Since I've been using AmiBroker, my strategy has changed a little. The basic principles of the strategy remain the same (Click here for my initial blog AtticFund strategy), but I've been able to re-introduce some of the technical indicators that I used to use on Tradestation.Here is a revised overview of the strategy;
We are currently in a bull market - I'm only going long (there is the odd exception however, but only using a much smaller size)
Technicals (long only)
- Scan daily charts using AmiBroker to find bullish price action, using a combination of OHLC over a set number of bars
- Are stochastics overbought or oversold
- Is volume increasing
- What does the Squeeze look like (much more on the squeeze in a later post)
This scan normally reveals 20 stocks to investigate further...
- Is the weekly chart bullish (pretty much without exception they all are at the moment)
- How far from a value entry is the stock (I normally will not trade a stock that looks extended from its 8EMA)
Once I have my watch list, I then undertake some fundamental research.
Fundamentals
Company Activity - I only invest in companies I understand and that I'm interested in.
Profits and Market share - I only invest in companies that have grown (when going long) their market share and profitability consistently over the last 4 years.
Debt/Equity Ratio - I look for companies with a comparatively low Debt/Equity ratio
Volatility - Does the company trade with average volatility - I'm not interested in crazy volatility
What are people saying about the company - What is the talk amongst the professionals and independent traders?
Currently the markets are on a nice bull run, so going long is much easier than going short. I'm much more comfortable on the long side so it will be interesting what happens when the markets turn. The scan I undertake can be reversed to identify shorting opportunities, but I need to identify an indicator to give me a warning that the markets are turning (so I can start to look for shorting opportunities).
There's still a fair bit to be done on the strategy but for now I have at least identified and rectified my ability to locate potential investment opportunities.
Here's my strategy development 'to do' list;
1. FTSE 100 and 250 Weekly scan for Bullish / Bearish Direction
2. Weekly Sector scans for bullish / bearish Direction
3. Develop a bearish scan for all FTSE 100 & 250 stocks
4. Enhance the use of the Squeeze indicator to identify long and short opportunities
5. Develop a scan to be used on company fundamentals (this will reduce the time it takes to research companies)
