To celebrate our 1000 member I'll disclose a part of the strategy that leads me to the 3 Stocks on Fire, so you can pick the parts that better fit your personal trading style.
It is a simple method indeed.
1 - You need to have the Equis Metastock software
2 - You need a database feeder to Metastock. I have Reuters Data Link (it is a pretty cheap feeder - only end of the day - you don't want intraday)
3 - On the Metastock software you have one function which is the «Explorer»
Inside the Explorer you need to follow the next steps:
1 - Choose the predefined «Equis - Volume above average» explorer
2 - Edit that predefined Explorer and make some changes: on COL D put "CLOSE", on COL E put "Ref(CLOSE,-1)" and on filter put "colA > colB AND colA > 10000 AND colD > colE AND CLOSE > OPEN AND V > Ref(V,-1)"
This means you want volume above the 50 day volume exponential moving average. You want stocks that went up the prior day. You look for stocks with at least 1,000,000 shares traded on the last session. Finally, the last day on the stock must have been white, i.e., close > open.
Applying this filter you throw away 95 to 99% of the 11000 or so stocks. But this still leaves you with 50 to 500 stocks to consider ... that's when art comes to play, and I can't teach you art ;D
I have about 150 stock market books in my shelves ... some of them (about 10) have thought me something about this business. Someday I'll tell you what those books are.
Good trading for all !
dave you genius, 150 books. damn.
Question #1: how much of your stock picking is based upon charts and how much is based upon learning something about the company's business?
Question #2: how about sending out an email telling us when to sell? How do we know when to sell?
Question #3: What does Fred do? Do you discuss each pick with him?
Love your site. Daniel
Weeeeellllll :o I will just keep reading your posts. I dont use Metastock and I "KNOW" you will never give away the rest of the secret!!!! ;D >:D
Good job. I have a feeling though that you have learned more from your trades then putting all 150 books together. :)
HEY DAVE, IS THAT ONE DAY UP OR 2 DAYS UP IN A ROW?
This means you want volume above the 50 day volume exponential moving average. You want stocks that went up the prior day. You look for stocks with at least 1,000,000 shares traded on the last session. Finally, the last day on the stock must have been white, i.e., close > open.
QuoteQuestion #1: how much of your stock picking is based upon charts and how much is based upon learning something about the company's business?
Chart must be favorable or I won't even look at the stock. I don't want to be the first to see a good business, I wait for someone to see it first. This happens because I don't want to be the only one who sees a good business and no one else buys ;)
After exploring and filtering the entire database I get 50 or 100 stocks or so. Then I try to grasp the reason behind the move and that leads me to choose the best stocks from my analysis.
QuoteQuestion #2: how about sending out an email telling us when to sell? How do we know when to sell?
Good question. You see, now I analyze all holdings after the close or before the open and there I almost always tell what to do given any market circumstances. I say I'm going to sell before I actually do it, sometimes 10 hours or so before. For example, yesterday I've sold RMBS and BCGI. If you go check those posts I've said I would do it much before the open.
I review holdings answering the buying posts. When I sell I answer the buying post.
We're thinking of sending an e-mail for when to sell, but not immediately, maybe in the future ... altough I almost always say I'm going to sell much before I actually do it. Just pay attention to this board, please.
QuoteQuestion #3: What does Fred do? Do you discuss each pick with him?
Everyday me and Fred have lunch together. The picks we discuss at lunch are the better ones, when we get very excited about a stock or a story we have a good probability of a 100% move, or even a 10 bagger like happened with AMRE. Fred may choose some of the 3 stocks on fire but we don't trade as a team, I'm the sole responsable for the trades. Fred has the technical department of the website (man, I can't do websites) and he participates on other boards. We're a perfect team I believe.
QuoteLove your site. Daniel
Thanks Daniel, I love it too ;D
Quote from: bob839usa on June 08, 2005, 05:01:57 PM
Weeeeellllll :o I will just keep reading your posts. I don't use Metastock and I "KNOW" you will never give away the rest of the secret!!!! ;D >:D
Thanks bob839usa, nice picture (I have to put one of me here). I will keep sharing my strategy with you fellows ... :)
Quote from: stocky on June 08, 2005, 05:44:09 PM
Good job. I have a feeling though that you have learned more from your trades then putting all 150 books together. :)
I guess your feeling is right stocky. A wise man learns from his mistakes. A genius learns from someone else's mistakes. I know I ain't no genius, but I like to learn from others mistakes and successes. That's why I've read so many books, but like I said, the majority of them are worthless (you only know after you've read them).
QuoteHEY DAVE, IS THAT ONE DAY UP OR 2 DAYS UP IN A ROW?
Just one day up, that's enough, given the other conditions. I forgot about another rule: volume must be higher than the volume on the prior day.
Thanks to all for your feedback !
David,
Q#1: What are Your basics for selling?
Q#2: Do You use STOP-LOSS orders?
BTW! Your page has taken 1.st place in my financial bookmarks in only 5 days.
Quote from: Rocket8 on June 08, 2005, 03:06:51 PM
Question #3: What does Fred do? Do you discuss each pick with him?
