Well the FTSE All Share ended 1.7% down for the week, so lets take a look at how the two accounts performed during the same time.
Account 1: Pro tips strategy account
I had plenty of stops taken out during the week in this account as I've already mentioned. The account decreased its value by -2.5% this week to £1737, it could have been alot worse aswell so overall I'm not too concerned really. Didn't buy any of the pro recommendations this week as most of them were stocks I already have positions in or I considered the risk was just too high because of the high value of the shares recommended wouldnt allow me to have proper stops in place. I do have some possible trades lined up for this account over the coming 5 days though. Available free trading funds have now increased to £400 in this account.
Account 2: Tony Loton's 'position trading' strategy account
I just realised that last weeks figure was a typo, I had written that the account had gone from 1136 to 1331 "just £5 down on last week". Of course that figure was meant to read 1131 NOT 1331 (I've edited last weeks post now to reflect that change). The account fell again by around 4% to £1083. I had one losing trade all week which was in Partygaming. All the rest that stopped out actually banked a profit so I can't complain. The decrease in the FTSE brought some of my positions down hence I cant be too concerned with this weeks results.
I had a few positions end prematurely this week which I was dissapointed with. This has caused me to re-evaluate my auto trailing stops. I've decided to completely abandon auto trailing stops and go with manually adjusted stops once a week. This gives me more time to re-evaluate positions over a weekend plus gives a share price the proper opportunity to move up and down naturally during the week without triggering automatic trailing stops that have just nudged up higher as the price action suddenly drops.
On one particular share I missed a 20% share price rise on the day after it had stopped out because of the automatic trailing stop.
Hopefully this is something that will improve the account slightly. I'm still learning really and slowly tweaking things here and there should increase potential returns.
Showing posts with label trailing stops. Show all posts
Showing posts with label trailing stops. Show all posts
Sunday, 23 January 2011
Thursday, 20 January 2011
Todays a good example...
..of why you need to have trailing stops in place! The FTSE dropped nearly 2% in todays trading session, and I saw no less than 10 of my positions in 'account 1' (pro share tips account) get stopped out. Some got stopped out for decent overall profits but some were also losing positions. I can't be too down about it though, the market has been kind to my accounts over the last few weeks and it couldn't and wouldn't continue like that forever.
In fact todays post was going to be about two positions that had that stopped out yesterday 'prematurely'. They had both risen fast during the day and come down just as fast towards the end of the days session and taken out both their trailing stops that I had in place on them. But overall their stock charts were showing both shares still in an overall uptrend so I was a bit gutted they had hit their trailing stops because in theory they still had some way to go... until today!
Funny how things turn out.
My post was going to be about the fact my default trailing stop on new positions is 2xATR (Average True Range). For those of you that are unsure, the ATR on a stock measures its volatility - this takes a stocks highs and lows over a set period based on values on an intraday, daily, weekly or monthly period. The default period is 14 but I lean more towards 10 and use it on daily graphs. This value therefore gives me an average of how much a stock has moved over the last 10 days. Usually the value doesnt change too dramatically if you increase the period from 10 to 14 anyway. So like I said, I tend to have my trailing stop setup as 2xATR on a stock, e.g. a stock at 100p may have an daily ATR of 6p, hence my default trailing stop (2xATR) will be at 88p when I first establish the position. *Phew*
Anyway my point being (yes there is one!) I noticed recently that sometimes when a stock gets some good news (like William Hill did yesterday) and the price suddenly spikes due to increased buying, the trailing stop of 2xATR doesnt seem to be enough when that buying action settles down and the price drops. i.e. the last few weeks of its average daily range just goes out the window! It doesnt really concern me when the price doesnt drop that same day because I manually check my stops most evenings and I can see positions that are close to stopping out - It is the stocks that drop that same day whilst I am not watching my positions that are sometimes getting stopped out unnecessarily because of a price spike. I may have to start looking at the daily biggest winners list at Yahoo Finance during my lunch hour just to check if one of my shares has suddenly skyrocketed in price. Then if needs be I can check that the ATR hasnt suddenly doubled in value.
So from being very dissapointed with those 2 positions being taken out prematurely last night, obviously I end up looking like a hero because the markets came down and both shares dropped today. Hence I banked my profits at exactly the right time... But it could have easily ended up going the other way and leaving me bitterly dissapointed. So if anyone has any suggestions on positioning stops other than multiplications of ATR then drop me a comment, I'd be interested at looking at this in a different way. Maybe even leaving a stop without a trail once its risen past 2xATR...
Anyway hold onto your trading seats because tomorrows market could be another bumpy ride!
In fact todays post was going to be about two positions that had that stopped out yesterday 'prematurely'. They had both risen fast during the day and come down just as fast towards the end of the days session and taken out both their trailing stops that I had in place on them. But overall their stock charts were showing both shares still in an overall uptrend so I was a bit gutted they had hit their trailing stops because in theory they still had some way to go... until today!
Funny how things turn out.
My post was going to be about the fact my default trailing stop on new positions is 2xATR (Average True Range). For those of you that are unsure, the ATR on a stock measures its volatility - this takes a stocks highs and lows over a set period based on values on an intraday, daily, weekly or monthly period. The default period is 14 but I lean more towards 10 and use it on daily graphs. This value therefore gives me an average of how much a stock has moved over the last 10 days. Usually the value doesnt change too dramatically if you increase the period from 10 to 14 anyway. So like I said, I tend to have my trailing stop setup as 2xATR on a stock, e.g. a stock at 100p may have an daily ATR of 6p, hence my default trailing stop (2xATR) will be at 88p when I first establish the position. *Phew*
Anyway my point being (yes there is one!) I noticed recently that sometimes when a stock gets some good news (like William Hill did yesterday) and the price suddenly spikes due to increased buying, the trailing stop of 2xATR doesnt seem to be enough when that buying action settles down and the price drops. i.e. the last few weeks of its average daily range just goes out the window! It doesnt really concern me when the price doesnt drop that same day because I manually check my stops most evenings and I can see positions that are close to stopping out - It is the stocks that drop that same day whilst I am not watching my positions that are sometimes getting stopped out unnecessarily because of a price spike. I may have to start looking at the daily biggest winners list at Yahoo Finance during my lunch hour just to check if one of my shares has suddenly skyrocketed in price. Then if needs be I can check that the ATR hasnt suddenly doubled in value.
So from being very dissapointed with those 2 positions being taken out prematurely last night, obviously I end up looking like a hero because the markets came down and both shares dropped today. Hence I banked my profits at exactly the right time... But it could have easily ended up going the other way and leaving me bitterly dissapointed. So if anyone has any suggestions on positioning stops other than multiplications of ATR then drop me a comment, I'd be interested at looking at this in a different way. Maybe even leaving a stop without a trail once its risen past 2xATR...
Anyway hold onto your trading seats because tomorrows market could be another bumpy ride!
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