Monday, January 19, 2015

A note on strategy

Regular readers of Private Trader will have noticed that I seem to have abandoned the standard strategies that dominated my trading for much of 2014. I refer, of course, to the Shorter-Term Rules, with their use of the 20-day price channel, and the Longer-Term Rules, for stock positions held for at least a year.

The strategies are alive and well, and I shall be returning to them.

The reason for their eclipse is my recent focus on developing and implementing trades under my Volatility Rules, which have proven to be quite profitable under the present high-volatility market conditions.

They work best in conjunction with earnings announcements, and of course my other two strategies quite explicitly avoid earnings announcements, so the two rule sets are complementary.

Going forward, my plan is to focus on volatility trades during earnings season -- the six weeks following the announcement by AA, which for the present season occurred on Jan. 12. The season lasts for six weeks, and so I anticipate a drop-off in such trades around the end of February.

The six-week earnings season is followed by seven weeks when earnings are announced, but at a far slower pace. That will provide ample time for my trading practice to flow, quite naturally, into the other strategies under my Shorter-term Rules and my Longer-term Rules. How those play out, of course, will depend upon market conditions.

The volatility plays generally last for under 14 days each. The other strategies allow for positions to last for months. Working with those time frames to ensure that the longer-term trades still allow sufficient funds to be free for the next earnings season will be the biggest challenge.

-- Tim Bovee, Portland, Oregon, Jan. 19, 2015


My shorter-term trading rules can be read here. My longer-term trading rules can be read here. And the classic Turtle Trading rules on which my rules are based can be read here. My volatility trading rules can be read here.


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Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.
No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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