04 Aug The Timeframe Champions Use
The Timeframe Champions Use
Aug. 4, 2023
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This week we’re talking about what timeframe is best for long-term stock trading.
And, of course, we’re keeping it very simple so we can have a meaningful discussion.
We’re not adding a bunch of entry or exit filters and we’re not using any discretionary ideas that are impossible to re-create.
We’re using a simple system based on timeless Stan Weinstein principles. (You can get all the details on how I adapted Weinstein’s ideas into a robot here.)
And this time we’re using the best, most trusted timeframe known for swing trading stocks.
That, of course, is the Weekly timeframe.
This is the preference of stock trading champions (and legends) Mark Minervini, David Ryan, Oliver Kell, and many others. Is it a coincidence that so many triple-digit return superstars using Weekly charts?
I think not.
So here’s our basic system on SPY adapted to the Weekly Chart:
Stan Weinstein Weekly Robot
Long Entry: Enter Long at the open of the next bar when price closes above the 30-day SMA for 5 consecutive bars. (You could use different consecutive closes, but they don’t seem to be as good.)
Exit: Get out at the open of the next bar when price closes below the 30 SMA.
Great! It’s similar to both Daily and Monthly but is on the right chart.
Here’s the Curve on the SPY from 1994-2023 trading $10k of stock each time:
Hmm. It looks good from 2002 to 2022 but it loses at first and has stalled a tiny bit lately.
Here’s the Report:
The win percentage has climbed back up to 44%. And the Max Drawdown Close to Close is back down to $2,600.
But none of the metrics are as good as the Monthly.
Not even close.
Yikes.
For long-term stock trading, the Monthly chart is the best chart, according to the numbers.
Obviously, this is just one study and many other rules could be applied. But trading this way while compounding could hypothetically produce a nice return with very little drawdown.
Buy-and-hold can’t offer that.
And Daily and Weekly charts can’t offer any improvements either.
At least in this style of trading.
Talk to you soon.
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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.