Question for active traders vs. buy and holders?

[Tacitus]

So for equity indexing I am buy and holder, and similar for my fixed holdings with individual bonds (bought with intention to hold till matures or redeemed), and preferreds. Do have some debt cefs but absent fundamental reason not inclined to sell. Even find it best to not look at the markets too frequently.

Anyhow, for those active traders I have a sincere question, whether it be equity, debt cefs or whatever. If you rely on technicals, as have read some due, and if the signals have now crossed into a sell sign, are you selling all those holdings? I think this question arose in my mind upon reading the cef thread regarding some with large holdings, or large portion of their entire portfolio in debt cefs, who in particular trade via technical signals. But pertains as well to equities. Just very curious. Hard to imagine selling huge amounts now, and then will have to pick when to get back in, lump sum or otherwise. Is this all dictated via the movement of some technicals. Just want to understand in real time sort of the plan of those traders. Thanks for feedback.

 

[COcheesehead]

Why would you think things are on sell indicators?

 

[Tacitus]

Am asking general question. How it came to my mind relayed as above but a general question nonetheless. Have not even checked the price of any pimco leveraged debt cefs if perhaps that is the focus or concern of your query, which am guessing based on prior posts. The dow is near a bear market. About 18% off peak. Nasdaq about 22%, and in a bear market. But even if were not am still curious. So the scenario am especially interested, is whenever huge holdings in a highly correlated asset group all drops at once, which is often the case. Does the trader who relies upon technicals, (buy and sell signals) and receives the sell signal, sell off that portion, or if 100% of portfolio in the same asset class, his/her entire portfolio?

The trough of the Dow after 2008 was 6470 but it is even now over 38000. So that may be one example as to why am not a market timer. But am curious as to other approaches. Please don't be defensive or personalize. Just truly interested. And so, just like to hear what a technical trader would do in above scenario, even if no sell signals at this moment, (though seems after at least a drop of almost 20% in dow something may be in a sell signal). But ok if not yet in a sell signal, and it or whatever other class has to drop even more to be in a sell signal, same question. Do you then sell it all off?

 

[COcheesehead]

I use a highly sophisticated system honed with years of back testing. Proven to be the most reliable. I buy low and sell high. LOL
I always go back to why did I buy something, what was my goal. So I look at all my assets in that regard. If I bought something for appreciation, volatility is the price of admission. If I bought something for income and it still provides that cashflow, why would I sell it?
I haven’t sold a thing because all of my goals are still in place. So I guess I don’t fit the active trader profile. I just was curious why you thought things are on a sell signal. I thought you knew something I didn’t

 

[Tacitus]

Was not predicting anything, Just asking what technical traders actually do in real time or proactively. ( Yes if something is going to go higher, buy it. And if something is going to go lower, don't buy it. LOL.) Yes in your case, per above, you trade individual holdings, not equity indexes am guessing, based on fundamentals and question therefore not applicable. Sorry unclear but still appreciated your feedback. Guess I can understand the process for say an individual stock that often "rolls" up and down. This would preclude any recent buyers of just about anything perhaps. But hard to envision in other scenarios for seems may then actually result in buying high and selling low. Yet many claim success, so what do I know.

 

[target2019]

Was not predicting anything, Just asking what technical traders actually do in real time or proactively. ( Yes if something is going to go higher, buy it. And if something is going to go lower, don't buy it. LOL. Yes in your case, per above, you trade individual holdings, not equity indexes am guessing, based on fundamentals and question therefore not applicable. Sorry unclear but still appreciated your feedback.

If we could count the number of active traders on the forum, the number of strategies would be that count.

Since you're 100% buy and hold, and maybe even a boglehead, part of your philosophy is that no signals matter, and you just buy and hold forever. After retirement you determine what your financial needs are, and sell shares from an account to satisfy that. Most on this forum up til very recently are investing similarly.

This particular sub-forum was set up to accomodate discussion of almost everything outside of passive indexing. So it's not like everyone in here has a narrow, signal-following approach.

Technical analysis (TA) traders are a sub-category. And again, there isn't just one signal.

You can find specific proponents of an approach on utube or tweets. One of the simpler TA approaches I've read about is the use of long and short moving averages. When they cross, that's a sell or buy indication.

