Kirkpatrick's Investment And Trading Strategies: Tools And Techniques For Profitable Trend Following

Hardcover | July 30, 2013

byCharles D. Kirkpatrick

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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

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From the Publisher

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 prot...

From the Jacket

Trend-Based, Evidence-Driven Strategies That Work “This book should be in the library of every serious trader, investor, or portfolio manager. It brings out clearly the essential elements needed to construct and test systems for investing and trading successfully in stocks. The author vigorously backtests algorithmic, rule-based syste...

Charles D. Kirkpatrick II has spent 45+ years in investing as a security analyst, portfolio manager, block desk trader, options trader, and institutional broker. He continues to publish his Market Strategist letter, calculate award-winning stock-selection lists, write books on trading and investing, and teach technical analysis at uni...

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Format:HardcoverDimensions:160 pages, 9.25 × 6.25 × 0.58 inPublished:July 30, 2013Publisher:Pearson EducationLanguage:English

The following ISBNs are associated with this title:

ISBN - 10:013259661X

ISBN - 13:9780132596619

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Extra Content

Table of Contents

Preface     x

Chapter 1: Introduction     1

Chapter 2: Investment Strategies: Backtesting     21

Chapter 3: Initial Standard Optimizations     37

Chapter 4: Market Timing and Walk-Forward Optimizing     51

Chapter 5: Stock Selection Using Relative Strength     69

Chapter 6: Trading Strategies     83

Chapter 7: Directional Movement Index (DMI) and the ADX     91

Chapter 8: Cycles and the Forward Line     109

Chapter 9: Trading Models and Tests     127

Index     145

Editorial Reviews

“This book should be in the library of every serious trader, investor or portfolio manager. It brings out clearly the essential elements needed to construct and test systems for investing and trading successfully in stocks. The author vigorously backtests algorithmic, rule based systems. Writing in plain, understandable language, the author clarifies the advantages of the ‘walk forward’ method for testing and optimizing strategies and the importance of well-defined exit rules for risk control and profitability. Indeed, everything from portfolio stock selection to short-term trading systems are well defined and thoroughly tested.” --Hank Pruden, Ph.D., Professor of Golden Gate University and Chairman of Technical Securities Analysts Association of San Francisco   “Charles Kirkpatrick does an excellent job of laying out a complete investment strategy, from stock selection through money management. Even seasoned pros will learn something new about relative strength, ADX, and optimization.” --Lawrence G. McMillan, President of McMillan Analysis Corp. and author of Options as a Strategic Investment   “The wisdom of a true master! My highest recommendation! Kirkpatrick, a highly respected professional at the peak of his long and varied investment career, distills all of his 47 years of intensive study and experience into this concise book that spells out in detail his best strategies--so that you can profit from his deep, hard-won knowledge.” --Robert W. Colby, CMT, author of The Encyclopedia of Technical Market Indicators   “Charles Kirkpatrick has been producing top-notch work for years, as evidenced by his multiple Dow Awards and top-rated books. And his work keeps getting better. He doesn’t just hypothesize about market movements. He backs up his ideas with real, quantified data. This book is another very impressive addition to the Charles Kirkpatrick library of work. Well done!” --Rob Hanna, founder of QuantifiableEdges.com and OvernightEdges.com   “Kirkpatrick’s latest work is a great companion to his book Beat the Market: Invest by Knowing What Stocks to Buy and What Stocks to Sell. He walks the reader step by step through his logic and then demonstrates the results by statistically valid test procedures. This is the Kirkpatrick Investment Theory updated and proven, plus a few extra studies to improve performance once again. “For those of us who use his approach regularly, his latest work will improve and confirm his investment concepts. For those not familiar with his work, this book may inspire them to rethink what methods they are using. The backtested results are that impressive. “Kirkpatrick’s latest work addresses two significant areas. First, his investment approach is reviewed, tested, and refinements applied; then it is retested using walk forward techniques. The other area covered, and one that should not be overlooked, is his testing techniques and theories on how to evaluate stock selection and portfolio changes. He shows the reader how to focus on significant parameters that are most important while trying to avoid the dangers of optimization. The result is a robust system with a high probability of excellent performance in the future.” --Thomas Hamilton, President of Special Risk Capital Management, LLC   “When someone has been successfully involved in the markets and in particular technical analysis for almost half a century, you should pay attention to what he has to say. Charlie Kirkpatrick is such a person, one who has a solid grasp of how markets work and how to develop a process for profiting in them. I cannot begin to count the number of times I have read about someone’s system and found that it was poorly designed, inadequately tested, and in many cases, used for some other motive than to provide a systematic approach to profiting in the market. Charlie has conquered all of these shortcomings in this book with a solid, well-constructed, thoroughly documented, and viable approach to systematic trading.” --Gregory L. Morris, author of Dancing with the Trend, Chairman of Investment Committee, and Chief Technical Analyst of Stadion Money Management, LLC “On the Venn diagram of financial market study, this book fits into the coveted overlap between technical, quantitative, and fundamental approaches. It addresses one of the key questions that all three methods ask: How can the relative performance of stocks to one another be used to create a profitable investing approach? Kirkpatrick walks the reader through the necessary elements to comprehend and build robust market timing and stock selection systems. He addresses the murky issues of optimization and quantifying trend and also focuses in on his preferred indicators and uses for cycle analysis, based on 40+ years of market experience. No fancy software required--Kirkpatrick presents systems that can be implemented and managed using the most basic of tools. A great read for anyone looking to approach the markets more systematically, making the most of their capital and time.” --Hima Reddy, CMT, author of The Trading Methodologies of W.D. Gann