Highlighted Trades - 04/08/2024
It was a roughly average day in terms of activity from our system. We had 9 trades in total, but no shorts. Just 9 long positions, across 5 tickers. This isn’t the first day we’ve had with trades going only one direction - on this low-activity system, it happens with some regularity, but it’s pretty uncommon.
Our most profitable trade of the day was on FANG - made up of 4 entries bringing in a total of 0.50%. While it’s a strong trade overall, there’s some room for improvement. The primary issue is that only that last entry made any real money. The first 3 entries are either relatively in the black or negative. This doesn’t make it a bad trade obviously (profit is profit), just less good. This is a somewhat common issue with this issue, where our signal is correct overall, but due to premature stops and re-entries, we miss out on some or all of the profit. In experimental versions of this system, we’re looking for ways to improve this, but I can’t guarantee they’ll make it to full releases. In order to avoid premature stops and re-entries, we would have to take larger losses on legitimate stop-outs. It’s unfortunate when it happens, but the premature stops may simply be a cost of use here.
The other thing I find interesting here is that the only time the stock had consistent movement was when MACD was almost completely flat. The success of the last entry is counter-intuitive in that regard. I hate to say it, but I think I would have under-allocated it, making the wrong call if I were trading this live. I still would have taken the position, since the stock had shown some solid upwards movement since the initial cross, but a flat MACD is a big red flag, just a red flag that wasn’t correct.
Our biggest loser of the day was this trade on MSFT - losing 0.14%. If you took this trade, I can’t blame you. The stock price looks pretty erratic prior to our entry, but that’s mostly because of pre-market data appearing on the chart. Once the market opens, movement is much smoother and more consistent. There’s great momentum and a great MACD going into this trade, and none of the usual red flags we look out for are present here. Overall, this trade had a really solid entry, it seems we just got unlucky here. It’s unfortunate, but we can’t be right 100% of the time, even with extra signs for end users to look out for.
The last trade I’d like discuss is this pair of long entries on JBHT - because it shows the same problem as most of our trade on FANG. The TK-cross is correct overall, preceding an increase in price, but we lose 0.11% overall due to a premature stop-out. We could have done a bit better here had we re-entered on the following candle, but ironically, our system refused that because it wanted to avoid being stopped out again. After taking a stop loss on a long trade, our system won’t re-enter the position unless the entire candle (wick and all) is above the most recent stop loss price. The bottom of that green candle is just below where we got stopped out on the previous candle, so our system felt it was still too close to re-enter. This is another thing I’d like to experiment with in future iterations of this system. At what point are we missing opportunities by being too strict on our re-entry conditions?
That’s all I have for you tonight - thank you for reading and happy trading!