 

[tflannery]

Use moving averages on the daily chart. 9, 20, 50, and a 100 day moving average. It is not the holy grail though.

I am 60 and have always believed in this country. So buying corrections and crashes have been my niche since 2008. However, the tariffs are a deal breaker for me. I rebalanced to 50/50 with VTI near 300. Wish I would have gone to 30/70.

I have no plans to buy or sell equities right now and instead I am looking to sell some BND that I have bought the past 2 years.

 

[Tacitus]

@target2019
I am kind of a boglehead but only with equity indexing but not so with bond funds. Thought I read of some technical active traders with significant or all of their portfolios relying upon technical buy and sell signals, perhaps among the newly arrived Fidelity crowd. With MACD signals crossing or something? Doubt would be interested but was willing to listen and then maybe consider. HIndsight claims of how I sold in past and then bought back in, usually still at some point in past, never that compelling.

@tflannery
So absent tariffs, per above, "So buying corrections and crashes have been my niche since 2008." So that is kind of the opposite of technical buys and sells. In sense similar to a rebalancing approach.

Well guess movin on.

 

[38Chevy454]

My simple answer is as a buy and hold investor, you just wait it out. Have confidence the market will recover and you will benefit riding the recovery.

For the active trader side my simple answer is you decide when to jump in with available cash and buy when equities/funds are discounted. The buy in date is where you are making a bet on which way the market will move. As the old saying goes: when you buy, someone sells, and they both think they are right.

 

[Zathras]

I just don’t think there are many Technical traders here.
Before putting much weight into any system, I’d want to back-test it.

 

[Lorenzo]

As the old saying goes: when you buy, someone sells, and they both think they are right.

I wonder how the advent of automated trading has affected that? Algorithms don't "think."

 

[target2019]

@target2019
I am kind of a boglehead but only with equity indexing but not so with bond funds. Thought I read of some technical active traders with significant or all of their portfolios relying upon technical buy and sell signals, perhaps among the newly arrived Fidelity crowd. With MACD signals crossing or something? Doubt would be interested but was willing to listen and then maybe consider. HIndsight claims of how I sold in past and then bought back in, usually still at some point in past, never that compelling.

@tflannery
So absent tariffs, per above, "So buying corrections and crashes have been my niche since 2008." So that is kind of the opposite of technical buys and sells. In sense similar to a rebalancing approach.

Well guess movin on.

An example of 50 and 200 dma almost crossing. One would have to backtest different settings to settle upon "what worked best in the past."

https://finance.yahoo.com/quote/VTI...pZ0RldkV2ZW50cyI6W119LCJwcmVmZXJlbmNlcyI6e319

BTW, I don't do this. But I do look for general understanding.

 

[WhenIsItTime]

Would think traders and investors are equally dumbfounded.

 

[Tacitus]

Sometimes imo traders' (moreso than investors) self reported trading history can be akin to fishermen discussing their catches. "I once caught a fish this big". Both tales maybe a little fishy.

 

[TheWizard]

I ignore technical analysis and predictions on what's going to happen next.

The only "active trading" I do is for Tax Loss Harvesting in my taxable account. This requires me to pay attention to what the markets are doing and to have an approximate idea how much of a total loss I want before "pulling the trigger".

Also, it helps to already have an alternate ETF in mind to which the harvested proceeds will be going. Then it takes less than five minutes on my smartphone with the Vanguard app to sell the various lots showing losses and then buy an equivalent amount of that different ETF using market orders.

I've done this twice so far in recent weeks and am ready for another harvest if the decline continues...

 

[MichealKnight]

So for equity indexing I am buy and holder, and similar for my fixed holdings with individual bonds (bought with intention to hold till matures or redeemed), and preferreds. Do have some debt cefs but absent fundamental reason not inclined to sell. Even find it best to not look at the markets too frequently.

Anyhow, for those active traders I have a sincere question, whether it be equity, debt cefs or whatever. If you rely on technicals, as have read some due, and if the signals have now crossed into a sell sign, are you selling all those holdings? I think this question arose in my mind upon reading the cef thread regarding some with large holdings, or large portion of their entire portfolio in debt cefs, who in particular trade via technical signals. But pertains as well to equities. Just very curious. Hard to imagine selling huge amounts now, and then will have to pick when to get back in, lump sum or otherwise. Is this all dictated via the movement of some technicals. Just want to understand in real time sort of the plan of those traders. Thanks for feedback.

