Any room on this forum for a thread on charts and technical analysis

[Brains428]

Are the spaghetti lines 10, 20, 50 DMA?

[Vae Victis]

And another recent trade. Hershey $HSM consolidated in a horizontal channel and also formed something of an inverse head and shoulders before a strong breakout and quick rally up to my price objective. Bought on 12/8 and closed on 1/4. ~7% profit.

[Vae Victis]

Are the spaghetti lines 10, 20, 50 DMA?

10, 50 and 200 DMA. The 50 day moving average is the most important to me and is one of my main chart filters. Price HAS to be above a rising 50 DMA or I don't look at it.

[Vae Victis]

It is worth noting here that there have been a number of trades that I have been stopped out on for small losses. I'm not trying to give the impression that I only win, just posting as examples some of my recent successful setups to illustrate the approach I've been using. Many setups fail and I usually lose around 2% or less on those.

[Brains428]

Interesting. I guess 50 vs 100 DMA is deciding on sensitivity vs specificity. You may miss some winners, but you may have less losers.

Are you also making little flags and pennants, volume histograms, momentum indicators?? Or just looking for consolidation and uptrend

[Vae Victis]

Interesting. I guess 50 vs 100 DMA is deciding on sensitivity vs specificity. You may miss some winners, but you may have less losers.

Are you also making little flags and pennants, volume histograms, momentum indicators?? Or just looking for consolidation and uptrend

I have found over time that patterns based on diagonal trend lines (which would include pennants, triangles, etc) are really quite unreliable. Horizontal lines tend to work much better for me and they give much cleaner invalidations. Though, I do see on occasion really tight flags or descending channels after an uptrend where the breakout is very powerful, so I don't disregard them altogether.

I stopped looking at RSI, MACD, and other oscillators. They make a lot of visual noise to me and don't seem to enhance my thinking. In fact, I think I have gotten into more trouble looking at "overbought" or "oversold" indicators than anything else. Many of my early failures were related to bottom fishing (e.g. buy low, sell high). Just because something has been beaten up, it doesn't mean it won't keep getting beaten up (see growth names currently). One of my biggest epiphanies was to stop trying to find "bargains" and instead focus on strength.

[pierre]

How many hours per day or week do you spend doing this?

[Nysoz]

As someone else mentioned make sure you take into account taxes when calculating profit at end of year.

If you’re in the 37% tax bracket and S&P returned total 28.7% last year including dividends. So to beat that you have to make 42.8% to match that after taxes. Although this is skewed because it doesn’t take into account the ltcg you likely pay on the S&P sooner or later. If you’re doing this in a tax advantaged account it may make more sense.

Then what you also have to ask yourself is how confident are you in your trades? Are you making 5-10% on these trades with a significant portion of your portfolio to make it worthwhile or just a smaller trading portion?

Trading can be fun and interesting. The hard part is differentiating between luck and skill and outperforming over the long term. It’s definitely been profitable for me for the past 2-3 years and time will tell if my method will stay profitable for as long as I’m willing to continue.

[CordMcNally]

I'm not trying to give the impression that I only win

Don’t worry, with your underperformance of the market not taking into account taxes at the highest marginal bracket, I don’t think anyone was going to think you only win.

[Vae Victis]

Don’t worry, with your underperformance of the market not taking into account taxes at the highest marginal bracket, I don’t think anyone was going to think you only win.

As I said, those returns including a large portion of the year where I did not have a rules-based system in place and made a lot of rookie mistakes. I am more interested in my current and future performance now that I have a system in place. What do we often say around here, "past performance does not indicate future performance" or something like that?

[Vae Victis]

How many hours per day or week do you spend doing this?

I spend a couple hours on the weekend screening charts and identifying setups. I check the charts at the close during the week to watch for breakouts. I try to only buy right before the market close if clinic allows. I also spend a lot of time reading books about investing, so I guess that counts as well?

I truly enjoy chart analysis so it doesn't feel like work at all, I would classify it as leisure.

[Vae Victis]

As someone else mentioned make sure you take into account taxes when calculating profit at end of year.

If you’re in the 37% tax bracket and S&P returned total 28.7% last year including dividends. So to beat that you have to make 42.8% to match that after taxes. Although this is skewed because it doesn’t take into account the ltcg you likely pay on the S&P sooner or later. If you’re doing this in a tax advantaged account it may make more sense.

Then what you also have to ask yourself is how confident are you in your trades? Are you making 5-10% on these trades with a significant portion of your portfolio to make it worthwhile or just a smaller trading portion?

Trading can be fun and interesting. The hard part is differentiating between luck and skill and outperforming over the long term. It’s definitely been profitable for me for the past 2-3 years and time will tell if my method will stay profitable for as long as I’m willing to continue.

Yes, those numbers apply to me. A few things I will say about comparing my returns against the S&P: first, I never had a 100% stock portfolio, so my returns never matched the S&P. But my portfolio was arranged in a classic, Bogle three fund portfolio (ITOT, IXUS, BND) that no one on this board would have ever batted an eye at despite its underperformance of the SP500 because it was a "normal" portfolio. Second, long term capital gains are not 0%, they are 20%. People seem to lose sight of this. So it isn't the difference between 38% taxes and 0%, its 38% v 20% when you eventually sell.

Out of curiosity, what is your method of trading?

[nycEMMD]

Love this thread, strong work Vae Victis. Do you use screeners to identify stocks that are consolidating? You also seem to trade large caps only. Most people that I know use this strategy will trade any stock that fits the pattern, was wondering if you had a rule for a certain market cap

[CordMcNally]

What do we often say around here, "past performance does not indicate future performance" or something like that?

You’re right, your returns may get worse.

Nonetheless, I’m glad you’re doing this and I hope you post trades/charts when you make them. That’ll be more than some people who are no longer around did. Plus, it looks like you’ve got thick skin and can take some good-natured ribbing.

[Vae Victis]

You’re right, your returns may get worse.

Nonetheless, I’m glad you’re doing this and I hope you post trades/charts when you make them. That’ll be more than some people who are no longer around did. Plus, it looks like you’ve got thick skin and can take some good-natured ribbing.

Ha. Yes, I fear that they might. I maintain a healthy paranoia that I am, in fact, a moron .

As for having a thick skin, nothing you can say to me will be worse than residency lol.

I will post my charts and await your wrath.