Someone over in FF asked me my opinion about VectorVest product and its comparison to other services like IBD. Here is what I wrote:
- It is more of a library of tools which you can use to unleash your creativity and imagination and come up with your own strategies and scans for stocks.
- Since it is so powerful - it does come with a learning curve and you need to spend some time to get used to the software.
- Back test your ideas on past 12 years of data to see what works best under certain market conditions
- Comes with lot of canned strategies which you can use out of the box or modify as per your taste.
- Prescribes you a list of stocks e.g. IBD50 which you cannot alter in any way. You have to take IBDs list and apply your criteria to narrow it down to 5-10 stocks you want to buy.
- As far as I know do not provide any back testing capability to see how their lists worked in the past
I think recently IBD has released a software called MarketSmith which is comparable to VectorVest. I do not subscribe to MarketSmith - this is just from their informational web page.
My friend and valued contributor at TT diogenes227 suggested I start a separate thread for individual stock picking in Swing Waves forum. So here it is:
- The very first premise I work with is that no matter what method you use (chart reading, mechanical scanning etc.) you cannot pick winner ALL the time. The least you need is 40% and best one can hope for is 60% (unless you are some sort of market genius)
- Each stock pick is nothing but a ticker symbol as good as the next ticker which will make you money i.e. I do not fall in love with any company or stock in particular
- I tried reading charts and indicators but subjective methods of selecting stocks always skewed my judgement because my bias towards a specific stock always made my readings incorrect.
So in order to come up with an objective strategy I picked up VectorVest subscription and tried learning it. It was a long process but I think the long learning curve does pay in the end. It helps you define your own criteria and come up with a strategy according to your taste.
One important thing about trading individual stocks is that you must marry it with market timing. It could be a crude MA cross over or sophisticated timing strategy. VectorVest does come with some canned market timing strategies. But you can also devise your own.
Once you have the two - market timing and stock picking strategy - then you can use VectorVest to back test your ideas and see what worked or did not work in the past. Thus VectorVest provides you a COMPLETE solution for you to come up with a comprehensive system to trade stocks.
e.g. here are 2 scans I ran today. IF the uptrend continues - you can track the performance of these 2 portfolios until we get a sell signal. Coming up with the strategies took me weeks of back testing. But now to run it on daily basis - takes me 5 seconds:
Prudent Basket Of Stocks:
HBAN RF WFR BAC AYR
Speculative Basket Of Stocks:
HW AOI SPF ZLC COCO
I hope this helps. If anyone has any questions about VectorVest - please feel free to ask. I am just a happy subscriber not affiliated with the company in any other way.