Hi Rocket,
Like David Said... and by other words:
- Managing a Stock Portfolio is like Sailing...
You can have a good crew, but theres only one man in charge on board: The Captain !
And here, the Captain is David ;)
Trust me (and I'm a sailor), if you have 2 captains on board, the boat is lost >:D
Me and David have learned together the «art» of speculation, we have the same educational background (we are best friends since highschool), and we passed by the same kind of experiences on this area, but David is the right guy for the job ;)
All the trading decisions are made by him, and he have always the last word on it. I may suggest him some stocks, and we discuss a lot of trading ideas and strategies (specially at lunch), but he is the man in charge for our portfolio ;)
best regards,
Dave,
What are your top 3 book picks!!
My eyes will hurt if I read 150 to find the good ones.
I never really cared for message boards but you guys have a winner here.
Thanks
Hi David,
Does the basic version of Metastock include the filters necessary to follow your method? Also, like Boatguy, I'm curious about which books you felt were truly informative. I've read three so far by different authors that have basically said the same thing. I've learned just as much by following the boards here. Thanks for a very educational site.
Racer X
Quote from: poiss on June 09, 2005, 04:27:18 PM
David,
Q#1: What are Your basics for selling?
Q#2: Do You use STOP-LOSS orders?
BTW! Your page has taken 1.st place in my financial bookmarks in only 5 days.
A#1: Selling is much more difficult than buying, so this is a great question. I can't answer now, during the week I'll try to write a text where I will give some clues when it comes to selling stocks.
A#2: Sometimes, but I try not to. If I can't watch the markets (I don't like to sit around the computer all day watching the intraday quotes) and I'm focused on a particular level I may use stop loss orders. But it is rare because I don't like taking conclusions out of intraday data, I like to decide near the close of the session.
5 days and we're number 1 for you. I'm proud, thanks !
Quote from: boatguy on June 12, 2005, 11:57:01 AM
Dave,
What are your top 3 book picks!!
My eyes will hurt if I read 150 to find the good ones.
I never really cared for message boards but you guys have a winner here.
Thanks
3 top book picks ... that's a hard one boatguy ... let me see. Number one is easy: «Reminiscences of a Stock Operator, Edwin Lefèvre, 1923». Number two I'll give you «The Disciplined Trader, Mark Douglas» and number 3 a technical book, «Candlestick Charting Explained, by Gregory L. Morris», because I think you can't understand the psychology behind short term price moves if you don't know about the candlestick theory.
This is valuable information. It took me years to find out about these books. I hope you enjoy and value them.
Quote from: Racer X on June 12, 2005, 01:58:09 PM
Hi David,
Does the basic version of Metastock include the filters necessary to follow your method? Also, like Boatguy, I'm curious about which books you felt were truly informative. I've read three so far by different authors that have basically said the same thing. I've learned just as much by following the boards here. Thanks for a very educational site.
Racer X
You got the 3 books (but I got more that are very good and probably would deserve too to be on that 3 book short list).
Concerning Metastock I don't know what is the version you're talking about but even my version from 1999 had the tools needed to build my explorers and filters. If you need help doing this say something.
Have a nice day, see you fellows in action tomorrow !
Dave & FRederick,
just a suggestion. you may want to keep this thread displayed on the homepage as a 'fixture'. may get more hits. anyways i am learning!!
Hey, David, do you use eSignal or Datalink with the Metastock software ?
Also, do you have the 7.0 or higher version ?
Thanks !
David,
While the veteran traders will likely laugh at this question, I find myself often wondering what is the right number of shares to purchase in a trade. The obvious answer is that it depends on how much you want to or can risk. Sometimes even a dramatic move will yield negligible returns if you haven't purchased enough shares. Do you have a rule of thumb for how many shares to buy with each trade?
I apologize if you've discussed this in earlier posts, as I am relatively new to 3StocksOnFire (but am already thoroughly impressed)!
Quote from: Thunderbunny on June 18, 2005, 10:44:37 PM
While the veteran traders will likely laugh at this question, I find myself often wondering what is the right number of shares to purchase in a trade. The obvious answer is that it depends on how much you want to or can risk. Sometimes even a dramatic move will yield negligible returns if you haven't purchased enough shares. Do you have a rule of thumb for how many shares to buy with each trade?
I'm not laughing at your question and I'm not a veteran trader, but I think I can answer the question sufficiently.. The amount of shares you hold is irrelevant.. Whether you own 1 share of Berkshire Hathaway or 192,000 shares of AMEP.OB (as I do) If either stock goes up 10% you make 10% on your investment regardless of how many shares you hold....
So you think the market would be all the much wiser to splits, reverse splits etc... Which attempt to make the stock more attractive to investors. However man is not fooling the market, he is fooling other men, which is easy.. fooling the market is impossible
Quote from: Thunderbunny on June 18, 2005, 10:44:37 PM
David,
While the veteran traders will likely laugh at this question, I find myself often wondering what is the right number of shares to purchase in a trade. The obvious answer is that it depends on how much you want to or can risk. Sometimes even a dramatic move will yield negligible returns if you haven't purchased enough shares. Do you have a rule of thumb for how many shares to buy with each trade?