I wish was a good active trader - the way Warren Buffett is. Too late now. Nice move he made selling off so much and timing the market well.

 

[drs]

@Tacitus

Yeah, I fall into this category so... typically when your price trigger is hit off the technicals, you execute. A lot of people put some sort of filter in there to avoid premature execution; a lot like setting a mental stop instead of putting your stop loss as an actual order so that the algorithms hunting stops with a quick sell/buy won't fake you out. To avoid some of the noise that occurs with the technicals, some people only execute at specific times - so your signal has to be active at a specific time (say 15:45pm daily) to be valid - if you crossed over the line at 15:30 and bounced back down at 15:40 it wouldn't count.

But for me I trade risk positions AROUND my allocation. Helps to soften the blow on bad days and can reduce the joy on good days, though. At the end it is whatever gets you across the finish line.

 

[dickoncapecod]

So for equity indexing I am buy and holder, and similar for my fixed holdings with individual bonds (bought with intention to hold till matures or redeemed), and preferreds. Do have some debt cefs but absent fundamental reason not inclined to sell. Even find it best to not look at the markets too frequently.

Anyhow, for those active traders I have a sincere question, whether it be equity, debt cefs or whatever. If you rely on technicals, as have read some due, and if the signals have now crossed into a sell sign, are you selling all those holdings? I think this question arose in my mind upon reading the cef thread regarding some with large holdings, or large portion of their entire portfolio in debt cefs, who in particular trade via technical signals. But pertains as well to equities. Just very curious. Hard to imagine selling huge amounts now, and then will have to pick when to get back in, lump sum or otherwise. Is this all dictated via the movement of some technicals. Just want to understand in real time sort of the plan of those traders. Thanks for feedback.

Reasonable inquiry given the abrupt and large decline in equities and bond income products. I use a pretty simple technicals toolkit that has worked well for me over the past 16 years since retirement. (In fact, my returns have been DIMINISHED when I deviated from some technical signals because I was "so smart.") I sold maybe 20% of holdings near the beginning of this dive and have since replaced them/swapped around.

But this time WAS different. Momentum indicators typically respond to growing investor realizations that a narrative is changing / investment rationale are changing as economic data slowly undermine the existing narrative. This time things worked in reverse --- it was suddenly enacted government policy / tariff-tax "law" or procedure THAT TANKED EXPECTATIONS about the economy --- and the data won't reflect whatever happens for months. (For example, inflation expectations have soared while current inflation measures ARE DOWN.) In short, these market declines were the result of abrupt policy engineering -- which has obviously been subject to equally abrupt daily modifications. Technical indicators often work/are helpful because they capture changing investor sentiment in response to changes in the macro environment. This time, an abrupt policy change has "instantly" changed PREDICTIONS about the macro environment.....and left technicals behind.
Regards, Dick

 

[drs]

Expanding on what I said before:

50% portfolio allocated
50% "actively" invested.
Active investments are sometimes out of the market so that's a higher cash position than most people.

I became an 'active' investor after 12 months of trying to follow the
"experts" at the old "top rated" No Load FUNDX newsletter and seeing their (& my) diversified returns down 16% while the SPY was down 1% and decided nobody was coming to save me so I'd better be proactive in my own defense. I'm focused on capital preservation/accumulation through income securities, augmented by strategic trades. The goal is to achieve most of the returns without the volatility/drawdowns.

I use technicals actively - been a chartist since taught by my father at age 14. Charts, multiple time frames including intraday; 20, 50, 200 day moving averages on the charts, 14 day RSI. Focus on support resistance, channels, no fancy stuff except for Fibonacci retracement.

For ETF and equity trading I use backtested (and forward tested) systems that are specific to each security I am actively trading. Only works on the largest stuff. I focus on minimizing drawdowns and reproducibility in returns.

For CEF's I use charts and focus on discount/premium and yield since so many CEF's are bondlike. Watch interest rate indicators for clues but CEF's trade differently due to 1) retail primary buyers and 2) stupid HF's discovering illiquid markets when they play in this space.

