No. of Recommendations: 2
From your description above I get the impression your concerned about filling your trade the same day(ASAP).

Correct. Because that's what the backtests do. If you are wishy-washy on your buys and sells then you are not adhering to the backtest trading rules.



While I will set a limit order price outside the Bid/ask spread(think Dollars not pennies) and check back again next week.

That's a different kind of trading than these Mechanical strategies. That's more along the line of traditional non-mechanical investing. NTTIAWWT, it's just not MI screen investing.

I always think back of the guy that I used to follow over at seekingalpha, with his AAPL call a few years ago. AAPL was around 95 and somebody asked his advice. He said that it was too high and his friend should wait for a better price, more like 75---after all, it is stupid to buy a stock at its all-time high, right?

Every six months or so, somebody would post a reply on that old thread, asking if his friend was still his friend seeing as AAPL just went from new high to new high, and NEVER dropped back to anywhere near 75, so he talked his friend into sidestepping a hefty profit. (AAPL is now at 163.)

I suspect that the attractiveness of this business of setting a lowball buy or highball sell is due to confirmation bias and ignoring foregone (and hence invisible) gains.

If you think a stock is good enough to buy, then buy it. As Tuco said in The Good, the Bad and the Ugly, "When you have to shoot, shoot. Don't talk."



Today I bought IJT when the market was having a bad day, that had a limit order set several days ago when the screen said buy.

I've done this a few times. Often what happened was that the stock didn't get bought until a few weeks later. Or never.

And, y'know, if the market is doing bad on trading day, then it's bad for both the stock I'm trading out of *and* for the stock I'm trading into. Ditto for the market going up on trading day. I make some extra bucks on the stock I'm selling but it costs me extra bucks on the one I'm buying. Over the course of a year or two, it all cancels out.


All that applies to stocks, not options. On options I do enter limit orders--sometimes outside the spread. If it goes thru, good. If not, oh well.

All this explains why different people can get quite different multi-year returns even when using the same screen. Different trading methods.
Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement