Michael, The biggest obstacle I’ve had in my trading is over trading. I have to constantly remind myself of Jesse Livermore’s rule to sit tight when I’m right.
Your strategy now? Time frame?
I apologize in advance for this being lengthy. My strategy now is to sell my full position whenever the 10-Week Exponential Moving Average Line closes lower than the week prior. I will give my position until around 2:00 PM CST on Fridays to either pass or fail this test. If it’s below, I sell. I devised this test after reading all of Steve Burns’ books, which I otherwise wouldn’t have known of without your podcast. And in conjunction with those books, Ed Sekoyta’s quote, “The trend is your friend except at the end, when it bends.” I will always set up a stop-loss at -5% below the 10-Week Exponential Moving Average as my insurance policy in the event there’s a COVID-19 like selloff such as in March of 2020. I maintain this -5% stop-loss under the 10-Week Exponential Moving Average as it advances. I previously used the CAN SLIM system from Investor’s Business Daily, and would sell when I was up 20-25% and take the profit. After doing post analysis on my trades I discovered I was often leaving a ton of money on the table as many of these stocks would continue going up. My post analysis (which I refer to as my version of poor man’s back testing) by the time the 10-Week Exponential Moving Average bent downward it was well above the price I sold at. I have corrected this by no longer having a price objective to sell at. This has helped me from having numerous sell rules, to just two. It’s easier to keep it simple. Since I have your ear, I came across your podcast while looking for more interviews, insights, etc from Mark Minervini after I read his books. After listening to those podcasts with him I was drawn to your matter of fact, no bullshit attitude. I began bingeing your podcasts from Episode #1 in January of this year. I am currently on Episode #477. Through your podcasts I have nearly 400 books in my Amazon Save For Later queue. Every guest you have on who has wrote a book, I add it to my queue. I also added books from Milton Friedman, Von Mises, and others who have since passed as you have discussed them on your podcasts. I have read two of your books The Complete Turtle Trader, and Trend Following. The Little Book of Trading, will be the next one of yours I’ll read. I have just finished Ed Thorpe’s, A Man for All Markets, and I just started Jack Schwager’s, Getting Started in Technical Analysis. For the record I couldn’t believe the size of your book Trend Following. I figured it would take me a month to read it. I opened it up and read it within a week. I couldn’t put it down. Lastly, when it comes to CNBC, Bloomberg, and the fundamentalists, “People want to be bullshitted”. I can’t take credit for coming up with this quote, but after hearing it, it’s so true. And it’s never more true than today. I know you’ve discussed ‘shifting through the bullshit’, buy in my opinion, that quote is the WHY. It’s why CNBC exists, its why Bloomberg exists. You may have specifically said this as I am still 5 years behind in your podcasts, but every time you rant (I love when you do it), I can’t help but think of this quote. Thank your for your time, and keep educating all of us with your podcasts and the guests you have! PS: Keep swearing…it gives you THAT edge!