Selling Tactics

Dr. Winton Felt asked:


In order to develop or refine our trading systems and algorithms, our traders often conduct experiments, tests, optimizations, and so on. One of our traders tested a variety of moving average-based sell strategies and we are now sharing some of those findings. Richard Donchian popularized the system in which a sale occurs if the 5-day moving average crosses below the 20-day moving average. R.C. Allen popularized the system in which a sale occurs if the 9-day moving average crosses below the 18-day moving average. Some traders feel they give up less of the gains they achieve if they use a shorter long moving average. These people prefer to sell if the 5-day moving average crosses below the 10-day moving average. Traders have used variations on these ideas (some touting the benefits of one variation and others touting the benefits of another). A friend told me about the crossover of the 7-day and 13-day exponential moving averages. Because that system was highly recommended, it was included in the tests for comparison purposes.

The strategies covered in this particular series of tests were as follows and all involved simple moving averages except where otherwise noted.

Sell if the stock’s 9-day average crosses below its 18-day average,

Sell if the stock’s 10-day average crosses below its 18-day average,

Sell if the stock’s 10-day average crosses below its 19-day average,

Sell if the stock’s 9-day average crosses below its 19-day average,

Sell if the stock’s 9-day average crosses below its 20-day average,

Sell if the stock’s 10-day average crosses below its 20-day average,

Sell if the stock’s 4-day average crosses below its 18-day average,

Sell if the stock’s 5-day average crosses below its 18-day average,

Sell if the stock’s 4-day average crosses below its 20-day average,

Sell if the stock’s 5-day average crosses below its 20-day average,

Sell if the stock’s 5-day average crosses below its 9-day average,

Sell if the stock’s 4-day average crosses below its 9-day average,

Sell if the stock’s 4-day average crosses below its 10-day average,

Sell if the stock’s 5-day average crosses below its 10-day average,

Sell if the stock’s 7-day average crosses below its 13-day average (exponential),

Sell if the stock’s 7-day average crosses below its 14-day average (exponential).

We wanted to avoid “curve-fitting.” That is, we wanted to test these strategies over a wide range of stocks representing a variety of industries and market sectors. Also, we wanted to test over a variety of market conditions. Therefore, we tested the strategies on each of about 3000 stocks over a period of about 9 years (or over the period during which the stock has traded if it has traded for less than 9 years), factoring in commissions but not “slippage.” Slippage results when the sell order is for $30 but the price at which the sale is executed is $29.99. In this case, the slippage would be one penny a share. The same “buy” strategy was consistently used for each test. The only variable was the rule for selling. For each strategy, we totaled the returns on all stocks. We performed a total of 47,312 tests.

The idea behind this experiment was to find out which of these sell disciplines achieved the best results most of the time for most stocks. Remember that the profitability of a system that is applied to a single stock (even if this is repeated for 3000 stocks as in our test) does not paint the whole picture. Profitability per unit of time invested is a better way to compare systems. In designing this test, our stockdisciplines.com trader required that each system had to wait for a new buy signal in the particular stock being tested. In real life, a trader could jump to another stock immediately after a sale. Therefore the trader would have little or no “dead time” while waiting to make the next purchase. A system that is less profitable when trading a single stock but that exits a position earlier could therefore generate greater profits over a year by enabling a person to reinvest in a different security as soon as the first one is sold. On the other hand, it would be a poorer performer if it had to wait for the next buy signal on the same stock while another slower system was still holding and making money.

The various sell systems were arranged in order of their profitability. We set up a table in which the left column was the short moving average and the middle column was the long moving average. The sell signals were generated when the short average crossed below the long average. The right column was the total profitability for all stocks tested. However, the key item of comparison was not the actual magnitude of gain for each sell system. This would vary considerably with different “buy” and “sell” system combinations. We were not testing for the profitability of any complete system, but for the relative merit of the various “sell” systems in isolation from their respective optimum “buy” disciplines. The main points can be briefly stated as follows. Any one of these systems may be the most profitable when trading a particular stock at a particular time. However, this experiment has shown to our satisfaction that selling when the 9-day moving average crossed below the 18-day moving average was generally not as profitable as selling when the 10-day moving average crossed below the 20-day moving average. Donchian’s 5-day moving average cross of the 20-day average was also generally more profitable than the 9-day average cross of the 18-day average. All tests were identical. The only variable was the combination of moving averages selected for the selling system.

