Price & chart are same thing, as the chart is noly the summation of tracking of the price.

Yes the volatility was high that time. I took AAPL before the earnings (was an easy trade)
but chose a spread cause of the vol. Then I got greedy (I planned for 50% till end of
year). Could have made 30% in one day and buy the same some days later again.

"Look at RIMM for example. It goes up $5 one day, down $6 the next, up $4 the next and so
one sometimes. The movements are usually meaningless and have nothing to do with the stock
itself but makes a great trading opportunity. MA is similar."
You have here the same problem with TA and fund. This works for a time. Under a certain
environment with certain stocks.

Does anybody remember the "buying the dip" and "hold in the longterm" from 99/00? I think
it lasted till the end of 2001to get the people out of this. It killed em fund or TA. Now
we have 4.5 years with quiet regular patterns and all happens again. just think on the
countless "buy the dip in BIDU" postings some weeks ago

I am a software engineer. Do you think if I wrote an application that did that we could
sell it? ;-)

We could probably market it to brokers and hook into their data streams for quotes and any
other data.

Last edited on: 09-04-2007 07:06 pm

I don't know, I've made a good chunk of money buying stocks on the way down on temporary
and inconsequential issues. Volatile stocks do this all the time. Look at RIMM for
example. It goes up $5 one day, down $6 the next, up $4 the next and so one sometimes.
The movements are usually meaningless and have nothing to do with the stock itself but
makes a great trading opportunity. MA is similar.

Where I think your system would be quite valuable is if it could be constantly monitoring
the movement of your stocks throughout the day and tell you when the rumor hit the stock
price. If it could tell you as soon as it sees it, you could go buy puts or short it
until it tells you it has bottomed and ready to go back up.

the homework was building the system and trading on paper before putting it to use...

Even if I could be 100% sure the only reason INTC dropped was because of a fake rumor I
would not buy the stock as it lowers because that iis not a defined rule to trade on. How
far will INTC drop? How long before it starts to recover? What if there were other
reasons for the decline? (99% sure does not cut it) I cannot quantify the answers to
these questions in a way that limits further depreciation of capital - to the dollar.

I would exit the position (or short) once I received a sell signal from my system. I
never have to make a decision on the fly, exposing my process to be influenced by
emotions. All of my decisions are pre-built into the system.

I agree that past performance is no indication of future success (which is why I trade the
same stocks long or short depending on my system's output). But stocks have a tendency to
trend. And the only way to define risk is by trading on price.

Cohen --

Lol, I said the same thing several pages back as well. I think a person should use
whatever method works best for them. I like the simplicity of sock's method, but question
the reliability of it. I would like to backtest it on some paper trades and see how it
performs. If something like this works, we could just plug in the whole universe of
stocks and spit out 5 stocks to buy each day. How simple and sweet would that be!?! No
homework, every school kid's dream. ;-)

cputech, I'm with you and think that fundamental analysis can tell you when to buy or sell
but arguing about diferent methods is just spinning the wheels as Mock has said.

Also, if you look at prices from the previous 12 months, you are looking at where the
stock has been, not where it is going. Ever heard the disclaimer that past performance is
no guarantee of future success?

FA gives you forward looking analysis, rather than backward looking.

Well, let's try this. Theorectically speaking, suppose a rumor was started by someone
influential that said INTC was going to slash their prices for chips in half, which would
cut INTC's revenue in half. You don't know this rumor was started b/c all you look at is
the closing price. This rumor certainly isn't true, but would be enough to make the stock
plummet temporarily. As soon as the company cleared up the rumor the stock would be back
to making new highs again.

So, at what point would you decide to sell or short? Is there anywhere in your system
that says it's down for a stupid reason and you should double down b/c it's going to go
right back up again?

Using FA you'd know it was a rumor and 99% sure it wasn't true. So, you'd add to your
position on the way down or buy calls or something to profit from the fact that is it down
for a false reason and will go right back up.