Swing trading the Mr.Market Portfolio

[spikefader]

It makes sense to start a new thread for the new swing trading system idea using only Mr.Market's portfolio picks. Posts will only be on those specific trades that meet the criteria discussed here (http://www.mrmarketishuge.com/forum/showpost.php?p=9071&postcount=1481)
Summary of method:
Intraday entry at S2 for any of Mr. Market's open portfolio positions.
Target is R2, and stop is 2 x (S1-S2).
I'll post percentage win loss percentage, but for a more real-life trading interpretation, I'll also calculate dollar profit, based on each open position being $5,000 worth of stock, and commissions of 1c per share each way (as per IB fee structure)

First position was opened yesterday for SSNC:
Long at 22.56.
Stopped out today at 22.22 for -1.5% or -$80.00

Total system Profit/Loss to date: -$80.00

[spikefader]

CBK S2 long today at 20.45.
Stop is 20.14 or 1.5%
R2 target today is 21.30 or 4.15%

[spikefader]

S2 Long GGI at 22.42.
Stop is 22.18 or 1.07%
Current R2 target is 23.11 or 3.07%

[spikefader]

OFG long at S2 at 29.45.
Stop is 29.16, risking 0.98%
R2 target currently 30.13 or 2.3%

[spikefader]

MCRI long at 35.88
Stop at 34.07, risking 5% (yowza)
Target currently 39.04, or 14% (double yowza)

busy day :D

[spikefader]

MCRI long at 35.88
Stop at 34.07, risking 5% (yowza)
Target currently 39.04, or 14% (double yowza)

busy day :D
Well, a quick game is a good game I like to say, but sheesh, the system hasn't started too well!

Stopped out -$1.81 or -5% or -$255 including commissions on 1 x 5k position.

System Total to date: -$335

[spikefader]

CBK S2 long today at 20.45.
Stop is 20.14 or 1.5%
R2 target today is 21.30 or 4.15%
Stopped out this morning. Looking at time and sales, I'm going to allow for some slippage to keep it realistic. So stopped at say 20.00 would be accurate looking at bid and volume at the time.
So, -0.45 on the trade for -2.2% or -$115 inc. comm. on a 5k position.

SYSTEM TOTAL TO DATE: -$450.00
OPEN POSITIONS: GGI and OFG.
New positions opened today will follow this post.

System thoughts: In hindsight, I should have contemplated commencing the system after a market correction, since it's been very strong lately, and I may have placed an unfair burdon on the system now. I'll stick with it though, since this will put a good test on the system..... i.e. can it recover from such a downdraft. If so, how long will it take. Might be an unprofitable read for a while....

[spikefader]

PRX:
Long at 37.82
stop is 37.21 or 1.6% risk.
target currently 3.6% or 39.18

[spikefader]

NUTR long 16.42
stop is 16.03 or 2.4%

[spikefader]

DW Long 31.68
stop is 1.14%

[spikefader]

NUS long 21.93
stop is 2.9%

[spikefader]

FLIR long 58.77
stop is 1.9%

[spikefader]

SPF a quick in and out today for -1.17% or -$61.10 inc. comm. on a 5k position.

SYSTEM TOTAL TO DATE: -$511.00

[spikefader]

PTSI:
was a quick in and out today for -1.6% or -$89 inc. comm. on 5k position

SYSTEM SUMMARY TO DATE: -$600
OPEN POSITIONS: GGI OFG PRX NUTR DW NUS AND FLIR

[spikefader]

MIDDAY THOUGHTS:
Well, it's only day 2 of system, and already generated 12 trades!
Thus far the first 5 have been stopped out for a total loss of $600. The other 7 trades are OPEN, some in profit, some not.
Not a good start to the system, but I'm sure there will be some great trades down the road.
By my calculations, the system will only need 4 profitable trades to get to net positive again. The market is at good support now, so I expect a bit of a bounce, and hopefully Mr.Market's wonderful picks can display some of that wonderfulness today :D

[Karel]

Hi spike, hang in! Only: I find your stops awfully narrow. Is that how you ususally place your stops?

Regards,

Karel

[spikefader]

Hi spike, hang in! Only: I find your stops awfully narrow. Is that how you ususally place your stops?

Regards,

Karel:) Will do. No, not at all. I don't place stops this way at all. I usually use intraday support price stops - tucked just underneath price support somewhere like under low of day or sometimes the nearest price support on the previous day. Which begs the question, then why use this new method in this system???

Well, I wanted something consistent and easy to calculate, one that took emotion out of the equation, and at the same time giving some 'wiggle room' on an intraday basis. You see, in my experience, S2 is usually a very good point to enter...and if S2 fails with any signicant degree, then you don't want to be long the stock. I think the 2 x (S1-S2) gives enough wiggle room to give the trade a chance of success on a swing basis (several days), and yet gets me out of the position on a huge down day like MCRI experienced yesterday.

