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Allan Harris
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After practicing law for way too long, I moved my family to the beach (Kiawah Island, South Carolina) to trade stocks for a living. After making and blowing a fortune in the technology bubble of the 1990's (and then again in 2006-08), I discovered the art and science of trend following. In... More
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The Constitution, The Declaration of Independence, and the Articles of Confederation
  • The Inherent Objectivity Of Algebra And Algorithms 1 comment
    Oct 7, 2012 12:33 PM | about stocks: AOL, XNPT, SIRI

    Is stock trading more an art than a science? The truth is it can be anything you want it to be, so long as you make money. The most effective way for me is to identify a trend. Once identified, I look for the bumps in the road that provide great opportunities to get on board.

    Easier said than done?

    Take a look at the following three stocks. Each one has buy and sell signals that were generated by a simple algorithm that's only task is to identify changes-in-trend. The most bullish patterns are LONG trends that briefly turn down then immediately reverse back LONG.

    It took me a decade to figure out that success in the stock market is found not in the words of pundits, nor the occult of technical analysis, but in the inherent objectivity of algebra and algorithms.

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    Disclosure: I am long AOL, XNPT, SIRI.

    Themes: Investing Ideas Stocks: AOL, XNPT, SIRI
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    Marc,

    I would gladly divulge my intellectual property to you, if you would pay me a fortune.

    What makes this work is that unlike a moving average or a trailing stop, the trend line is calculated in such a way as to minimize whipsaws and maximize elongated trends.

    Speaking of which, I see you are enamored with VXX. I have a trend model for it, but why bother, it appears that simply holding short is a winning trading system, without the angst.

    Best,

    A
    10 Oct 2012, 09:07 PM Reply Like
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