Out with the Old / In with the New


Out with the Old / In with the New
 03/30/2017 12:00 AM

Question of the Week:
Out with the Old / In with the New

Although I’ve locked in quite a bit of profit, I feel that I’m sitting in positions from the Active Trades List that aren’t trading as much as the other stocks. Is there a rule in CoolTrade that allows us to flush out stocks that are no longer active?

Answer:


Yes.


The scenario for taking profits with the Active Strategy is:
1. The autotrader selects the most active stocks in your price range.
2. Stock prices move up and down.
3. The software closes the profitable positions and locks in profits.
4. The software buys more stocks with the proceeds from step 3.
5. The software repeats steps 1-4 above repeatedly.

Here's your issue:

The above scenario is good for locking in your daily profits and they will add up over the year.

However, if you hang on to the less-active positions:
1. You will eventually be sitting on all less-active positions.
2. You will also be tying up funds with less-active stocks, potentially leaving nothing to allow the trader to buy new positions in the currently most active stocks.

The Solution:

Close out the non-performers (less active stocks).

Here’s how to do it with CoolTrade:

The Active Trades report found at https://cooltrade.org shows that only a few hundred stocks are active movers (yielding over 100 trades a year), while over 7000 stocks are virtually non-movers, or are stocks that will only yield a few trades a year.

1. To instruct the software to pick the most active stocks, simply add this rule to your Watch List Rules (Tab2) and Open Position Rules (Tab3):

Active Trades Count > 135
You can use any number greater than 135 to suit your trading objective.

2. To instruct the software to close out of the non-performing stocks, you can simply add this rule to your Exit Rules (Tab5). As above, you can modify the number to suit your trading objectives.

Active Trades Count < 100

HOW MANY DEADBEAT STOCKS ARE IN YOUR PORTFOLIO?

Look up your stocks on the Active Trades Report found at https://cooltrade.org

If they are not located near the top of the report, they could be trading duds!

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