Trend Changes for February 2010

By Dave McLachlan

This month I have learned a valuable lesson.  Often the market is such a simple place to go to, and yet because we are human we tend to make it complicated.  And the more complicated we make it, the better we feel about ourselves. 

But the only thing wrong with this scenario is that the best trading plans are simple ones – and the more complicated they are, the more likely it is we are losing money because of it. 

So this month I went back in time and back-tested the Top 20 ASX stocks properly.  I got their stats – like which tools they work best with, their Win Percentage and their Profit to Loss Ratios over 20 to 30 years.  And every time I update them I will include the stats for you to see also.

This does two things – one you get to find out which tools work best with that stock.  You may have heard it and it is true that different stocks will have different “personalities”.  They are not all created equal, and they will respond better to some rules than others.  So you get to find this out.

The second thing is that you get to know with a higher probability what to expect when you make a trade.  For example, if your backtesting yields a 60% win percentage, you can expect that 4 out of 10 of your trades might be losing trades.  You won’t be disappointed when a loss happens – you will know it is part of the game and part of your expectancy, all moving along nicely as it should.

Backtesting can do wonders for your psychology and your trading, especially if you are still in the “Trader’s Apprentice” stage.

Trend Changes For February 2010

So which stocks have updated their medium term trend direction this week?  We have:

ANZ, BHP, MQG, QBE, WES, CSL and WDC.

CSL and WDC have changed direction, others have simply been updated after my backtesting found they worked better with certain rules.  Go check them out!  And if you want to swing me a line, feel free: dave@asxmarketwatch.com .

Happy Trending!

Dave McLachlan

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February 19, 2010  Tags: , , , , ,   Posted in: Research On Australian Stock Trends

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