SATS2 Stock Trading Expert Results

Introduction & Results

A great majority of private investors are trading based on fundamental analysis. They are long term investors buying stocks that are kept in portfolio for longer periods of time. The idea behind is that in the long run the stock market rises with an average of about 11% per year. So, they are trying to be as profitable as the stock index or even a bit better and of course more profitable than a no risk savings account. With this kind of investing the money must be spread among a bigger number of different stocks and sectors. That way a bigger loss in one stock can be compensated with higher profits in another one. This means that there must be sufficient starting capital and that it must be reserved for long term investing only. A big disadvantage is the difficulty to define rules when to close a trade, because generally fundamental data is lagging considerably. This is why many long term fundamental traders have stocks in their portfolio suffering losses of 30% and even much more. Looking for an alternative, I have developed SATS2 “Stocks Automatic Trading System2”.

 

 

For a successful application of SATS2 it must be applied as outlined in this manual concerning:

• Money management: the money management method applied with SATS2 is to use a limited selection of stocks (5 to 25) and to distribute the available capital between these stocks. Each stock will be traded individually with no profit or loss sharing with the other stocks in portfolio. This means that you must make a limited selection of stocks beforehand.

• Stock selection: use stocks that have a history of bigger price moves over a longer period of time and avoid to use stocks that have a history of:

1. Little price change over a longer period of time
2. Very high intraday volatility
3. Very high daily volatility
4. Regular big surprise moves

• Charting: Keep a chart, eventually with the special indicators that come with SATS2 for each of the stocks selected to maintain comments, trendlines etc on each chart.

• SATS2 is not perfect: Keeping in mind that there is no perfect always winning system in the world, you have the possibility to decide for each SATS2 buying or selling signal to open or close that particular trade or not. This manual explains some simple technical rules and some special indicators that will help you making this decision. That way you can make even more profit.

SATS2 is an expert advisor for MetaStock®, a technical analysis program from Equis (http://www.equis.com). This expert advisor creates buy and sell signals on daily stock charts based on closing prices.

Search the Internet

The SATS2 system results

SATS2 is designed to trade long positions only. As long as there are green bars (or candles) you have an open long position. Contrary with red bars (or candles) you are out of the market. SATS2 will gracefully avoid entering long trades in longer term falling markets (figure 1.1). It will therefore be a bit slow entering a new uptrend, but it will be reasonably fast closing the trade when the stock price is turning down (figure 1.2).

Figure 1.1: SATS2 in a downtrend.

Figure 1.2: SATS2 in an uptrend.

To check the validity of the SATS2 system, we will use a selection of 25 stocks that make bigger price moves over a longer period of time, avoiding stocks that have a history of:

1. Little price change over a longer period of time
2. Very high intraday volatility
3. Very high daily volatility
4. Regular big surprise moves

The stocks used are: AIRM, AKAM, AMD, ANF, ATI, AYE, BGC, BRCM, CRDN, CVO, EBAY, FTO, ILMN, INTC, MED, MIND, NCR, NVDA, SNDK, SPNC, TRE, TWTC, VPHM, WFR, X.

These are the general test conditions: $1,000 capital per stock with no profit or loss sharing between the stocks. 0.1% Broker entry cost and 0.1% exit cost. Only long positions are traded at the closing price the same day there is a buy or sell signal.

SATS2 Stock Trading Results NEXT -Part 1 -Part 2

STOCATA Stocks Technical Analysis HOME