1000 Ways Not to Make Money Trading

Trend 18 - Follow-Up Report - Test 3

2010-06-19T15:28:00.000+01:00

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Trend 18 - Results:

Hello once more! We are getting closer and closer to finding a trend that makes money. So far we have tested this trend and found it has made money over two periods of time, both of which were in downward trends and from January to March. But now we have to look to see if it makes money over a longer term.

Test 3 - Longer Time Frame

Due to the fact that on both occaisions the lower the stop the better the results, I have taken the stop level to be 1%. (The other reason for this, is because any kind of analysis takes a lot of time to process through my computer!)
Results taken January 2009 - December 2009

This trend is looking very good. Not only has it made money in the two periods previously tested, it has proved it is sustainable throughout a longer period! There are some who would say that 2009 across the boards was a year of growth following the huge collapse of the major stock markets, but even then we can see here that we would have had a return of 137% which is by far above the growth of 22% for the FTSE and 19% for the Dow Jones.

Now I can forsee only one difficulty. Keeping track and selecting the right shares. Obviously it is virtually impossible to trade all of the average 19 shares per day, and the number of shares that are below that follow the trend of Up and Up then do not give the trigger Down will be greater. So with a win average of only 38% it means we could be picking the losers 62% of the time. Difficult.

So I bet you can guess what the next test is going to be?

Next Test: Choosing Random Shares

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Trend 18 - Follow-Up Report - Test 2

2010-06-18T10:57:00.001+01:00

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Trend 18 - Results:

Hello again! Now so far the tests have given us some positive results. We have managed to ascertain that the trend of Up over 7 days, Up over 2 days and then Down on the day of trade, will give us enough good returns to enable us to make a profit. At least we have proved this within the period January 2010 to March 2010. But does it work in a different time frame? Well, let's take a look:

Test 2 - Different Time Frames

Results taken January 2009 - March 2009

Fantastic and interesting results! We have made profit again on six out of the ten trialswith the highest profit being that of the one with the lowest stop in place. Again.

Luckily for this one there is no need to begin looking for exceptions. The maximum/minimum results show that the highs and lows are within suitable parameters so we have a strong possibility that this is going to turn out to be a winner again.

The most interesting part is that we are seing these winnings despite the fact that we have very low winning %. This means that we are actually losing more often than we are winning. However, it also means that our average winnings are much higher than our average losses, thereby giving us the wins we have seen.

So, thus far we have seen that our results have been positive over two differnt time frames. However, both of those timeframe have been from January to arch. This could just be a seasonal trend (which is still not a bad discovery and warrants extra research if it is proven to be a bad trend at the end of the next two tests), and so we must push forward and discover the truth.

Next Test: Longer Time Frame

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Trend 18 - Follow-Up Report - Test 1

2010-06-11T00:38:00.001+01:00

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Trend 18 - Results:

OK! So in our last test we discovered what looks to be a decent trend. As I said though we are going to have to put this through a very tough investigation. For those that have been reading this blog, you will remember that we thought we havd discovered a trend with Trend 6 because all the indicators were good but the follow-up report really dismissed this idea very quickly.

This one looks more solid, but I am not going to lay down one pound against it until I know we have found a winner! So shall we start:

Test 1 - Exceptions

Looking at the results I can straight away see something that stands out. There is a very large Max running from the 2% line downwards. This looks as though it has had some impact. However, I am not convinced that this is the only reason we have made money here because 1% has still made 41% even without the exception. So what was it?

Well it turns out that it was Brit Insurance Holdings PLC (BRE.L) with a 1 for 4 share consolidation, as well as good news from their annual report. So we have an exception, but what impact does it have on the reports? The answer is % row - None at all, the rest are all shifted down by about 25%.

So even with this exception we still have good trends! (After a thorough check this was the only exception.)

This trend is flying through at the minute! How long will it last?

Check back with me tomorrow and I will see what impact we have had with a different time frame!