I am open to new ideas on the stop for this system, and it's very early days. Should the system continue to a massive drawdown, I'll be contemplating changing the rule. And input is very welcome on this. Bottom line, I'd love to come up with a robust swing system for Mr.Market's picks. I think it could really lock in some great profit. There may be other system conditions that will increase the chances of this, which I'm also gonna put some thought into. Perhaps only trade the system when general market conditions have a green light for up and not when it's getting overbought like it is now. But the one thing that worries me about that is that markets can remain overbought for a long time and give some good profits...and by sitting out, the system is not given the opportunity it needs.... anyway, just thoughts anyway.

[New-born baby]

Spike,

Let's face it: it was a horrible day to be long in the market. Very few stocks didn't get slammed. And something else, I think what is wrong with your system is that you are using burnt biscuits. These MM picks are old; the fundamentals underlying their original choice in the MM system have all changed. Therefore, it seems likely to me that your test program is going to yield less than fully accurate results.

What if you hone your system now as a test, but the real competition comes with the next real, fresh, MM pick? I say, that ought to be the one that really counts.

And also, I think you should get to pick the entry, too. If we are going to use TA for the exit and stops, then it ought to be applied to the entry.

[spikefader]

Yep, you're right. Market got slammed today.

Yes, good point, I may be using burnt buscuits. I just took all of Mr. Market's open positions because I'm assuming he's still bullish on them all since he hasn't closed them (I'm referring to some of his other posts where he says he only sells when he doesn't like the stocks anymore). But stocks like BEL surely must be off his list.....

OK, let's hear it folks, which of his picks should be included in this new system? Or which ones should be left out. I need help since I know less than squat about FA! :D

I like the idea about his fresh picks, but at the same time, I'd like at least 8 picks on the watch list so we're not waiting an eternity for an S2 entry on only one or two picks.

Pick the entry huh? Yes, this is worth some more thought. OK, how about this.....I change the system to wait for an S2 hit signal, THEN I pick the entry based on a double bottom or inverted SHS with neckline break, or attempting to anticipate a double bottom or right shoulder, or any other significant intraday pattern, like a wedge formation or a triangle, or a bullflag breakout or 5 wave down completion. How's that sound? That way, I will be able to tighten the stop to a mandatory low of day stop, which will mean an even lower risk percentage. And if stopped out, another entry can be attempted on the next bullish pattern.....There may be more losses, but they will insignificant in the bigger picture, and the great entries that are eventually caught (along with the nice moves to R2) will logically make up for the stop outs. Yes?

Further on this thought of picking the entries......how about I pass on any S2 signals if the stock's last channel touch on the daily is bearish. That way I'm only taking S2 signals for stocks that have had a bullish channel touch, which should improve the % win rate.

On that point, I'll go and check the current list agains the daily charts and see where they stand as far as channel hits.

[yaoyao]

I like your last thought: pass on S2 signals if the stock's last channel touch on the daily is bearish. However, it may significantly reduce the chance that the stock hits its S2 signal.

[New-born baby]

Spike,

How about a compromise? 8 is too many the way the man announces stocks (i.e., the Top Five). Why don't we let you send the entire top 5 to market? With MM picking, and Spike giving the order to "jump," I think I'll buy all five of 'em!

And while I'm a fussin', I think somebody needs to say this: the MM system needs to be honed for this horrible market. This has to be MM's worst year. Period. I checked his portfolio, and there are several burning wrecks that he picked this year. In any case, I think we either need to lower the target for crummy, bear markets to 10%, and/or else find some other refinements that will increase the efficiency of the system in times like these. I am open to suggestions.

And Mr. Market, I am not, by this post, in any way trying to denigrate your good work. As I have written before, I love this forum and have learned much from it. By my suggestions I am seeking to benefit us all.

Best of investing to all on this forum!

[Websman]

Y'all are getting too complicated for me. I'm just a dumb redneck from lower Alabama.

Maybe when y'all get this figured out you can make it where, even I can understand it.

[New-born baby]

Websman,

I didn't know Spock was from Alabama!

[Websman]

Websman,

I didn't know Spock was from Alabama!

Actually, I'm from Florida, but Alabama isn't too far up the road...so sometimes we call where we live, Lower Alabama

[spikefader]

Spike,

How about a compromise? 8 is too many the way the man announces stocks (i.e., the Top Five). Why don't we let you send the entire top 5 to market? With MM picking, and Spike giving the order to "jump," I think I'll buy all five of 'em!

And while I'm a fussin', I think somebody needs to say this: the MM system needs to be honed for this horrible market. This has to be MM's worst year. Period. I checked his portfolio, and there are several burning wrecks that he picked this year. In any case, I think we either need to lower the target for crummy, bear markets to 10%, and/or else find some other refinements that will increase the efficiency of the system in times like these. I am open to suggestions.

And Mr. Market, I am not, by this post, in any way trying to denigrate your good work. As I have written before, I love this forum and have learned much from it. By my suggestions I am seeking to benefit us all.

Best of investing to all on this forum!
Now there is something worth thinking about! The Top Five. I just wonder......