This study supports the notion that a triple moving average system based on the 5-, 10-, and 20-day moving averages is likely to be more profitable than the similar 4-, 9-, 18-day moving average combination. It has the additional advantage of enabling us to monitor the crossing of the 5-day moving average with the 20-day moving average. The latter is Donchian’s system, and it is a strong system in its own right. It also gives earlier signals than either the 9-18 or the 10-20 combinations, though the 10-20 combination tends to generate higher average returns. Therefore, including the 5-, 10-, and 20-day moving averages on our charts gives us an additional option. We can use the 5-, 10-, and 20-day triple moving average system or we can use Donchian’s 5-, 20-day dual moving average system. If the stock pattern does not look or “feel” right to us, the 5-day moving average cross will give us an earlier exit. Otherwise, we can wait for the 10-20 crossover. Either will likely give a more profitable signal than the 9-, 18-day combination. The decision of which to use can be based on separate considerations related to stock behavior.

Copyright 2009, by Stock Disciplines, LLC. a.k.a. StockDisciplines.com



SAMUEL

Ian Davis asked:


At a time when people are struggling to make ends meet selling to make money online offers many a possible solution. The problem is that so many people are also trying to make money this way that competition is fierce and when you are competing with thousands, even hundreds of thousands of other sellers profit margins are going to be squeezed.

Therefore to be successful selling to make money you need to make sure you have a great product that people need and want. You will need to market it to as many potential customers as possible and provide genuine value to them in order to encourage repeat custom.

If this all sound familiar that’s because I’m talking about Internet marketing. Selling to make money online can not be separated from Internet marketing. If the world wide web is your shop window then you need to understand how to make your products stand out in that window, and that means learning how to market.

You need to learn how to research markets; keyword optimisation; product sourcing and development; promotional and selling strategies. All of these are part of the Internet marketers toolbox and every successful marketer can work from home selling to make money. So if you are serious about selling to make money you also need to be serious about learning some effective Internet marketing strategies. Get it right and the rewards can be considerable. Giving up the day job could be a real possibility.

Assuming you have an understanding of marketing what are the best 5 ways of selling to make money on the Internet:

1. Selling digital products through your own website.

2. Selling on auction sites like eBay.

3. Selling affiliate products.

4. Selling through an online store.

5. Selling your own products through other peoples websites.

Before we continue it should be pointed out that this is not intended to be an exhaustive list and that, whilst you can use these ways of selling to make money on there own, it is probably worth considering using most, if not all of these techniques if you want to be successful.

1. Selling your own products through your own website: - If you know how to train a dog, wire a house, restore silver or host the perfect dinner party you’ve got a great chance of developing a top selling product. In fact whatever knowledge you posses that others would want to know can enable you to start selling to make money online. All you need to do is write down your ideas, explain your methods and develop your processes so that you can create an ebook about what you know. Similarly if you can create software products or applications, or have inside knowledge about something you can create a great digital product (providing that you don’t infringe any copyright or libel laws in doing so.)

If you want to start selling to make money then digital products sold from a content rich website can really get the ball rolling. You don’t even need to be a skilled writer or software developer. Providing your idea is a marketable one there are plenty of ghostwriters and software developers out there who will be willing to deal with you to make a top quality product.

The big advantage of selling digital product is that once you’ve funded product development (and this need not be too expensive) your reproduction and delivery costs are practically zero so your profit margin will be good (providing you’ve got customers.)

2. Selling On Auction Sites: - Ask most people what they would think of selling to make money online and they will probably think of an auction site, particularly eBay. Selling on auction sites has an immediate advantage as you are more or less guaranteed access to a high volume of customers. However, so large and diverse are sites like eBay that you will still need to have a well planned marketing strategy to succeed. Furthermore the listing fees and postage are extra costs that you need to factor in when your calculating your profit margins. However there are many people who are so successful at selling to make money through auction sites that they have completely abandoned all other methods.

