Quant Based Trading: Good News, and Bad News

For the past eight months or so I have been writing my own quant based trading system. I like to call it quant based trading, and not automated trading because quant implies analysis and some automated trading. Trading based on quantative analysis is becoming the norm, not the exception. Automated trading implies auto-pilot and not as much analysis. If you don’t know much about automated trading it is time that you start learning about it.Now brokerage companies are starting to release automated trading software that you can use to devise your own strategies. For example, TDAmeritrade has released such software. I use Interactive Brokers as an online brokerage, which has an application programming interface allowing me to write my automated trading software. Or you can buy software that allows you to write scripts.

What To Do After the Drop

Ok so the market is dropping, and as per my earlier comments you should wait until the Dow hits 11,750 before thinking of stepping in. I am changing my opinion. Yes I think the Dow will drop, but I think there is something more going on here.

Diversification or Delta Neutral?

Kimber wrote an interesting post regarding diversification. BTW Kimber, no idea where you got the idea that women can’t trade.

It has me thinking, do you diversify or do you become delta neutral? For those wondering, delta is one of the Greek letters in option trading, and it implies risk neutrality.

The question is what do the big traders recommend? Without knowing a hundred percent, they would probably recommend delta neutrality. I myself trade for the most part risk neutral (not completely delta neutral). Risk neutral means regardless if the security goes up or down I win!

Automated Trading Algorithms

For the past two months I have been writing my own automated trading system. Two weeks ago I slowly started trading using manual techniques based on data generated by my software. The initial results are very good, but I am tempering down my glee because I was conservative and focused. It’s like those drugs you test to cure cancer that work in smaller trials, but fail in mass scale. My return has been about 33%, with 95% of the trades being in the money. Being the skeptic I am quite nervous about these results because they are too good to be true. Yet I see the monies in my brokerage account and think, interesting. Time will tell if my software is worth its money.

New Indicators for Investing

Most of you are probably looking at stocks and thinking about moving averages, technical analysis, and probably running some scanner application to find the latest and greatest stock to invest in. Maybe some of you will use fundamental analysis to figure out what the cash flow or earnings per share is. Regardless of what kind of investor you are you will use some kind of indicator.

In the technical analysis or fundamental analysis world there are literally oodles and oodles of indicators. Yet if you thought about it the indicators digest the same data over and over again in different manners.

I’ll discuss why traditional technical indicators and fundamentals can be misleading. Then I’ll give you two macro-economic indicators I’ve been using lately: In-house software, and Remanufacturing.

Video Stock Review: AERT

Here goes… my first attempt at a video stock review.

I take a look at Advanced Environmental Recycling Technology (NASDAQ:AERTA), which has had a recent sell-off due to a factory delay. Is this a buying opportunity or should we be jumping ship too?

Share Your Chart Reading Skillz on YouTube

I found this interesting site through a link that came up on my Google Finance screen for Crystallex. Ant & Sons Chart of the Week Video: Ant & Sons has rolled out its updated Chart of the Week column with technical analysis video using the latest technology. The video is hosted through YouTube and displayed (more…)

Google Trends on S&P, BBBY, and AMZN

Google TrendsOn Monday, I wrote about using Google Trends as a resource for investing ideas. I took a look at three restaurant businesses which, while they were on my mind at the time, probably weren’t the best candidates for this kind of research.

Below, I’ll take a look at three Google Trends charts and compare them against some corresponding stock charts.
– Trends for “bull market” and “bear market” vs. the S&P 500.
– Trends for “bed”, “bath”, and “kitchen” vs. Bed Bath and Beyond (BBBY).
– Trends for “book” and “books” vs. Amazon.com, Inc. (AMZN).

Google Trends: Can it Help Me in the Stock Market?

Google TrendsWe’ve had discussions here about different ways to use the huge amount of data freely available on the web to make better informed investing decisions. Let’s take a look at some graphs courtesy of Google Trends and see if they can inform us about which restaurant stock to purchase.

Who Set The Price?

I’d like to invite you to look at a recent, not atypical, four day chart of a stock. In this particular case, it’s SiRF Technology Holdings (SIRF).

As you can see, the stock gapped down from the $25-$26 it had been trading at to the $19-$20 range. You see this kind of thing all the time when “bad” news comes out.

The question I’d like to raise today is: who set the price?