The reason I created this blog was from the beginning to make notes of the development of my algorithm for selecting profitable stocks. I started in 2019 with a picture in my head of how the ma50 intersects with ma200. Since then the picture have slightly changed, but the core of the idea is the same: how to trade profitably regardless of trend – bull and bear. I started of with swing trading and have moved forward a combination of swing and day trade, also called Breakout and Run. It’s a combination of swing trade and day trade, where You pick stocks braking out, that is: coming out of the dip with momentum, with day trade. I only keep the stocks for maximum one day.
The algorithm is a part of a protocol, a procedure. The first part consists of selecting a basket of stocks that are on the verge of braking out. That is done with a screener containing a few key parameters often used in technical analysis. The size of the basket varies a lot depending on the trend. This has emerged to be one of my key indexes taking the temperature of the market. As a matter of fact, it works pretty well. At the moment I choose to ignore the index since I still am testing the algorithm. In the future I will choose to not trade when this index tells me so. Or I will modify the algorithm depending on the trend. My last evaluation points more in that direction. I run my algorithm on the selected stocks, and pick the ones with the highest probability of being profitable during the trading day. When the market opens I follow the basket of stocks and select 4-5 stocks getting momentum. The reason for selecting 4-5 stocks is to increase the possibility for an average plus return. My core strategy is to select 4-5 stock with a combination of a stop/loss at -1%. This has shown to be very successful so far. Stop/loss means that You set an automatic sell if the stock price falls more than 1%.
I have a background as programmer, automated software testing, statistics and economics. At the moment I’m paper trading at Interactive Brokers.