Further to your question John, I did not know or really care that WBC could close lower. It could also close higher and be a missed opportunity. My intent is to fill my positions with valid entries asap, so anything below action price. On the open you get open price anyway, not what’s bid. A few cents saved on entry price is not worth a possible missed opportunity, especially if we have a run up.
Cheers.
Hi Ian,
Thanks for the reply. As I say, I am trying to understand the advantages of buying WBC (or any other stock) intra-day.
From what I can see, you are buying intra-day on the belief that buying intra-day defines a valid SPA3 Investor buy signal. The problem I see with this is that, by definition, this cannot be true because the SPA3 Investor edge is researched on only close prices.
Would I be correct in saying you assume that buying intra-day defines a valid SPA3 Investor buy signal?
You may be onto a winner with that idea. Have you had a chance to research your intra-day approach? How does it compare with the SPA3 Investor edge Buy/BAP signals?
Like you, I am keen to get my money invested in the market as quickly as possible. However, I want to be sure I am not doing this with inferior positions compared to the SPA3 Investor edge, ultimately compromising my overall long-term performance.
Thank you for taking the time to explain your approach.
Hi John.
This has come up before with the Monday wrap. The real money portfolio will take positions that weren’t listed as baps occasionally on this premise. As David mentioned above, open positions that trade below action price at any stage constitute a valid entry.
Sometimes entries can be few and far between, you don’t want to miss them in a run up.
Hope this helps.
Cheers.
Ian
How do you go running 2 portfolios? Do you duplicate holdings across both or try to diversify them a bit? That’s the dilemma I am having at the moment as it’s delaying me getting back to fully invested. One portfolio is 8 positions and the other 12. One theory could be to just fill both straight away with the same stocks then as one is 12 positions they will gradually diverge I guess.
Hi Nick, I just take all signals in both. As they started at different times they differ slightly. If you’re not taking signals due to mutually exclusive rules then you’re deviating from the researched edge imho.
Gary tried to run two US portfolios mutually exclusively and ran into unforseen problems and poor performance. (The rule of unintended consequences), I believe.
Cheers
Thanks Ian - Gary are you able to clarify the above? It makes sense to me as well but was wondering if there is any commentary on it available. i.e. webinar discussing this?
Nick,
“Do you reckon I should just fill both portfolios with the same stocks initially as signals present themselves and as they are a different number of stocks held (8 v 12) they will eventually diverge.”
We have mostly answered this question (following earlier discussions on this topic) with what we have done with the two EW USA public portfolios: US EW Stocks and US EW Stocks No 2.
Due to the no. of open positions being different in the two portfolios, some divergence in which stocks are held will occur. But every time there is a big enough market correction, the two portfolios will just about start again. Given that SPA3 Investor is a longer-term trading methodology, the two portfolios will probably not diverge enough over the long term to gain exposure to different stocks in the SPA Universe.
“Do you duplicate holdings across both or try to diversify them a bit? That’s the dilemma I am having at the moment as it’s delaying me getting back to fully invested.”
Allow me to explain in more detail…
The two main problems with running 2 portfolios on the same exchange are (assuming a different no. of open positions otherwise why would you have 2 portfolios):
-
When the market corrects and we ‘start’ again with from 0, 1 or 2 open positions, the first few new positions would always be the same stocks across both portfolios.
i.) This means your capital invested in that exchange will be carrying double the risk (and reward) on those common stocks.
ii.) Also, you wouldn’t be getting the EW exposure across all your capital within the same strategy in different stocks that are part of your investing universe.
iii.) This leads to deciding to trade mutually exclusive open positions across the two portfolios. -
Problem 1 leads to a 2nd problem: what happens when you have vacant positions in your primary portfolio (presumably the one you started first)? Do you wait for a new signal (ATR B/O or BAP) or do you ‘transfer’ a current BAP to your primary portfolio that is an open position from your secondary portfolio?
i.) With the US EW Public Portfolios, to ensure the primary portfolio always maximises exposure as if it was the only portfolio we were managing , we ‘transfer’ open BAPs from the secondary to the primary portfolio (by selling in the No. 2 portfolio and buying in the primary portfolio thus incurring 2 x brokerage).
Let’s revisit WHY an investor might have two separate EW portfolios. The potential need for a 2nd portfolio arises when more capital becomes available to invest with SPA3 Investor. Typically, this happens when enough trust has been built in the SPA3 Investor process to invest more capital with it. So just about every user of SPA3 Investor will face this situation at some stage.
Options at that stage:
-
Add capital to the single portfolio currently being managed.
i. With same no. of positions, or more positions with smaller position sizes.
