With wrong goal, you won't get any profit.

When you keep losing your money on trading stocks, one of the reasons is probably the goal you've set is wrong. I'm not saying that if we have the right goal we can always make profit, because more than goal, the right strategy is important, and this is how it does when trading.

However, there is a tendency that the shorter term strategies you use, the more likely you are to lose your money. Why do I know this? Well, because I analyze markets with using computer language to calculate a lot of numbers and patterns almost astronomically. I'm not exaggerating. You can know it when you look at all articles in this blog.

And what makes you interested is that it's way more easier not only for me but for someone who does the same things that I do to make trading strategies that work on longer term span. This means if you are a beginner thinking of applying a strategy on your trading but you don't want to spare a lot time about thinking what strategy is good and you have an idea of using a strategy made by somebody then you should always rely on long term strategies

Here is two examples that illustrate it for you.



This chart shows you how your capital would've gone like if you had been trading with a short term strategy. In this strategy I used 1 day price action and 7 days price action. When 1 day movement  gets stronger against 7 days movement the system automatically buy. As you can see, you capital gets up and down.

but to make the system buy with a longer span like 1 day against 60 days, your capital would've been like this. It's much better.

If you want to know more about this or want to get this spreadsheet just give me an email or a comment and I send you right away.

↓↓↓please click on this button below so that you can get me higher rank in a blog competition.

にほんブログ村

The price movement tendency for each month

Do you care " the price movement tendency for each month"? If you do, you have come to the right place.

I made a little program with google spreadsheet that tells you what kind of tendency each month has. All you do is to put the number of month you like in the cell which you can see in the red circle in this picture, and spreadsheet will automatically calculate it for you.

In the result you can have a look at a history of a specific month through 1985 up to 2018. The data used in this spreadsheet is from Dow Jones Industrial Average. Link is below.

(show it on your display now)

Please click on the button below to get me to upper rank in the blog competition I join.

にほんブログ村

strategy tester for stock markets

This time I will introduce to my readers a strategy tester for stocks which runs on Google Spread Sheet and Excel Spread Sheet.

Whether you trade on fundamental information or not, it is still important to know how to trade with technicals, because you will have to look at the chart the moment you buy and sell stocks.

However it’s impossible to check with your hand all the entry timings that are generated by the technical analysis. So using computer program is very practical, but there aren’t many of them who are good at it, and I think spreadsheet is a potential alternative, because it’s easier to operate than computer languages.

Here is the tester I created. With this, you can test a strategy with Moving average’s crosses(entry with gold cross and exit with dead cross). If you don’t know what it is please google it.

All you have to do is to put some numbers you like in those two boxes, and click on “RUN”

Then, the spreadsheet automatically simulates all the trading points generated by the strategy, and show you the results, all the transactions in it and stuff. It’s important what kind of result you get, but I would like you to pay attention to “drawdown” and if you are a beginner you must.

It's not a good idea to trade without knowing how much money you have chance to lose with the strategy you are going to stick to. By knowing this you can truly control your risk and money. And a lot of people say that it’s crucial to control your money in investment, but they rarely talk about drawdown let alone “how to figure it out”. 

In the different sheet you can see all the functions with which I use to create this simulation. You can take a look at it freely from a link below and even download it onto your PC.(If you want to use it, I think you need a Google Account)

(to show it on your display)

This one is very basic, but I will create more sophisticated ones if you have any requests. So if you have any, give me some comments or e-mail me.

And please click on the bottom below so that you can push me to the upper rank in the blog competition I join.

にほんブログ村

Check how you should trade with the theory

 

 In the previous article, I promised to write more in English, if I could get more viewers from the US. And It seems me that this blog has been gaining those viewers, so, I will write an article following "Sell, when people are losing in the market because it’s proven to be so." the article previous discussing whether "Prospect Theory" is a possible theory and I proved it is, showing the result of a computer analysis for trading simulations on Nikkei 225 data (1990-2018).

 And today, I'll be showing how each entry of trade looks like in the candle bar chart.

 The blue circle on the chart is the point where you entry for sell. The price got stopped just a little under the MA(the red line). The hypothesis that I though of is based on factors 1~3

1: In the upper shadow of the last candle bar, there is a possibility that some people jumped on the price when it showed a surge, but they ended up holding a position with a lower price. As "Prospect Theory" suggests, they can't admit that they are losing, so they will wait until they have lost more than they expect.

2: The upper shadow of the last candle bar also tells us a surge against buying power and this is not like the one I showed in 1, which implies that people having sold in the upper shadow of the last candle might wait longer for a bigger profit, because they might be nothing like people illustrated in "Prospect Theory".

3: On top of these, there is less possibility that people jump onto buying than selling because the price once pushing itself over the MA now got pushed back to the original side.

The chart below shows 3 days later from the entry.



 The price moved as I anticipated, but no one can be sure of any hypothesis just to have seen a single case.

 However, this isn't the case that I picked out randomly from data. It was the computer program that chose this point as a point of sell. And the sum of all the gain and loss from similar trades that were simulated by the program I coded was positive. And profit line of this simulation has been steadily right-angled over 28 years.(to check about this, touch on here)

 To sum up, this Hypothesis has been proven to work!!

 This is all for this time. If I could get more viewers from US, in the next article I would share with my viewers the program that works on google spread sheet, and with that you can experience all the simulations I write here.

 Please post URL of this blog anywhere you think of, to share this with everybody.

 And also please click on the button below to push me up to upper rank in a blog competition I join.

にほんブログ村

Sell, when people are losing in the market because it’s proven to be so.

 I noticed some of my viewers are not only from Japan but also from other nations like the US. To attract more viewers to my blog, I will write in English this time. If I could get more people coming to enjoy my blog from US, I will do so more. So please subscribe this blog.

 The topic I'm going to write on is about "Prospect Theory". It's a theory that won novel prize in 2002, explaining how people act in uncertain situations and evaluate gain and loss.

 The graph below shows that the degree of emotion you will feel when you lose some amount of your money will be doubled, compared to the degree of emotion you will get when you gain exactly the same amount of money.

 This implies that you can hardly wait until the price hits the goal that you have decided on before the entry and you give little thought to "Lost Cut" until the price gets close to the point on which you think you'll have to exit from the trade.

 So you will always end up with "SMALL PROFIT & BIG LOSS"

 This is probably the biggest reason why you lose your money in stock, forex, future, and other markets. And I think this can also apply to many other forms of investment.

To prove it's a possible theory, I did a simulation with PC program which is based on these;

 1 Confirm a surge in a market.
 (People fear that they might miss a great chance, so they will jump on it.)

 2 A strong counter movement against the surge must follow.
 (As "Prospect Theory" shows, they will wait longer when they are losing their money because exiting from trades means admitting that they have lost and they don't want that.)

 3 So with programming and a little math, I made a strategy tester working on the spread sheet to see whether selling when the market indicates 1 & 2 is profitable.

 the chart below is the result.

 The data I used for the test is Nikkei 225 future (1990-2018)

 This strategy works very well. It has been making profit from 1990 up to now.

 This is the all for the article this time. I'm planning to show the details about how spread sheet calculates the strategy and the exact entry timing in the next article and if I should get more viewers from the US, I will write that in English too. So please share this with your friends

I hope you guys enjoy this article and have a good day :)

(Please click on the button below to get me to higher rank in the blog competition I join)

にほんブログ村