50% Annual Returns

Follow this threads from the begin,

Just for disclosure information,

at the begin, it is posted

8. Stops, Profits takes etc - Don't use em. Rather I only put 5% of my equity in each trade to minimize risk. I exit based on a 20 day holding period. This allows the stocks to swing around like stocks do.

then, now on there website,

STOPS: We use a generic stop that starts at 10% from entry, then travels towards the break even point, which is reached at 20 business days. This allows enough room for a position to swing around with the short term market noise, while providing maximum loss protection. The stops are on a 'close' basis and will not get triggered intra day. The graph shows the stop in magenta

My conclusion is they are still testing their stratedy, so use their recommendation with caution for true trade.

Also on their website,

SPECULATION: With this we mean the experience and knowledge necessary to look at the whole picture, and determine where a stock fits into current market events. It is not enough for the computer to spit out stock picks. The human brain is infinitely more complex than any computer program and serve as the final arbiter of what stocks are included in the respective portfolio.

With human intervene, there is no methods to backtest their strategy.
 
Quote from tonyzhou1:

Follow this threads from the begin,

Just for disclosure information,

at the begin, it is posted

8. Stops, Profits takes etc - Don't use em. Rather I only put 5% of my equity in each trade to minimize risk. I exit based on a 20 day holding period. This allows the stocks to swing around like stocks do.

then, now on there website,

STOPS: We use a generic stop that starts at 10% from entry, then travels towards the break even point, which is reached at 20 business days. This allows enough room for a position to swing around with the short term market noise, while providing maximum loss protection. The stops are on a 'close' basis and will not get triggered intra day. The graph shows the stop in magenta

My conclusion is they are still testing their strategy, so use their recommendation with caution for true trade.

Also on their website,

SPECULATION: With this we mean the experience and knowledge necessary to look at the whole picture, and determine where a stock fits into current market events. It is not enough for the computer to spit out stock picks. The human brain is infinitely more complex than any computer program and serve as the final arbiter of what stocks are included in the respective portfolio.

With human intervene, there is no methods to backtest their strategy.
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I have made it clear from the beginning that there is an element of human judgement, which of course cannot be backtested. I have have also said the backtest is not an exact replica, but an approximation of past returns.

As far as the stops and profit takes being added on, it is true that prior to posting on this forum I did not use stops or profit takes. However, after discussing the strategy with numerous people and spending many waking hours doing research I concluded that by utlizing the current stop and profit take methodology the risk can be reduced without sacrificing returns.

And yes, please use caution with any trading strategy, there is no holy grail and always risk.
 
STOCK TO SHORT FOR OCT 05, 2006 (GIS)

STOCK TO SHORT FOR OCT 05, 2006 (CAO)

STOCK TO SHORT FOR OCT 05, 2006 (SLE)



STOCK TO COVER FOR OCT 05, 2006 (TSN) 6.9% est. RETURN

STOCK TO COVER FOR OCT 05, 2006 (WIT) -5.4% est. RETURN

STOCK TO COVER FOR OCT 05, 2006 (MYGN) -7.7% est. RETURN
 

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First of all, thanks for starting this Journal. I found it informative and full of good stock picks.

Now on to my question:

Why are you selling LUV? It hasn't been on the portfolio for 20 days and is not down so much it reached a stop-loss point.

Thanks again for your sharing your picks.

:D
 
Quote from alphastocks:

By the way I think the DOW has topped here so I bought DIA Oct 118 puts for $0.80 right before the close today to provide an extra hedge.
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well if nothing else the vol is ridiculously cheap,however you bought puts in the strongest segmentt of the market and your exposure is not large cap..hope you Beta weighted it..
 
Quote from SmallInvestor:

First of all, thanks for starting this Journal. I found it informative and full of good stock picks.

Now on to my question:

Why are you selling LUV? It hasn't been on the portfolio for 20 days and is not down so much it reached a stop-loss point.

Thanks again for your sharing your picks.

:D
More...

Stocks are usually exited because of Time, Stop, or Profit. However, once in a while if I feel strongly about a position I might exit it for other reasons, this is where human judgement comes into play. My view is that Crude has bottomed for a while, plus LUV traded on weakness when the DOW was up over 100 points, both not good for LUV, hence the exit.

ARD, which replaced it is up 7.45% today or 3.6% from this mornings open.
 
It looks like a great system. Congrats on your great work. I only have one concern which is the cost of executing this system.

If a user follows both long and short, assume $5 per transaction, it needs $5 X 4 = $20 per day to buysell a long, shortcover a short. For a year, the commission alone costs $20 X 250 = $5000.

Assume this system makes 50% profit per year. It requires $5000 / 50% = $10000 trading capital to simply breakeven.

I am wondering it is possible to reduce the number of holdings and number of transactions for the system. It will dramatically reduce the cost and increase the gain.
 
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