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Kirkpatrick’s Investment and Trading Strategies: Tools and Techniques for Profitable Trend Following

Book Description

Choosing Stocks and Timing Buy and Sell Decisions: Trend-Based, Evidence-Driven Strategies That Work

  • What to do, how and when to do it, and why

  • Specific advice backed by modern statistical tests that identify consistently successful combinations of indicators

  • Techniques for identifying early weaknesses, maximizing gains, and protecting capital

  • By Charles D. Kirkpatrick II, the world’s most influential technical analyst

  • There’s only one way to successfully compete with Wall Street’s “big boys”: use algorithmic systems, just like they do. Fortunately, you can. Thanks to the wide availability of derivatives, cheap computing, and low-cost, high-speed trading platforms, you can run algorithmic systems that are proven statistically and can operate almost automatically.

    In this book, world-renowned technical analysis expert Charles D. Kirkpatrick II presents these systems and the evidence that supports them. Building on exhaustive research, Kirkpatrick shows why relative strength systems deliver consistent profits. Next, he drills down to identify the optimal elements of such systems, including lookback periods, ranks/ratios for portfolio changes, minimum trading volumes, and techniques for limiting the impact of market declines.

    Kirkpatrick’s final results are practical and robust. Based on easy-to-interpret ADX, forward line, and 3-bar reversal charts, they are easy enough for virtually any investor to use, with any size portfolio.

    At its foundation, technical analysis involves recognizing and analyzing trends and identifying the best investment strategy to take advantage of them. Most traders and investors who look for trends do so by analyzing a long list of charts on a continuing basis. In Kirkpatrick's Investment and Trading Strategies, world-renowned technical analysis researcher Charles D. Kirkpatrick II presents tested, pinpoint approaches to stock investing that are far more effective and efficient.

    Drawing on statistical testing of markets from 1990 to the present, Kirkpatrick identifies combinations of technical tests that have consistently delivered the best performance. Using them, he shows how to identify stocks that are now demonstrating the strongest relative and absolute strength. Next, he identifies specific trend following indicators most likely to identify the first signs of trend reversals--and, thus, the right time to sell.

    Throughout, Kirkpatrick offers detailed, practical, and example-rich guidance for using these indicators, providing all the detail you need to implement an investment strategy that is both profitable and risk-averse.

  • Tested, trend-based indicators you can understand and rely on
    Choose the right stocks--and the right times to buy and sell them

  • Protect your capital with DMI, ADX, and other key technical indicators
    Discover your true risk of loss and systematically protect against it

  • Why Kirkpatrick’s relative strength system works so well
    Understand the statistics behind the system--in as much detail as you’d like

  • Using the system after you’ve implemented it
    Realistic examples and step-by-step instructions

  • Table of Contents

    1. About This eBook
    2. Title Page
    3. Copyright Page
    4. Praise for Kirkpatrick’s Investment and Trading Strategies
    5. Dedication Page
    6. Contents
    7. Acknowledgments
    8. About the Author
    9. Preface
    10. 1. Introduction
      1. Discretionary Versus Algorithmic Trading or Investing
      2. Why This Book?
      3. Investing Is a Business
      4. Strategies
      5. Backtesting—Standard and Walk-Forward Optimization
      6. Book Organization
      7. Endnotes
    11. 2. Investment Strategies: Backtesting
      1. Standard Optimization
      2. Relative Strength Rules
      3. Walk-Forward Optimization
      4. Equity Curve
      5. Equity Curve Overfitting
      6. Entry Strategy
      7. Exit Strategy May Affect Results
      8. Equal-Dollar Weighted Index
      9. Objective Function
      10. Procedure Followed in This Study
    12. 3. Initial Standard Optimizations
      1. Degrees of Freedom
      2. Sample Database Size
      3. Lookback
      4. Buy Rank
      5. Sell Rank
      6. Percent Protective Stop
      7. Initial 50-Day Trading Volume
      8. Initial 50-Day Average Price
      9. Conclusion
      10. Endnotes
    13. 4. Market Timing and Walk-Forward Optimizing
      1. Market Timing
      2. Walk-Forward Optimization and Analysis
      3. Conclusion
    14. 5. Stock Selection Using Relative Strength
      1. Review and Present Standing
      2. An Alternate, Simpler Selection Method
      3. The Walk-Forward Optimizations
      4. Addition of Market Timing System
      5. Conclusion
    15. 6. Trading Strategies
    16. 7. Directional Movement Index (DMI) and the ADX
      1. The Genius of J. Welles Wilder, Jr.
      2. Wilder Moving Average and Average True Range (ATR)
      3. Uses of the Average True Range
      4. Directional Movement Index (DMI)
      5. Average Directional Movement Index (ADX)
      6. Conclusion
      7. Endnotes
    17. 8. Cycles and the Forward Line
      1. Cyclicality in Prices
      2. Cycles
      3. Plotting and Understanding Moving Averages
      4. Cycle Period Calculations
      5. Conclusion
      6. Endnotes
    18. 9. Trading Models and Tests
      1. Requirement for Period in All Indicators
      2. Determining Cycle Length
      3. Three-Bar Reversal
      4. Analysis Sequence
      5. Stops
      6. Experiments
      7. Conclusion
    19. Index
    20. FT Press