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Trend 18 - No Limits, With Stops - Up, Up, Down

2010-06-07T15:49:00.003+01:00

-2 Day Close < -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Loss at Low < x% then take Loss at x%; else If Day 0 Close > x% then take profits; else

If Day 1 Loss at Low < x% then take Loss at x%; else If Day 0 Close > x% then take profits; else
If Day 2 Loss at Low < x% then take Loss at x%; else If Day 0 Close > x% then take profits; else
If Day 3 Loss at Low < x% then take Loss at x%; else If Day 0 Close > x% then take profits; else
If Day 4 Loss at Low < x% then take Loss at x%; else If Day 0 Close > x% then take profits; else
Day 4 Close take Profits/Loss

Results:

Report:

Well, it was a toss up between reaching further into the depths of previous trend and finding out whether it was good, or wether it was just because of the time frame/ shares choice/ exceptions and so forth, or writing this message. As you can imagine, I get to see these results before I make my choice. and I really didn't have to take too long making it. WOW! and I mean WOW!

Let's look at the first results for this trend with no stops:

Now look at the results above. If ever there was proof that stops work on a longer term this is it. I have alread made my decision as to tomorrow's post. We are going to look deeper into this trend:

- Test 1: Review results for exceptions
- Test 2: Review results with different time frame
- Test 3: Review results over longer time frame
- Test 4: Review results with random selection of shares

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Trend 17 - No Limits, With Stops - Up, Up, Up

2010-06-06T22:02:00.003+01:00

-2 Day Close < -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Loss at Low < x% then take Loss at x%; else If Day 0 Close > x% then take profits; else

Report:

OK! Here we have it. We have come across an interstng set of results here 6 out of the 10 trials returned a profit, 1 broke even and 3 had losses of 2% or less. Let's look at the trial run here to determine if this has been a success or not. For those that didn't here is a short review:

All returns for this first set of results hovered around -33%, so to end up with the profits we have seen here is great. But does it work as a system? We are going to ahve to check this one out in more depth, because a quarterly profit of 10% is nothing to be sniffed at, especially with compounded growth!

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Trends - No Limits, With Stops

2010-06-06T00:33:00.001+01:00

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The idea of this trend is to prevent our losses going below a certain amount. This would mean that we are looking to increase the odds of getting a heft reward, by redcuing the amount we can lose. An example of this would be:

We buy two 10 of shares in two companies each valuing at £10.00 per share (Share A and Share B),and we set a stop in place at 5%. That day we see mixed results. For some reason Share A shoots down 50% whilst share be actually goes up 10%.

Ordinarily we would have made a loss that day as it would have looked somethng like this:

                     Start             Return            End
Share A        £100              -50%            £50
Share B        £100                10%           £110
Total            £200               -20%         £160

Obviously, it is good that the winnings of Share B have helped to offset some of the losses of Share A, but we cannot allow for that every day. With a Stop in place the results would look something like this:

                     Start             Return            End
Share A        £100              -5%               £95
Share B        £100                10%           £110
Total            £200                2.5%         £205

I know which one of those I would rather have! I am holding out a lot of hope for these results, because as with the last group the saying is ride your winnins and cut your losses. This trend is the very empitomy of that phrase. But we will never know until we get started!

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Trend 16 - With Limits, No Stops - Down, Down, Down

2010-06-06T00:03:00.001+01:00

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

And here we have it. The last of a very bad set of results. I am really glad I didn't go out and spend my hard earned cash following any of the trends in this set. I thnk I might have been a little upset and I probably would have earned more down at the casino!

Another successfully found way to not make money trading! Now let's see the difference when we apply stops instead of limits.

Trend 15 - With Limits, No Stops - Down, Down, Up

2010-06-05T23:53:00.007+01:00

-2 Day Close > -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Before I report, I must firstly apologise to my readers for the severe delay in this report! But it looks like it was definitely NOT worth waiting for. This one really takes the biscuit. For the first attempt we could only really do worse if we happened to lose all out money! We may as well have taken a punt on Nortel!!