-
Start a 2nd portfolio.
i. Same no of open positions as the 1st, or different no. of positions, which is more typical.
Problems with option 1:
- Your portfolio metrics will be affected. But not the Annualised Return %, which will be calculated correctly for multiple cash injections and withdrawals.
i.) Your equity curve will look funny with the capital injections. The Base Ref against an index will also reflect the injections (and withdrawals).
Problems with option 2:
- As per answered above in response to your question.
Ultimately, what you do is up to you and must be documented in the respective Investment Plans. No one way is the right or wrong way. And other variables come into it, like time availability to manage fewer large positions or more small positions, and one’s risk profile (degree of comfort) to be able to execute large positions.
Regards,
Gary
Thanks for that Gary. Just to clarify the reason I have two is one is in SMSF plus there is one outside using some modest leverage.
I think Ian has the right approach and I will just take signals as soon as I receive them to fill the portfolios as quickly as possible. Otherwise keeping track of what you did and didn’t take is probably more of a distraction than anything else. Yes it means potentially double the exposure at times but as you mention that can be good and bad on occasion and given the edge it’s statistically more likely to be positive over the long term.
Thanks everyone.
one more issue comes up when you run more than one portfolio - updating spreadsheets and the portfolio manager (record keeping) is a royal pain in the proverbial
Nick,
Different entities can be another reason for > 1 portfolio.
That’s fine - no one right way. Ensure that your Investment Plans reflect what you’ve decided to do.
Hi Nick / Gary,
Yes my situation is similar, one portfolio in super and one out (with a bit of leverage too).
As stated I will take all signals in both, I treat them as seperate entities but both mechanical and as close to the researched edge (rules) as I can. Not concerned with the extra exposure on positions, I want as much capital as I can get aligned with Spa3 investor and trust the statistical edge to do the heavy lifting for me over the long term.
Cheers.
Just a question with this upcoming research tool - does it allow to test for EXIT times of day e.g. Closing a position at market open or market close?
Hi Nick.
Not currently - it takes BUYs/SELLs based on the Action Price (CLOSE).
I will raise with the Devs - we will see if they can fit in the option into Version 1.
Karl.
Cheers Karl - I seem to be finding the session LOWS a bit too often 
Let me guess, you sold QBE or ORG or both this morning and now are annoyed that the price is much higher than what you sold for, right? 
If you are, join the club…
Yeah had ORG in both portfolios - I don’t trade QBE TLS or the golds though _ QBE TLS have been woofers for years and the golds’ win rates are too low for me to stomach. . It’s not just ORG though - there has been quite a bit of slippage last few months so rather than just gut feel would like to see if there is any science behind getting out at a different part of the session - probably not though.
Yes, agree.
I took the 2 gold trades.
If I had done nothing I would have been $2465.10 better off. The 2 gold trades only made 302 and 174 so my net loss position is $1989.10.
This has been the pattern for awhile.
Qbe trade was particularly annoying. To me the result was great, $30billion turnaround but the market hated it. So, obviously oversold but you have to be mechanical. The market could quite easily have tanked today and if it did qbe and org could have been slaughtered again. I sell and buy at open and in the past year it has been uncanny how many times the sell recommendations drop like a stone after the signal. The system has a proven track record and if you don’t follow it how then how do you know what to do with your stocks? Follow your intuition? No thanks, I’ve been there and don’t need to do that therapy again.
Plenty of buys on the list so instantly fully invested again just with a different mix, for a small cost in brokerage.
Onwards and upwards. In Gary we trust.
I am still struggling here. I am in an 18.5% drawdown. Since I started 15 months ago I have been below my starting capital. I have been told that the system has and edge and it is supposed to protect us from the downside. I continue to follow the signals. Recently I was 90% in cash. I am now nearly totally invested. Today the market fell 0.95%. My portfolio fell 2.55% today. That sort of under - performance seems to be a recurrent pattern in my portfolio. It underperforms the market on most days. After 15 months of consistent underperformance is undermining my confidence in the system.
Yeah that’s rough Ivor. We should statistically be getting pretty close to the researched drawdown by now (from memory) so hopefully not too much more pain (but that’s no certainty). It probably begs the question around a regime filter (index or similar) like SPA3Trader uses but I suspect it would negate/ reduce the edge (i.e. coming back into the market too late) given it’s not already in use. It COULD however assist with some sticking to the strategy more easily if they aren’t being whipsawed as much. I am sure this has been discussed at length previously somewhere on here though.
Best of luck - just have to keep executing as tough as it is sometimes. Remember the Mark Douglas 5 Fundamental truths. Give the guys a call too I would suggest - I plan too at some stage just for some support. As an aside I still have a couple of positions to fill myself which should be completed today.