Apart from effective marketing the most important aspect selling to make money on the auction sites is to either produce your resalable goods or source them for the lowest possible cost (whilst maintaining quality.) For example if you sell hand painted figurines look at continually shop around for better deals on raw materials or consider outsourcing some of you tasks in order to reduce costs.

Similarly if you have a specific product line, such as DVD players or motorcycle accessories, then seek out the best wholesalers or dropshippers. Be wary though as there are many services that purport to offer directory lists of quality wholesalers and dropshippers for a fee. Many of these are simply information freely available to all with a little research and the worst are lists of dead links and bankrupt suppliers.

Nonetheless there are some wholesale lists that can prove very useful if you are interested in selling to make money online. The best solution is to read the reviews and select a reputable directory provider.

3. Selling affiliate products: - Selling to make money with your own product can be advantageous and is a valuable part of most successful online entrepreneurs businesses. However selling other peoples product can be just as lucrative and can have advantages over selling your own. For example you don’t have to concern yourself with product development, storage and distribution as this is the responsibility of the vendor.

Many products available over the Internet, whether they are digital or physical, offer so called ‘affiliate programs’. If you sign up to an affiliate program, and are accepted, you can advertise that product on your website, blog or landing page and will receive an agreed commission if someone buys that product via your link (in fact some even pay out for a simple ‘lead’ rather than a sale). Selling to make money this way is relatively simple to set up and the better affiliate programs will provide you with plenty of support and advice.

You can find affiliate programs in a number of different ways including research via the search engines and directories but one of the best ways is to search the affiliate networks such as ‘Commission Junction’ or ‘Linkshare’.

Again, you need to use your common sense and should carefully select the affiliate products you wish to promote. It is certainly better to start with the affiliate networks if you are new to affiliate marketing as they check the products they list for quality and legitimacy. Even though you need to keep your wits about you ‘affiliate programs’ still represent a very good way to start selling to make money on line

4. Selling through an online store: - One of the most direct ways of selling to make money is to set up your own online store. This can sell your own or your affiliate digital and physical products. There are a number of pre designed ‘storefront’ solutions and ‘turnkey’ websites that you can use to quickly set up your store.

One of the advantages of this kind of selling to make money is that any body visiting a ‘store’ is already looking to buy. In other words your visitors are already presold on some if not all the products you have to offer. Again, this is extremely reliant upon your marketing strategy, but those who are successful at this kind of direct sales technique are amongst the highest earners on the Internet.

However, competition with such websites (and that’s exactly what an online store is) is extremely fierce and dominated by some absolute giants such as Play.com or Amazon. Therefore you ability to spot a profitable niche would never be more important than when using this way of selling to make money.

5. Selling your own products through other peoples websites: - Here is one of the best and highest earning potential ways of selling to make money on the Internet. Whilst affiliate marketing of other peoples products is a great way to start your career as an online entrepreneur one of the best ways to break through into the real top league is to offer an affiliate program. By combining you ability to create a great niche product with your best marketing techniques you can offer your prospective affiliate partners a high commission percentage and still make a fantastic income.

Imagine having hundreds or even thousands of affiliates marketing your products on your behalf. Even if you only make $20.00 per sale that’s soon going to amount into a considerable income. However you still need to have a clear marketing strategy. It’s no use having an army of affiliates driving traffic to your product if you don’t convert to a sale. Your affiliates won’t get their commission and will soon lose confidence, pull out of your affiliate program and your profits will dwindle.

It is therefore absolutely essential that the product you offer is of genuine quality and offers the customer real value for money. You can not hope to do well selling to make money this way if your product is sub standard or cheap. Customer loyalty is key for all Internet marketers.

In the same way that there are many ways to find affiliate programs there are also many ways to find affiliates to promote your products . However the most effective way is to sign up as a producer for an affiliate network such as ClickBank. This will give your product great exposure to affiliate marketers who are interested in selling to make money.

Conclusion. As previously said all of these techniques offer the possibility for you to make money online either on their own or in combination. However no matter which strategy you choose an understanding of market research and promotion will be essential for you to make the most of these opportunities. So good luck, learn as much as you can, apply what you learn and start selling to make money.

 

 



CLINT