Long AVB @201.91 or lower-Oversold and trending higher
Updated
I didn't do this trade yet and I may or may not. Its track record is good, just the returns are more modest than I'd like so if I can find something juicer but comparably high probability of success, I will do that instead. Also, high priced stocks make it harder to keep the position manageable as a % of trading capital.
More on that later. However, the strong recent uptrend it's in makes this one somewhat compelling, so I'm posting it.
The method is the same as most of my trades - I buy it and add to the position as long as it is oversold and exit each lot when it becomes both overbought and profitable.
Last 12 months results for AVB with this method:
26-0-1 (one of the "wins" is still open bc it isn't overbought, and the 1 is a position hypothetically opened with this trade so it's neither up nor down yet, though I included it as a 0% return trade in the average and median calculations.
The average return on all 27 trades is 2.6% and the median is 2.6% as well. Only 2 trades netted less than 1% but none made over 5%. This is a boring trade, and boring is fine if it's profitable.
The total 12 month profit of all 27 trades is .69x lot size. So if I traded say $1000 in each lot (I always allocate equal dollar amounts to each lot purchased), at the end of the 12 months you'd have $690 profit. Note: I don't use $1000 per lot, it just illustrates the math easier.
One word of caution - as "boring" and relatively safe as this trade setup is with this ticker, this stock trends. At the beginning of the 12 month period it was in a downtrend, and the very first signal buy would have needed to be held almost 10 months to become profitable and at one time it held 10 lots at once while waiting for them to become profitable. The original lot was down 13% or so at its bottom and the entire 10 lot position was down around 6% at its lowest. The typical holding period for each lot was around 3-4 weeks, but quite a few were less than 2 weeks.
This lengthier holding period can be problematic if lot sizes are too large. Even at each lot being .5% of trading capital that would have made the total holdings at its highest, 5% of all trading capital and that's a little risky. Now AVB isn't volatile and paid 1.60-1.70 per share per quarter in dividends while waiting for that 10 month trade to work itself out (which isn't factored into the return results, btw), so that makes it a little less risky.
It's a lesson, though, that this method can tie up capital for a while and not to trade high priced stocks if you are under-capitalized. I personally don't like any position to be more than 3% of my trading capital, especially if it's a high volatility stock. The trades usually work themselves out, but it's more psychologically challenging to maintain discipline when too much capital is at risk. Diversification is safer, too.
As always, these trades aren't investment advice. They are edu-tainment. Always do your own research and due diligence. If I trade this one for real, I'll post updates.
More on that later. However, the strong recent uptrend it's in makes this one somewhat compelling, so I'm posting it.
The method is the same as most of my trades - I buy it and add to the position as long as it is oversold and exit each lot when it becomes both overbought and profitable.
Last 12 months results for AVB with this method:
26-0-1 (one of the "wins" is still open bc it isn't overbought, and the 1 is a position hypothetically opened with this trade so it's neither up nor down yet, though I included it as a 0% return trade in the average and median calculations.
The average return on all 27 trades is 2.6% and the median is 2.6% as well. Only 2 trades netted less than 1% but none made over 5%. This is a boring trade, and boring is fine if it's profitable.
The total 12 month profit of all 27 trades is .69x lot size. So if I traded say $1000 in each lot (I always allocate equal dollar amounts to each lot purchased), at the end of the 12 months you'd have $690 profit. Note: I don't use $1000 per lot, it just illustrates the math easier.
One word of caution - as "boring" and relatively safe as this trade setup is with this ticker, this stock trends. At the beginning of the 12 month period it was in a downtrend, and the very first signal buy would have needed to be held almost 10 months to become profitable and at one time it held 10 lots at once while waiting for them to become profitable. The original lot was down 13% or so at its bottom and the entire 10 lot position was down around 6% at its lowest. The typical holding period for each lot was around 3-4 weeks, but quite a few were less than 2 weeks.
This lengthier holding period can be problematic if lot sizes are too large. Even at each lot being .5% of trading capital that would have made the total holdings at its highest, 5% of all trading capital and that's a little risky. Now AVB isn't volatile and paid 1.60-1.70 per share per quarter in dividends while waiting for that 10 month trade to work itself out (which isn't factored into the return results, btw), so that makes it a little less risky.
It's a lesson, though, that this method can tie up capital for a while and not to trade high priced stocks if you are under-capitalized. I personally don't like any position to be more than 3% of my trading capital, especially if it's a high volatility stock. The trades usually work themselves out, but it's more psychologically challenging to maintain discipline when too much capital is at risk. Diversification is safer, too.
As always, these trades aren't investment advice. They are edu-tainment. Always do your own research and due diligence. If I trade this one for real, I'll post updates.
Note
I didn't take this trade, but if I did, I'd be out at the close today at 208.01.+3.0% in 3 trading days is good work if you can get it consistently and with AVB this setup and exit is now 27-0, so I guess I can. No regrets, there were better trades out there, statistically speaking.
Note
Trade results summary (for my information)
Wins 1 Losses 0
+3% in 3 days
Average return = +3.0%
Avg days held = 3
Per lot per day held annualized return = +252%
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