Buy Signals - I would like to clarify the reason of the trailing stock loss in the buy alerts I receive. i have always worked with the buy and sell signals I receive each day. When the value of shares drop and the loss over a couple of days is substantial I was wondering if this trailing stop loss provides an opportunity to make a decision to sell prior to receiving a sell alert from share wealth and minimise my losses
Been there done that and blew up an account. If you want to obtain the backtested results trade the system and not the price. why spend money on a robust system then ignore what its telling you
Couldn’t agree more with Ralph. SPA3’s edge works with next day MOC sells.
It’s a mechanical system. No room for discretion.
What I do is to place a Stop Limit order using the TSL value once the trade is filled. I then move the Stop Limit if the TSL value changes. Alternatively is to use the % value and place an actual TSL order so it moves by itself (auto pilot) but my worry is it may get triggered before a SPA3 Sell signal is received.
Happy to hear any comments if this is the correct or wrong approach.
Thank you.
I agree with Ralph and Douglas. Overriding, second guessing or front running the SPA3 alerts is a TRADING ERROR in the objective mechanical system. There are multiple exit formulae built into SPA3 Investor and these are ‘tuned’ to each stock in the universe through the research process. Suggest you reread the manual. Gary can elaborate on this.
It’s totally the wrong approach,no question
Nothing to add to what you’ve stated Bruce. Or Wakefield.
The rest is why. Which I wouldn’t do justice to in a Forum response.
The ‘why’ can only be learnt:
- by ‘flawlessly executing’ a large sample of mechanical trades, while
- studying Mark Douglas’s material in detail, and
- trading out of a reasonable drawdown (at least -10%) to a new high at least twice.
So to clarify. No stop loss orders are placed. A position is only closed on the day after a Sell signal is issued using an MOC order. Correct?
I just came across this discussion and was interested in others thoughts, because I had also considered whether setting the SPA3 Stop Loss as an automatic stop to cash out a position if triggered would be a worthwhile strategy, as Ee Ching Ren outlined above.
I have been trading the April 2025 LTTP Australian portfolio and was alerted to FLT’s nose dive on Friday 6th, which was obviously going to trigger a sell signal that evening. I decided to trade out of the position late in the day, when the stock price had recovered, as a profitable trade.
Perhaps I ‘bent the rules’ a little bit, but I was happy to lock in profit at the trade price of Friday afternon, rather than waiting until Monday MOC to trade out. This in esence was utilising Mark Douglas’s principal of taking profits when the market offers them to you.
FLT recoverd on Monday to close at $14.66, so I could have made an extra $300 if I had closed at Monday’s MOC, but I was satisfied with the 8.9% that I made on the trade.
Interested to see if setting a Stop Loss would have improved the profitibility of the portfolio, yesterday I looked at the charts for all of the stocks that I have traded in the LTTP portfolio to see if the automatic stop loss would have traded me out of losing positions quicker, compared to being stopped out of positions that went on to be profitable (or more profitable than in cases where they would hit their stop during a day but recovered to not trigger a sell signal).
Although far from exhaustive back testing, my observation was that employing an automatic stop loss would likely have traded me out of more profit than would have been saved with an early stop loss. Which takes me back to Mark’s first ‘truth’ - Anything can happen.
Simon - I think you answered your own question in your last 2 paras. Note you would need to manually backtest several 100 -1000 completed trades to determine if you have found a robust exit tweak.
Ee - for the ASX can use MOC or MOO for similar results. Not true for US stocks though. SWS tested and presented this several years ago. Consistency is the key.