#1 can lull you into a false sense of security as the CEF seemingly defies current trends until it doesn't. #2 creates opportunities as the dislocations don't last long if they are truly someone selling into an illiquid market.

I do OK, but could always do better.

 

[Shredder]

I guess sometimes I invest with hunches and emotions. Last time was after watching the news on Feb 28, (Zelensky white house meeting) I went to 91% money markets and 9% to a European defense ETF (EUAD). Up till then it was mostly Wellesley, and a small handful of ETF’s.

 

[copyright1997reloaded]

I am sort of a bar bell investor when it comes to "buy and hold" vs. trading.
1) The vast majority of my holdings (in terms of $) are buy and hold and hold and hold. Examples:
Marriot - 1990
Microsoft - 2010
Apple - 2000
Abbot/Abbvie - 2010
Ameritrade (now Schwab) - 2006
Honeywell - 2003
JP Morgan Chase - 2012
Stryker - 2008
Walmart -2012
Freeport McMoran - 2015
Marvel - 2008
Edwards - 2000 (via Baxter)
ADI - (via LLTC) - 1990

Now I have certainly added to these over the years (when I thought they represented a buy), or sold off part of them (if they appeared overpriced), but for the most part very little change. (Well, except for "having" to sell off some of Apple as it represents significant single stock risk).

2. I will do a lot of trading, mostly fairly small $ when the market becomes wacky, like it did recently. Sometimes I try to build on existing smaller positions. Sometimes I will buy to hopefully trade it at a profit in a few days. For example, the things I bought last over the last couple of weeks have mostly been small adds to fairly small positions (as compared to any of the above which I consider full positions no longer to be added to).

 

[OldShooter]

Sometimes imo traders' (moreso than investors) self reported trading history can be akin to fishermen discussing their catches. "I once caught a fish this big". Both tales maybe a little fishy.

Nassim Taleb talks about "silent evidence." Same thing, really. People who are unsuccessful don't post, so it looks like success is everywhere..

Taleb's illustration:

"Diagoras, a nonbeliever in the gods, was shown painted tablets bearing the portraits of some worshippers who prayed, then survived a subsequent shipwreck. The implication was that praying protects you from drowning. Diagoras asked, “Where are the pictures of those who prayed, then drowned?”

 

[AudiDudi]

.

 

[FD1000]

I have a dedicated site about what I do. It's a system that I developed for over 15 years.
My main goals for the portfolio is to be positive annually, beat 50/50, never lose 3% from any last top, using 90-100 bond OEFs. Since retirement I have done a lot better. The main ideas are to own just 2-3 funds, all must be in an uptrend or flat, never going down, if risk is very high (about 10-20%) I sell to MM. If I'm wrong, I'm back within days, if I'm right, I'm out for weeks-months.
Read my profile.

 

[MichaelH13]

So for equity indexing I am buy and holder, and similar for my fixed holdings with individual bonds (bought with intention to hold till matures or redeemed), and preferreds. Do have some debt cefs but absent fundamental reason not inclined to sell. Even find it best to not look at the markets too frequently.

Anyhow, for those active traders I have a sincere question, whether it be equity, debt cefs or whatever. If you rely on technicals, as have read some due, and if the signals have now crossed into a sell sign, are you selling all those holdings? I think this question arose in my mind upon reading the cef thread regarding some with large holdings, or large portion of their entire portfolio in debt cefs, who in particular trade via technical signals. But pertains as well to equities. Just very curious. Hard to imagine selling huge amounts now, and then will have to pick when to get back in, lump sum or otherwise. Is this all dictated via the movement of some technicals. Just want to understand in real time sort of the plan of those traders. Thanks for feedback.

I’ve been holding gold for a while now, and I’m really encouraged by the recent move. It’s one of the few assets that tends to hold up well when everything else gets shaky. This run feels different—seems like more people are waking up to gold’s role as a long-term store of value, not just a panic play.

I’m not saying back up the truck, but I’m glad it’s part of my portfolio. It’s been a solid hedge, and in times like these, that peace of mind is worth a lot. If anything, this just reinforces why gold still has a place in a well-balanced retirement strategy.