Weekend Trend Trader - Nick Radge

Last updated Jan 21, 2025

• Author: Nick Radge
• Full Title: Weekend Trend Trader
• Category: #books

if you lose a substantial amount of your capital in pursuit of higher returns you may not be able to complete the journey to success. (Location 56)

Am I willing to resist my emotions and the opinions of people around me to achieve my goals? (Location 61)

Gambling is a random act with a binary outcome. Trading to a plan is a discipline that has a proven mathematical edge or expectancy. (Location 71)

Losses tend to unnerve us. A common reaction is to make a rash investment decision straight after a loss in an attempt to make back the money lost. (Location 75)

Be mindful of your thoughts at all times and be alert for warning signs of hope or greed as these will place large amount of stress on you and possibly your family. (Location 81)

By defining the broader market trend we are always aligned with the line of least resistance and therefore can increase our risk adjusted returns. (Location 122)

To create an Index Filter we place a 10-week moving average on the underlying index, in this case the S& P 500 Index ($ SPX). You may use any Index if you are trading more specific universes of stocks (Location 124)

If price is above the Index Filter then the trend of the broader market is UP. If the price of the $ SPX is below the Index Filter we define the broader market trend as DOWN. (Location 130)

Every sustained trend that occurs is preceded by a breakout to new recent highs (Location 154)

We only want to take new positions when the broader market is deemed to be in an uptrend (Location 163)

Statistically the more trade signals that are generated, the more our end result may vary from the expected. This is known as Selection Bias (Location 175)

The $ SPX must be trending up as defined by the 10-week moving average The stock must make a new 20-week high The ROC indicator, set to 20-weeks, must be above 30 (Location 205)

The key to successful trading and investing is ensuring that the winning trades far outweigh the losing trades. (Location 211)

In order to capture the trend effectively we need to allow the stock to naturally oscillate yet at the same time be prepared to take defensive action if the broader market trend reverses. (Location 214)

we do not place the stop loss in the market. We monitor and await a close below before exiting the next week. (Location 232)

the $ SPX has started trending higher again. Now we will start using the 40% calculation from each successive high point but only if it is higher than the current stop loss level. In other words we NEVER move the stop loss backward. (Location 247)

The higher the level of permutations the more variance of returns and the more the real time results could diverge from historical testing if the strategy is not robust. (Location 280)

Simplistic strategies are more prone to position variability. The same number of positions should be used regardless of the capital allocated to the strategy. (Location 288)

Trading highly speculative stocks and conservative stocks together will offer some diversification but ultimately it will degrade performance and more seriously could be incompatible with your risk tolerance. (Location 294)

Trading a universe of stocks of the same breed, such as all blue chip or all small-cap, will keep volatility in check, or at least offer an understanding of likely portfolio volatility. (Location 295)

a core philosophy of active investing is ensuring we do not predict. (Location 297)

In reality the best performing sector, or the constituents that make up that sector, will naturally float to the surface as momentum increases. (Location 298)

With 20 positions the risk per individual stock is a maximum of 5% of the full portfolio value. If we assume an exit point set at 40% from entry then risk per trade is just 2% of portfolio capital. (Location 300)

The key with simulating historical trading performance is to ensure it’s done accurately. Remember, garbage in, garbage out: (Location 320)

select all securities from the Russell 3000 including current constituents and those that were once in the index but have now been removed. The use of historical constituents ensures we reduce survivor bias and makes the simulations substantially more accurate. (Location 323)

Monte Carlo simulations ask the question, “What if the past had been slightly different?” It allows us to view a range of possible outcomes and statistical probability which in turn gives us a better expectation of what may occur in the future. (Location 337)

The MAR Ratio measures this ‘pain to gain’ metric by dividing the annualized return by the maximum equity decline during the investment horizon. (Location 361)

Almost all fund managers have a mandate to remain invested meaning they will suffer capital declines during these poor periods of time. (Location 365)

There are three steps to successful trading and investing. They are: Find a strategy that works Validate it Do it (Location 379)