Forum Archive Index - June 2003

["WOOD, Pete (HLY)" <Pete.Wood@genesispower.co.nz>]

Hi
I am a very much "beginner trader" and have been following this forum for a
short while.

Would I be right in assuming that you are the "moderator" for this forum and
general GURU

I have not traded apart form "one-offs"  in the past.
Who (I will take advice) in the Hamilton area would look after a very small
time trader such as myself.
Also I thought I had subscribed to this forum but cannot find where to email
etc.

Some very interesting and thought provoking opinions have been expressed
here

regards



Pete Wood
Field Services Coordinator
Genesis Energy
c/- Huntly Power Station
Private Bag 501
Huntly

DDI  (07) 8286 772
Mob  021 506 225 
fax   (07) 8286 848



-----Original Message-----
From: Phaedrus [mailto:Phaedrus@techemail.com] 
Sent: Monday, 23 June 2003 08:52
To: Sharechat@sharechat.co.nz
Subject: [sharechat] WHS and Trend Followers


Snoopy,
       Your argument is illogical. Before I tackle your misconceptions,
let's define a trend and a trend follower so that we are at least discussing
the same things:-  An uptrend is a series of higher highs and higher lows. A
trend follower is one that looks for stocks that are in an uptrend, buys,
and holds until the uptrend ends.

 You state "You make the assumption that most trend followers are as
meticulous and sophisticated as you are." 
 No I do not. The trendline break system that I use is probably the simplest
of all trend following techniques. Sophisticated? I think not!
Additionally, in an attempt to cater for other trend followers interested in
trading either more and less actively than me, I incorporated multiple
moving averages into the chart, thus covering people short-term trading
right through to the very conservative users of a 200 day ema. Again, using
moving average crossovers as exit signals is a very simple technique that is
anything but sophisticated. 

"What would have happened if a person scanning the daily papers saw WHS
trading in mid April at $5.30 or so and saw the price rising?  They saw it
had bounced off the support level at $5.30 twice in recent months and could
see the price rising again so decided it was a good time to 
buy."
This person may have bought, but they would NOT have been a trend follower.
Trend followers would have seen that WHS was making lower highs, price
action was below their chosen moving average, and that WHS was still in a
downtrend. There is simply NO WAY a trend follower would have bought here! 

".....none of this would be any consolation to the *unsophisticated* TAer
that bought in at $5.30 in mid April." 
Anyone buying at $5.30 in mid April would have been buying into an
established downtrend. Even the most unsophisticated user of TA would be
unlikely to do this. You claim to be using an  "*unsophisticated* TAer" as
an example, but in fact their hypothetical actions show a total ignorance of
even the most basic TA principles. Unfair!

"As I see it, my point that an (unsophisticated) pure trend follower may
have indeed lost money by selling out WHS in the low $4 range, still
stands." 
Snoopy, trend followers (even unsophisticated ones) sell at the END of
UPTRENDS, they DO NOT sell at the end of DOWNTRENDS. They then buy at the
beginning of Uptrends - see arrows on chart. I went out of my way to include
in the chart a 200 day moving average such as would be used by conservative
(read unsophisticated) trend followers. The point of showing these different
systems on the same chart was to demonstrate the ALL trend followers would
have been out of WHS well before the meltdown -  no matter how simple the
system they used. In addition ALL of these various systems kept their users
out of the "rally" that sucked you in.
         Regards,   
                   Phaedrus.

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