Ed Hollestelle of Ontario let me know last year that he was getting solid returns with a search and trading system he created for himself in early 2014. The search was based on VectorVest’s Retirement Search titled, High VST+ YSG Stocks/CA.
He added, for example, RS>=1.2 criteria to ensure solid earnings and better safety. For timing, he used the DEW timing signal for his entries and went all cash on a DEW Dn signal.
As a relatively new VectorVest subscriber, he did considerable backtesting and paper trading before he began live trading the plan in his Questrade brokerage account. He has been very happy with his results, especially since tweaking his search and changing his timing to Green Light Buyer from the DEW.
Using VectorVest’s Trading System Score approach, Ed’s score of 291.88 from the search and backtest below from Jan 2, 2013 to current would have handily bested VectorVest’s Model for the recent Midas Touch Challenge. More important perhaps, the equity curve shows steady, consistent growth without too many drawdowns.
Ed said his revised plan is getting solid results, up double digits in 2015 using margin. Here’s the changes he made from early last year. He tweaked his search adding a minimum RT>=1.2 and RT trending higher one week. Then he switched timing signals to the Green Light Buyer, a faster BUY signal than DEW that also uses the C/Dn signal for exits.
The C/Dn is typically slower than DEW for the down signal, so it delivers fewer signals. “I never used to believe in backtesting, but now I see the real value in it,” Ed says.
“I’ve learned that market timing is the most important thing,” Ed said this weekend while updating me on his trading plan and results. “I found the Green Light Buyer is getting me into some good stocks earlier in a new uptrend. I also found that if you stay in for too long, even good stocks get stale and lose momentum.”
That’s why Ed said he uses a 30% target gain and refreshes his entire portfolio on a Confirmed Down call. Ed uses margin in his backtesting and his real-life portfolio. “It makes sense to me to take advantage of margin when I’m confident the market is in a nice upturn.”
Although his plan is automated, Ed says he studies VectorVest graphs for confirmation. “I really like VectorVest’s take on EPS. Outlook on future earnings is what’s most important to me.”
Ed said he fired his financial adviser in 2001 and has been self-investing ever since. As a former car dealer, he offers this bit of sage advice. “When the automakers and dealers are suffering, the markets suffer and we need to be extra cautious. I saw that developing in 2008 and I was able to protect myself even though I didn’t have VectorVest guidance at the time.”
Ed said he values the sharing in our VectorVest community and he is pleased to share his search and trading plan with other VectorVest investors. So here it is!
NOTE: These results do not include margin. When Ed runs his tests, he changes the Account Settings to Use Margin at 50% (shown below). This typically delivers more than twice the returns shown in the backtest results below due to the effects of more cash invested and faster compounding.
Shown at left is how you can account for margin in your backtest and trading should you wish to do so.
This look really good…well done Ed…has anyone tried a back test with other timelines (before Jan 2013) ? Would love to hear..( I don’t have the automated back tester!…sorry).
I will compare this with the MTI graph when I get home this evening….
Thanks for sharing Ed!
Great Work Ed !
Have you tried it with maybe just 5 positions ?
Buying 10 at once seems a little daunting – but who am I to say if it is working out as nicely as this
I tried 5 positions and it did not do as well.
Also tested 12 and it also underperformed.
thanks for your update Ed
and thanks Stan – for posting Ed’s work for all of us to admire – and maybe even work with it ourselves
Thank you Ed for sharing your trading plan. Having a stop and loss compared to the VST stop and getting all out by the C/Down gives me more peace of mind. Thanks again
This looks like you have found a really good plan that can actually be used! The Midas Touch challenge plans were too daunting for me with the 50% stop losses and relatively high (for me anyway) drawdowns.
I really like this but as is often the case, it goes to cash when the market slows or declines. This may have been covered in todays session at 4:30 which I missed, but I have been working on using inverse ETF’s in some of the strategies as you can’t use shorts in registered accounts.
I was wondering if anyone has tried to provide a profitable direction instead of just retreating to cash in a registered account and how did you select the ETF to use?
This is a great blog, lets all support it. Thanks Stan.
Hi Dave, Thanks for your kind comments about Ed’s trading plan and our Blog. I would be also be interested in any follow-up regarding incorporating contra ETf’s into a trading plan. Thanks again Dave.
I did run a backtest with contra ETF’s and Hindenburg Short In the down situation.
Both had a lower AR.
I ran your search yesterday (April 8) and it came up with 3 stocks and when I run the search on Jan 2 2013 it shows only 2 stocks. How long did it take for your portfolio to reach the full 10 positions?
The search puts high demands on the selection of stocks and it might take a few trading sessions to get a 10 stock portfolio.
The Backtester proves that it gets the results we are all looking for.
Just after I posted 3 more stocks came up in the search. I started a “paper” portfolio yesterday and it was up the first day!
That is the greatest virtue of of a Genius automated trading plan. It sticks to the set rules !
Whenever I ignore my rules it costs money…
By Monday I should have all 10 positions in my ” My Ed’s Portfolio” ( got to give credit where credit is due!) You are right about the rules….I don’t know how many times I have not followed my rules over the years and lived to regret it!