As is fairly obvious from the start of this thread, I have not spent a great deal of thought on the system rules, and to be frank, I really don't think it's going to matter THAT much how the system chooses ENTRIES, but rather it will be how we MANAGE those postions with stops and targets that will lead to profitability over time.

While a high % win rate is always a good thing to have in any system, this fact alone become less important for overall profitability if your % gain target on open positions can overcome the stops. It's entirely possible that a system to have cruddy win rate and lots of stopouts, yet still be profitable. For this case, if we have a fairly limited target, i.e. the first R2 hit then our win rate is going to have reach a certain standard. I don't have the time or inclination yet to backtest for it (anyone else is more than welcome??) thus I started doing the paper trading test of this thread to see how robust Mr. Market's open position were at the significant S2 intraday areas. I presume that if they are going to outperform, then S2 is going to be very good place to be entering. Maybe the Top Five would be better to use. I'm off the Church with the family, so I'll give it more thought later today.

Get your brain cogs spinning folks, and see if we can't form a profitiable stop-based system with Mr.Market picks. It's not been done before, but I really think it's possible. We just need to get the rules right.

[billyjoe]

I'd call myself a position trader rather than a swing trader it's all according to time elapsed or time holding a particular stock. Anyway it seems as if it is a common occurance for 3 of MM's top 5 to do well. If that's true why not buy all five, cut the first two with aggressive stops , and give the remaining three more leeway. I'm assuming the first two dropped would be lower quality stocks. Actually they may just be more volatile. Either way we've got to eliminate them . I've noticed that the great majority of my successful trades drop very little or not at all in the first week after purchase. I don't know if cutting the target would help much. If you calculate MM's open positions, how many weren't sold because they hit 10% but not 15%? Just some ideas, keep up the good work, Spike.
billyjoe

[spikefader]

System tweaks introduced to system.

1. Only the current Mr.Market Top Five will form the watchlist.
2. Only those that have not been eliminated by bearish channel setups on the daily will qualify to be traded.
3. Entries and exits will no longer be based on madatory S2 intraday entries. Instead they will be based on the general principles outlined in the Scientific thread. (i.e. such as double bottoms, inverted head and shoulders, wedges, bullflags, wave theory etc.)

Any open positions from original system will be closed at R2s or when stopped out.

These changes are huge changes to the original system obviously. But I think the tweaks will be worth it. My stops will be tighter, and my targets will be bigger.

[spikefader]

OFG long at S2 at 29.45.
Stop is 29.16, risking 0.98%
R2 target currently 30.13 or 2.3%
We have a winner!
OFG, the Vulcan's stock :D Of all the stocks to be the first winner hey Webs!
Only 1% gain or $50.00 on a 5k position. But better than a kick in the pants.

SYSTEM SUMMARY TO DATE: -$550

[Karel]

Hi spike,

with tweaks this great, you might as well reset the system. Perhaps something else comes up after these tweaks, and you need to re-tweak big time. No problem; reset the system again. Perhaps you are still in the system building phase? And you need a life beside this test and your own thread, so the top 5 looks OK to me. And you might think about excluding thinly traded stocks, because I don't think one would be able to get a good entry there, the way you set things up.

Regards,

Karel

[spikefader]

NUTR long 16.42
stop is 16.03 or 2.4%
Another winner.
NUTR. Out 16.51 for + 2.15% or $67.50 on a 5k position.

SYSTEM SUMMARY TO DATE: -$482.50

[spikefader]

DW
Out for +0.88 or 2.8% or $140 on 5k position.

SYSTEM TOTAL: -342.50

[spikefader]

Hi spike,

with tweaks this great, you might as well reset the system. Perhaps something else comes up after these tweaks, and you need to re-tweak big time. No problem; reset the system again. Perhaps you are still in the system building phase? And you need a life beside this test and your own thread, so the top 5 looks OK to me. And you might think about excluding thinly traded stocks, because I don't think one would be able to get a good entry there, the way you set things up.

Regards,

Karel
Hi Karel. Thanks. Yes, I do need a life :) This is a time consuming thing with so many stocks and charts, so 5 stocks and the filtering will lower the workload significantly.

Ya, absolutely still in the system building phase :D S2s aren't standing up too well with Mr. Market's picks obviously, but if I had more time I'd follow it for a longer period of time - a few days isn't going to be accurate, and I do think that this system has potential. I suspect as you commented, the stops are too tight. And great point about thin stocks. Not very kind on stops in most cases.

Anyway, the winners today are helping the system's ego :D

I'll terminate the system as of now, and start the new system as of now.

[spikefader]

Karel,
I should probably start a new thread, since future content is not going to be "Swing trading the Mr. Market portfolio" as the thread name suggests. Or is it possible to change the thread title to "Swing trading Mr.Market's latest Top Five"?

[Karel]

Hi spike,

Just start a new thread. This one will sink down out of sight when it is no longer active.

Regards,

Karel

[Websman]

OFG still sucks...