specific timeframe, one of these systems will always prove to be superior. Which one it is depends solely on the stock and the timeframe selected.
http://h1.ripway.com/78963/ETCx3.gif
Candlesticks for all!