I apologize if you've discussed this in earlier posts, as I am relatively new to 3StocksOnFire (but am already thoroughly impressed)!
Hi Thunderbunny ! welcome to our board ;)
You must think in total position value instead of number of shares, the number of shares is irrelevant for your trading strategy, because each stock has a different price.
Imagine your total equity is for example $100,000, and you want to take a long position on a stock @ $10, you must think how much money you want to put on that position, and then you calculate the number of shares you want to buy.
You should also have some kind of rule, like we do on 3SF. Here we don't exceed 6,66% of total equity in one position, which means that in this case we would buy $6,660 of that $10 stock, by other words we would buy 660 shares of it.
best regards,
Fred,
Thank-you for your answer - makes good sense! Definitely appreciate it! I've already learned much from the membership of 3SF since discovering the site several days ago!
Definitely a great site and excellent interaction here.
I've changed my concept of trading more in 1 month here than through several newsletters I subscribed to. From their recommendations I have a finely tuned engine running on all cylinders. One day a position is up and the next down. I am down 20% in my portfolio from Jan 2005 and the buy and hold concept. Long term there are winners true but long term they ebb and flow and if I had moved in and out of my positions I would be much better off. Now I have decided to take profits when they come and not wait for the long term.
One thing I learned a long time ago is it the percentage not dollar value of the gain. So I also see the greatest potential in the OTC board at this time.
Thanks so much David,
God Bless
Does anyone on this board use TC2000 for your charting software? If you are well versed enough in it's use to post this material in the form of a scan it would be greatly appreciated. For all the claims of TC2000's simplicity, I really have a hard time with their scans, watch lists, PCF construction. Thanks in advance for your assitance. I usually can identify decent buy/sell candidates when I see them, but I need help with an initial sort that narrows down the whole universe of stocks to a more managable # to review. This seems to be as good as any initial sort to get down to a smaller group of stocks to review.
:-*
What a gas!!!!!!!!!!!!!!
Dave and Fred,
I recently discovered and am now also a new member to 3SF, but I want to tell you that:
- your website absolutely! rocks...great job! It's so easy and straightforward!
- the saying goes "a day with a master is worth a year of self-study", and I greatly appreciate your direct, honest, candid, no-bs approach/style and willingness to help pull the rest of us "up" in our investing abilities and understanding. :)
- hats off to the other members here, a community is only as good as its members, and I sense this is a great community that's gathered here.
Thank you! Best regards.
Quote from: eagle2232 on July 15, 2005, 04:29:35 PM
Dave and Fred,
I recently discovered and am now also a new member to 3SF, but I want to tell you that:
- your website absolutely! rocks...great job! It's so easy and straightforward!
- the saying goes "a day with a master is worth a year of self-study", and I greatly appreciate your direct, honest, candid, no-bs approach/style and willingness to help pull the rest of us "up" in our investing abilities and understanding. :)
- hats off to the other members here, a community is only as good as its members, and I sense this is a great community that's gathered here.
Thank you! Best regards.
Thanks Eagle ;)
And welcome to our website !
Hey Dave ...enjoy your thread, on a couple of times I noted people asking about selling rules, I am sure you have used the following rule....and perhaps its time to restate it to your followers..........
when I buy stock, I usually try and buy round lots....(most times its cheaper on the commission rate) and also, when the stock reaches a solid level and seems to be stalling and all the signs are there that indicates run is falling off.....I usually take 20 - 25 % off the board....this gives me a nice edge on the plus side if in fact the stock begins a severe correction, and if stock continues on its upward trend I am still in and am now holding cash assets for other buys, or even additional purchases of the stock at hand......Also< when the stock reaches a double I usually sell 1/2 and recoop my initial investment, and re-invest into another one(that of course you have recommended). Thus, I have nothing to lose....so to speak if the original stock loses some of its zest, or goes into a long base building event. I know somewhere in the past you have advised this method before, as I recall, however you are picking up newbee's daily, and they simply are not aware of this method......Thanks for all the advice.....most people are reluctant to share all this great stuff you are putting out!
GeorgiaBill "gabillh"
thanks for a great site! finally found something worthwhile on the net as far as traders info goes. i have been stuck with the yahoo message boards which are absolutely appalling the way people treat eachother there. i am new to trading and have been studying the safety in the market swing trading method developed by David bowden in Australia. it based on the work of gann, your site has been a great help to my understanding already . thanks again,
maxi
Hi david and frederick,
I just read the few questions and tips about numbers of shares to hold and when to go out when the stock goes sud!
I suggest than you open a new topic with a title like "risk management" to debate on those issues .
My best regards
Phabrux
I was wondering when you would start charging.
David,
I've been lurking here for the past month or so, but have to say you are really a good stock picker, stock educator, and communicate very well your decisions/strategies. I hold you in highest regards, and would like everyone to know that on 09/14/2005 you posted a buy on CTIB to buy at the open and then pulled that post about 10 minutes later. Well, I saw it and needless to say profited about 50% in one day. You will be getting a donation in the near future. Thanks a bunch,
Ellen :)
Moved this thread to this board.