2+2 Stock Trading Competition

[Dan Mezick]

The MarketWatch platform is not set up for high-frequency (ie "day") trading. It's better for holding periods of at least 1 day.

Higher-frequency trading will tend to have much higher commission and slippage costs.

If you know of a better platform, perhaps for higher-frequency trading, let us know and we can consider it for the next time.

[player24]

[ QUOTE ]
The MarketWatch platform is not set up for high-frequency (ie "day") trading. It's better for holding periods of at least 1 day.

Higher-frequency trading will tend to have much higher commission and slippage costs.

If you know of a better platform, perhaps for higher-frequency trading, let us know and we can consider it for the next time.

[/ QUOTE ]

I assume (without testing my assumption) that market orders are executed faithfully...and the problems arise (with unknown frequency) on limit orders.

You take away my ability to implement limit trades and I'm staying away from high turnover and I'm staying away from thinly traded stocks (which have a tendency to gap).

I don't know of a better platform for a competition of this type, and I appreciate the fact that you have applied the effort to setup this competition. I posted merely to help people understand that definition of "trading" in this competition is fairly narrow. You have no live feedback on implementation, limit orders are implemented sporadically and you cannot use stops. These limitations push this competition further into an imaginary context, but it can still be fun.

[felson]

[ QUOTE ]
The winner gets to say without bragging that (s)he's the best stock trader on 2+2.

[/ QUOTE ]

He can say it, but it will almost certainly be false.

[Dan Mezick]

Participant "paral2004lax-ebay" is #1 after Day1 with a 1.32% return on a single holding: AUY, Yamana Gold. The price today is 3.80 and the price yesterday was 3.60 or so.

It continues higher today.

I notice the average volume is 294K shares. 294K X 3.80 per share is about 1.1MM in dollars of volume. This means the purchases yesterday by paral2004lax-ebay would have been almost 50% of the total shares traded on Tuesday.

paral2004lax-ebay -- How about some background on this security?

[wildwood]

Hi Dan,
As I posted earlier wildwood = paral2004lax-ebay on the virtual competition. I never received a screen name option when I registered.
About your question, here are my thoughts. I've been an active stock and commodities trader for quite a long time. I belong to several investing/trading live groups. That doesn't mean I'm a good or bad trader/investor, just giving you some background. I've made every mistake that can be made and probably learned a little along the way. Since the objective of the competition is to win, I think about my strategy just a little differently than my own portfolio. I hold the view that gold is in a secular bull market that has a long way to go. We are just coming off a bottom in precious metals at the same time that you started this competition. Gold juniors are risker, but provide the biggest gains in the cyclical upmoves. So I decided to load the boat with a canadian gold junior listed on the amex. I've already looked closely at your strategy and it's a good one. You're riding the energy trend with a chunk on biotech. CCj seems to be a play on energy and pm's. Four months is the blink of an eye in investing/trading so timing is extraordinarily important here. I theorized that if gold moves up during the next 8 to 12 weeks and oil runs into any corection at all, that would give me an advantage. As far as yamana itself, I listened to a one hour wecast by the ceo at a gold ceo roundtable. I believe it's a promising company, but riskier because of it's small size. I own 500 shares which is a very small part of my assets. I'm much more diversified in my real porfolio, but I'm very heavily weighted in pm's. Read Jim Roger's new book "Hot Commodities" fwiw

edit: To all, do your own research before you buy or sell anything with real money.

[Dan Mezick]

[ QUOTE ]
Four months is the blink of an eye in investing/trading so timing is extraordinarily important here.

[/ QUOTE ]

Thanks for this post. For our game here, it's winner take all with no rebuys, and the winner gets there by achieving an absolute return greater than the other participants.

Because of this situation is pays to take a swing with 1,2,3 maybe 4 holdings and stay concentrated in a few rather than diversified in many. As we all know this is a recipe for eventual and total disaster with a real account.

The precious metals are pretty wrung out and maybe the timing is excellent for a low risk hi reward play-- thanks again for your post.

[Mason Malmuth]

Hi Everyone:

Just a reminder that this is not an official Two Plus Two function.

Best wishes,
Mason

[gvibes]

I have decided that I will put all my money into a single highly volatile stock, and hope that either puts me in first or last (I want some sort of bragging rights).

EDIT: I bought ~240000 shares of INB, a pharamceutical company that has gone down >40% in the last month, and set a 52 week low today. It has nowhere to go but up!!!

[wildwood]

Hi gvibes,
Good luck in the contest. Anything can happen. But stocks that are making 52 week lows usually means something is wrong. Would you buy a big share in a poker player who lost 40% of his bankroll in the past month with the idea he's got nowhere to go but up? This is why most people get broke in the market. Enron went from $90 to zero in 6 months. The analysts recommended buying it all the way down until it broke below $15. fwiw

[Dan Mezick]

The winner of this thing will likely:

1. Trade no more than 4 positions at a time;
2. Make picks that do not require precise intra-day entry;
3. Make picks that are in alignment with emerging trends;
4a. Ride winners, and ADD to winners
4b. Cut losers quickly with stops, limiting them to no more than 5% per position (this is probably way too high);
5. Preserve cash(no rebuys) if no home-run probabilities can be perceived and identified.

The structure of this game does not model the real world at all, and as such one can "throw dimes on it" (criticize or belittle, disrespect). Participanting may actually encourage some very bad trading habits, like concentrating all equity in one position-- a 100% sure recipe for trouble in the real trading world.

The reality is that players with some experience who are capable of some adjustments in light of the structure of the game are going to do very well.

The comments and insights from these players (Wildwood for example) are likely going to be very valuable to market students.

Successful trading is more about beliefs than money per se. It will be interesting to see what specific working beliefs are expressed (implicitly and explicitly) by the leaders that appear at the top of the list every week.

I suggest that starting traders would be wise to believe they "may lose/probably will lose" all their trading capital at least one time during the first 4 years of experience.