Forum Archive Index - September 1999

["Brent Wheeler" <brentw@bwcl.co.nz>]

We know markets spend 66% time moving sideways, not in trends. A helpful bit
of info is how long is the ave period one trend to another in days?  Once a
stock has got beyond that average we can expect maybe an event which will
stick it into a trend.  Say that happens and we define "into a trend as
"three (arbitrary) successively higher  closes".

Place the trade.  Now the gutz is, what is a retracement versus a trend
reversal?.  Again we need to know what, on average is the retracement to be
expected while still in a trend.  In other words we are happy to stay here
so long as the retracement does not exceed the average retracement when the
stock is in a trend.  This also tells us that we set our trailing stop just
behind (not on a even number the locals will gun you) the average
retracement. We ride with it.

Our third bit iof info is what is the average duration of a trend?.  Once we
get get past this we are getting suspicious - certainly if a retracement
goes below the average retracement for the stock in a trend we hope our
trailing stop will take us out.  Otherwise we keep dragging up that stop
until we get stopped out at the end of the trend.

Then back to looking at that flat line average.  There are heaps of
variations on this.  I just get too confused and try to stay by some basic
logic.. I guess money management is the main other way you might get out.
Some of you may find this system a bit risk averse - but I want to trade
tomorrow too.

Have a think

B

Dr Brent Wheeler
Director
Brent Wheeler & Co. Limited
AUCKLAND


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