Oh, Well. Another successfully found way to not make money trading!

Trend 14 - With Limits, No Stops - Down, Up, Down

2010-05-17T13:41:00.003+01:00

-2 Day Close < -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Yet Again, terrible. I am not going to even bother adding comment to these reports if it continues like this! They are all very bad.

Another successfully found way to not make money trading!

Trend 13 - With Limits, No Stops - Up, Down, Down

2010-05-14T14:09:00.001+01:00

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Well this one is the best of a bad bunch so far. But still it is terrible!

Another successfully found way to not make money trading!

Trend 12 - With Limits, No Stops - Down, Up, Up

2010-05-12T15:08:00.001+01:00

-2 Day Close < -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Yet again. Nothing. It seems like there is no point looking at these trends. But we can take somehting away from them at least. Limits should be higher, not lower.

Another successfully found way to not make money trading!

Trend 11 - With Limits, No Stops - Up, Down, Up

2010-05-09T22:03:00.001+01:00

-2 Day Close > -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

This is the worst so far. I am guessing that you, as well as I, are starting to see the trend within this set of trends. They just don't seem to be working.

Another successfully found way to not make money trading!

Trend 10 - With Limits, No Stops - Up, Up, Down

2010-05-06T12:26:00.005+01:00

-2 Day Close < -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Another true failure. Yet again we see the same trend as before. When we go for quick wins we are less likely to win in the long run. Plus an all round poor average for winning.

Yet another way Not to make money on the stock market, successfully discovered!

Trend 9 - With Limits, No Stops - Up, Up, Up

2010-05-05T00:03:00.004+01:00

-2 Day Close < -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at High > x% then take Profits at x%; else

If Day 1 Profits at High > x% then take Profits at x%; else

If Day 2 Profits at High > x% then take Profits at x%; else

If Day 3 Profits at High > x% then take Profits at x%; else
If Day 4 Profits at High > x% then take Profits at x%; else

Day 4 Close take Profits/Loss

Results:

Report:

Well, this is the first true failure. We have lost 82% of our pot in three months by following this trend! So we can see that trying to pin down quick wins really isn't the way forward. At least not with this trend. If we are taking the first set of results as a control, then we cna see a vast amount of difference. The win ratio is lower, the risk to reward is abysmal and of course the financial results are attocious. However, there is one point of interest, which is the results get better the higher the limit leve. It would be interesting to see at what point the limit reached its maximum... but not that interesting.

Yet another way Not to make monye on the stock market, successfully discovered!

Trends - With Limits, No Stop Losses

2010-05-04T23:45:00.000+01:00

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The following idea is that of limits. Using the limits is a way of locking in your profits, to make sure you get your return before it drops back down. In these examples, I am using the following concept:

If a profit for the day exceeds the given limit (x%) then the profit for the for the trade is the limit amount. If it does not exceed it, then the profit or loss is what ever it is at the end of the day. The idea behind this, is that there may be stray shares that will jump up high following a specific trend, before plumeting back down. If we were to look at a candle bar graph it would be displayed as the following:

Now I am not holding much hope for these, since there is an old saying with teh stock market that amatuers tend to ride their losses and limit their profits. By implementing a limit, we are doing just that. So I don't expect to see any big wins, but probably plenty of losses. But let's just try it and find out shall we!

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Trends - No Limits, No Stop Losses

2010-05-04T23:27:00.000+01:00

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The following trends can be used as a way of a control. The fact that we have no Limits in place, and no Stops,means that we can see how the trend will work without these factors. Therefore, we can see in the future how these factors will impct upon the results.

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Trend 6 - Follow-Up Report

2010-05-01T00:15:00.003+01:00

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So what is the verdict? Did we, after only six experiments, find a trend that is going to make each and every one of us rich beyond our wildest dreams? And the answer is:

NO!

