Tim’s Journal

[Nick Radge]

The TLT model does have an exit mechanism if a position goes parabolic. That code looks like this:

MovePercent = Param(“Move %”,25,5,100,1);
MoveLook = Param(“Move Lookback”,100,1,250,1);
PF1 = C;
PF2 = Ref(C,-1);
M1 = ((PF1-PF2)/PF2)*100 > MovePercent;

MoveNum = Sum(M1,MoveLook);
MoveFilt = MoveNum == 0;

It will do two things;
(1) Not allow a position to be entered if the stock moves 25% in a single day in the last 100-days, or
(2) Exits a position if the stock moves 25% in a single day (close to close)

Another way to do it is to measure the move in total over the last n-days.

ParabolicPercent = Param(“Parabolic %”, 300, 100, 500, 1);
ParabolicLook = Param(“Parabolic Lookback”, 100, 1, 250, 1);
Parabolic = ROC(C, ParabolicLook) > ParabolicPercent;

In this case, the stock will be exited if it rises move than 300% in the last 100 days. Use AND NOT in the conditions.

[KateMoloney]

Thank you for sharing Nick.

[TimothyStrickland]

Thanks Nick, very informative. I am glad Len brought up the point about the portfolio. MRNA makes up a massive part of both of my momentum systems now. I think in the aggressive system it is like 70% of the portfolio now. I have been debating a rebalance

[Nick Radge]

Len, Tim,
Regarding MRNA, it’s not the way the strategy is tested, so it’s emotion doing the talking.

We need to remember that these monster outliers is why these systems work. It wasn’t that long ago that the same discussion revolved around TSLA. That finished with a gain of +265% on turned a moderate year into a superstar year.

I’m not suggesting for a second that MRNA can’t reverse, but it’s still a 50/50 bet as to reversing or going higher. The odds are still the same today as when you put the trade on…

That said, common sense would also suggest doing some rebalancing.

[Nick Radge]

Here’s an article I wrote last year about the TSLA trade…

https://www.tradelongterm.com/yeah-about-tesla/

[GLENNPREECE]

Very interesting exchange guys and something I too have been considering, as I’m sure have many others. To make matters worse, this was the very first trade I placed after completing the course in October 2020… Thanks Nick / Craig….but talk about setting high expectations. For me MRNA now up over 500% and represents 58% of my NDX portfolio.

I’m generally inclined to just follow the signals, but I’m also very practical and believe in risk management (I work in insurance, so my apologies). MRNA now has achieved the 2nd largest gain out of NDX system (NVDA was the largest @ 540% but it occurred over 500 days – MRNA has done it in just 250days). I’m therefore going to be doing a little rebalancing… It may continue to go higher, who knows. For me it just seems prudent to ensure I have a good spread of risk.

Happy trading!

[LEONARDZIR]

Thank you Nick. It makes sense to rebalance the portfolio after these monster moves. I believe I did that with TSLA.

[LEONARDZIR]

Further thought. Actually I didn’t do the rebalancing until I sold TSLA. I think I will do the same with MRNA since I have no idea how high MRNA will go. One thing is that it appears we are heading for booster shots here in the US so I suspect the move in MRNA might not be over.

[TimothyStrickland]

Nick, I remember the TLSA article, I took part in that move as well. Needless to say, I have had an incredible 2 years haha. My wife is very happy of course. We made several hundred thousand dollars. You bring up a good point about MRNA. My system still ranks it the #1 stock today so if I were to start trading today, it would pick that stock albeit rebalanced. You bring up a good point that we need these big outliers to make the system perform very well. I always lean more on the aggressive side so I am fine just leaving it as is but at the same token rebalancing will be a challenge, when I get a chance I’ll test something first before I implement. If the change affects returns to greatly then I’ll just keep doing the same thing.

[KateMoloney]

The discussion about MRNA has been very helpful.

After a lot of consideration (re: rebalancing the portfolio or sticking to the system), I decided to stick to the system since that is the goal as a trader.

This morning I checked our portfolio expecting MRNA to drop … instead it went up 17.1% in the trading session.

[KateMoloney]

Nick,

Are you saying to leave the rebalancing until the portfolio goes 100% cash ? Or leave the rebalancing until the share has been sold?

[Nick Radge]

When we sell MRNA.

[KateMoloney]

Silly question Nick.

When you sell MRNA and rebalance the portfolio, do you wait till new signals appear and then rebalance?
Or do you just pay the extra brokerage and top up the other positions?

Or should I be asking .. which of those methods were backtested?

[TimothyStrickland]

I know many people I have talked to that doesn’t trade that much are under the opinion that if a stock goes up a lot, it must come back down. This isn’t always the case however, and I find just like Nick has said that, stocks that go up a lot, typically continue to do so. People were telling me MRNA had finished its nice run up at 150 and here we are at 484. Now I am along the lines of, the stock has finished its run, when it has finished its run! I will know when my system tells me to get out.

[KateMoloney]

A saying comes to mind ….. when the voices and vision on the inside are louder than those on the outside, you have begun to master your life.

Everyone has an opinion, you are instead trusting your system and processes.

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