In this post I suggested that VIT was setup to make a timely dip-buyers delight. I will have closed my position in VIT by the time you have read this post, for an egregious gain of near 15%.
Below are some great dip-buying setups for Tuesday…
AEO
EQIX
CAR
NKTR
VM
I see VIT is up another 5%…
One trader’s dip buy is another trader’s falling knife. Random walk suggests you were lucky.
Dave, Random Walk THEORY is a farce, and it is so like 1980s.
I want to suggest that you get re-educated, and meet me back in the 21st Century.
This setup has been profitable 68% of the time, including commissions and slippage, for over 4,000 trades.
Speaking of the 80’s, here’s a picture of Woodshedder from Halloween, circa 1981.
(sorry, slow day at the office)
lol @ DMG…
Did you catch that recording we did Sunday over on N. Belmont? They are playing around town this week, if you like what you heard.
Yes i heard it and liked it, though prolly not as much as my daughter did.
You going to any of the shows? If so, send me an email and i’ll join you.
68% accuracy over 4k trades?
Yipes. Good show.
Cuervo, depends on how far one wants to backtest, I guess.
That number seems high to me too, but I was just looking at it last night, granted, it was late. Wouldn’t I have egg on my face if it were only 400? 🙂
I’ll re-run the test tonight, over the last 10 years and post the actual number of trades here.
nice work. some of these don’t exactly look like a “power dip”, but rather a power rip followed by a slow 50% retrace.
wood,
is that result an compounded outcome.
i do some testing on stockfetcher and here are my cocern with this kind of stats
1. we wont be entering stks which are news driven or drastically fall. should be orderly pull back.
2.whats the hold time on each stk.
3. ignore the biotech ones as they can be dangerous and highly news driven.
4. 20 % annual return is not very exciting for gamblers ..i mean active traders.
bill
wood,
you talk about abnormal filter do you mind sharing it with us.
also do we need to put some filter that this trades only when we are in confirmed uptrend.
bill
Hi Woodshedder,
When you posted trade entries for the Big Bamboo, you were very diligent about always posting when you exited as well. I don’t mean to sound ungrateful at all, but I was just wondering if, when you post an entry for the Power Dip, you plan to always post the exit as well.
For example, I bought into HMSY when you suggested it on May 26, but no subsequent posts ever mentioned exiting it, so do you recommend at such times that I wait for you to post an exit or simply sell on my own?
Thanks very much for the excellent recommendations and have a great day!
Michael
Bill, the return in compounded. Here are my responses to your ideas:
1. News driven is fine. Drastically fall is bad. Orderly pull back is okay, but how would you define orderly?
2. Hold time averages 5.43 days, but the exit signal is not based on hold time.
3. I don’t care about sector or biotech. The only deviation may be if earnings are expected to occur while the trade is on.
4. Few traders will ever average 20%, after commissions, fees, and slippage. Also, this is just an example of what the system can do. I can improve it 3-5% annualized with a simple tweak. However, when I ran the test last night, it was for examples of slippage, not to show what it can do.
For Cuervo (and Bill)
67.5% win rate on 2727 trades since 1/1/1998. And I could go back farther.
Max system drawdown -23.43%
Michael, my apologies. I should have posted the exit signal. I’m not sure why I didn’t, but from here on out, if I note the entry, as I did today with the stocks in the post, I will post the exits as well. However, if it stops out, I will not post that it has stopped out. (Just trying to work smart and not have to make posts without some intrinsic value).
I’m using a 10% stop from the actual opening price.
By the way, the Bamboo is still killing it. I wish I had faith in it.
Michael, it looks like you might still be showing a profit in HMSY. I hope that you are. I don’t currently see any edge in entering today, but the doji candle leads me to think it might bounce some more. But please don’t let the trade swing to a loss.
Great, thanks very much – I appreciate it! And yes, I’m still up almost 4% 🙂
Bill, what is abnormal to me may not be abnormal to you. I use the filter for a mean reversion system, and so it will probably work exactly opposite of how it should for any other sort of system.
To build one, just decide what indicator/oscillator you want to use that shows a market that is building very strong momo or is strongly trending. For a MR system, strong momo or strong trend can be devastating.
The Power Dip has been profitable every year starting 1/1/98 except for 1999. Keep in mind, I’m still quoting the same settings I used for the slippage post.
In a bear market, it has trounced the indices.
Also, I believe I have several posts that go deeper into explanations of the ab filter. Use the blog’s search function. Michael Stokes at marketsci blog is the ab filter guru. You should read his blog for the best info on how to construct a filter.
thanks woody..i had been reading your blog and this site over 1 year..appreciate all that you do.
but for some reason 25 % annual return is not very exciting..what do you say
bill
Bill, no problem, and I’m glad you get something out of the blog.
I’ve designed the systems for me, and accordingly, they fit my goals.
I could make this system get better returns, but it would increase the drawdowns. I do not want to suffer through a very deep drawdown. I don’t know yet if I could suffer through it, so I design systems that sacrifice some returns but have a low vomit factor.
The testing mentioned here used 1% risk per trade. So in a 100K account, each trade risks 1K. Doubling that risk per trade will really juice returns, getting them to 30%, but then the max system drawdown goes higher than 25%, and the average drawdown doubles. So while instead of suffering through 7% regular drawdowns, now you are looking at 15% being a normal DD. To me, it is not worth it.
Wood,
Ambibroker questions –
1. do you need and data feed or there 199 $ one time deal includes data. currently i only have TOS and yahoo finance data.
2. how much if any you pay for monthly ambibroker charges.
3. does it have a scanner like Stockfetcher.
bill
67.5% win rate on 2727 trades since 1/1/1998
That’s sick Wood. Nice work.
Bill, yes you need a data feed. Ami will take up yahoo quotes but you have to manage the database which is a huge chore.
No monthly Ami charges. Premiumdata.net is about 25 bucks a month for data.
Yes it scans just like Stockfetcher but it is slower; however, the reporting is 100x better.
Cuervo, thanks. I will be releasing more stats on the system soon.