Sorry everyone, but unfortunately this is simply a case of right time, right place. I have done a data check on the data collected as well as report from another, larger data selection for this trend. So that you can see for your records why this is not a Golden Trend I have included snapshots of the relevant data below:

As can be seen from the above image,there is one day when the whole market shifts upwards magnificently. This happens only three days after we start the trend report, which means that the same could have happened on any of these reports and the results would have been damaged. I was right to worry about the fact that the max was so high, because it was on this day that the results have been changed. I have included the results of the trend if this anomaly was taken out and it can be seen, that we would actually have lost money following it. (These results come from the 7% cut off spreadsheet.)

We can therefore say that this change in market was not likely to be due to the trend of Down, Up, Down. But what actually happened? That day there was a minimum of only -13% and a maximum of 2565%. The average was 69%. Let's look a bit deeper into this so we can say if we can totally dismiss this trend as invalid.

On this day we only had 37 trades, which is very low. The lower the trades, the more impact bigger shifts are going to have on the average. The win ratio, was actually very low here, with only 16 out of the 31 being positive trades. However the average loss for the remaining 21 was -4.74%, which is not the worst result possible. The profit for the 15 without the anomaly was 7.71%. All together this gives an average of 0.45% for the day. Still a profit.

But then there is one giant anomaly: - Ovoca Gold (OVG.L)

But why? Well after a little bit of research. I have found the answer for you.

In a press release distributed on 15th January 2010 following an Extraordinary General Meeting, amongst other items their CEO, Timothy McCutcheon, announced the following:

"a Capital Reorganisation consolidating every 5 Ordinary Shares into 1 New Ordinary Share creating a more appropriate capital structure and share price for the Company."

This means that with the share price being 0.7 in the morning, after close it was then 3.5. However on opening on the 18th when these new prices were due to begin being traded, good news in the company sent the prices soaring from 3.5 to 18.5, the equivalent of 3.7 in the same terms as the previous price without adjustment or 500% return, and then further upwards.

So, therefore, though it looks all rosy and sunshiny on the outside, this trend has also been proved as defunct. And we can say we have successfully found another way not to make money on the stock market. (Sorry!)

PS The test of the extra data is still running on another computer and will most likely take a few days to complete. Once it is, I will add it to the bottom of this entry.

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Trend 8 - No Limits, No Stops - Down, Down, Down

2010-04-28T21:11:00.000+01:00

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Damn! I was hoping to use a phrase like "well what did you expect from something that goes down, down, down!" but I can't really. Yet again it is a quick wins one. Doesn't look like it is worth while following up though, becuase even at the quick wins stage you only get 2% return. There are bound to be more riper fruits that are easier to pick.

We will have to come back and test the 1% - 3% marks to see if it works well over a longer timeframe or with a random selection of stocks from the ones that are following this trend.

Trend 7 - No Limits, No Stops - Down, Down, Up

2010-04-28T20:52:00.001+01:00

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

No, no, no! This is just no good. We are losing money hand over fist here. We definitely can get rid of this trend and say we have successfully found one more way not to make money on the stock market!

Trend 6 - No Limits, No Stops - Down, Up, Down

2010-04-28T20:47:00.005+01:00

-2 Day Close < -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Wow!! OK, three months return of 48%! OK. Now I have to breathe! So we might have found our first golden trend. The Avereage trades is good at 54 each day which means we get a good selection. It also means that any huge trades are evened out by the low trades However, I am slightly worried by the maximum trade being nearly 2500% and the minimum beng only -39%. However the risk to reward is obviously good and the return speaks for itself.

Now I don't want to jump right in here head first without doing a bit more scouting. This one will be first on my list for some more rigorous testing to see about timeframes, percentages, random selections and more. Keep yourselves posted because I will make sure we get some good data on this and if it works out well. Well, you can do what you want with the information.

Let's chalk it up and we will definitely revisit this later! (Read here for the full report on this trend!)

Trend 5 - No Limits, No Stops - Up, Down, Down

2010-04-28T20:40:00.001+01:00

-2 Day Close > -1 Day Close

-1 Day Close > 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Now this is an interesting trend. We seem at last to have some sort of trend determined by the percentage cut off. Yet again, as with the previous find, it only gives us a 3% return. Similar to that of the FTSE over the same period. But we have growth. This is definitely a good one for us to push the percentages higher and see if they pay off. Also I would like to test this over a longer period to see if it gives better results.

Over all, let's chalk this up and come back to it later.

Trend 4 - No Limits, No Stops - Down, Up Up

2010-04-28T20:31:00.004+01:00

-2 Day Close < -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Ok so this is the worst so far. up to 62% losses over a 3 month period. That is as bad as having your money in a pension fund from Novermber 2008 to March 2009! I think we can steer clear of this trend.

Another way successfully found not to make money on the stock market!

Trend 3 - No Limits, No Stops - Up, Down, Up

2010-04-27T19:59:00.003+01:00

-2 Day Close > -1 Day Close

-1 Day Close < 0 Day Open

Sell Rule:

If Day 0 Profits at Close > x% then take Profits; else

If Day 1 Profits at Close > x% then take Profits; else

If Day 2 Profits at Close > x% then take Profits; else

If Day 3 Profits at Close > x% then take Profits; else

Day 4 Close take Profits/Loss

Results:

Report:

Ow! This one definitely looks like a no. 50% losses across the board no matter what % cut off we use. Well thats what you get if you lose 1% a day for three months! I think we can chalk this one up as another way successfully discovered not to make money on the stock market.

Trend 2 - No Limits, No Stops - Up, Up, Down

2010-04-27T18:35:00.007+01:00

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close
-2 Day Close < -1 Day Close
-1 Day Close > 0 Day Open
Sell Rule:
If Day 0 Profits at Close > x% then take Profits; else
If Day 1 Profits at Close > x% then take Profits; else
If Day 2 Profits at Close > x% then take Profits; else
If Day 3 Profits at Close > x% then take Profits; else
Day 4 Close take Profits/Loss

Results:

Report:

Now this trend is a little more intersting. It shows some progress when the return percentage trigger is 1%, but tails off towards the higher ends. But this kind of hit and run tactics can be dangerous. It takes a long time to build up your gains when they are so small, and it can take one loss to wipe them out. But with a win average of 56% and a risk reward ratio of over 3 it may be worth looking futher into.

This trend actually beat the FTSE 100 which rose only 3% over these three months, but did not beat the FTSE 250 or FTSE AIM which both rose at just under 7%. At a growth rate over this period, which did include a Correction, of 5% this is never going to give amazing results, but for steady growth I am sure no one would complain if they had their money in a bank account that returned 5% per quarter.

All in all, this actually might be worth looking into. I will flag it up and go over it with more data at another time.

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Trend 1 - No Limits, No Stops - Up, Up, Up

2010-04-27T16:07:00.007+01:00

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Rules:

Data set taken from 01/01/10 to 31/03/10

Trading Type: Stocks
Start Time: 08:00
Finish Time: 16:00
Stop Loss: None
Limit: None
Long/Short Trading: Long
Buy Rule:
-7 Day Close < -2 Day Close
-2 Day Close < -1 Day Close
-1 Day Close < 0 Day Open
Sell Rule:
If Day 0 Profits at Close > x% then take Profits; else
If Day 1 Profits at Close > x% then take Profits; else
If Day 2 Profits at Close > x% then take Profits; else
If Day 3 Profits at Close > x% then take Profits; else
Day 4 Close take Profits/Loss

Results:

Report:

So this trend is obviously not a winner.It shows that over the time frame selected, the results are negative. Even though the previous trend for all of the selected stocks is up over all three time periods, there is no guarantee that money will be made. Additioanlly, it can be seen that the changing of percentages ranging from 1% to 10% has little or no impact on teh average return, minimum or maximu returns and end % gain/loss.

Overall, we have successfully discovered a way not to make money on the stock market.

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