Highly successful traders tout the idea of studying past winners. This is a common them past down from one generation to the next like a family yarn, but one thing I've observed is that there is a lot of effort placed in the fantasy of focusing on the unicorns. In addition, there is a lack of attention paid to how these traders of yore modified their techniques over time accounting for varying market conditions. While the winners of the Dot Com era may have net 100% gains over night, the study of them from a swing trading perspective to eke out a 10% gain over a week or two under current market conditions is somewhat misplaced.
While there is nothing wrong with studying past winners, and these studies can lead to future benefits, the issues I've noted that often arise is attributing incorrectly one's time frame, risk tolerance, capital allocation --among other biases-- to the chart in question. In realizing the star gazer within me I've made focused effort in moving my market studies to real time so that moving forward I can more accurately access the past I've experienced.
For 2017 I've given myself a challenge of isolating stocks making 100% moves in real time. The goal is not to capture these 100% moves, but one or two slices of 20% gains from them. I want to isolate what makes these moves tick as they're unfolding to reinforce what the current market conditions favor as well as have data to back up whether or not I was able to capture these moves. It's one thing to believe you would have been in a rocket stock of the past, but another to find your future self looking successfully backwards knowing you were.
Through forward testing both in theory and in practice one of my aims is to dispel the charms of past patterns and the delusion of being in 1000% moves in stocks and focus these dreamer periods into actual effort of churning out 20% gains on a more frequent basis. If I'm consistently aware of stocks that are on their way to making such moves in real time and not capturing a slice then there is a completely different issue to address. Holding myself accountable for missing these is a priority in 2017.
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| Hunting 100% Movers in Real Time |
