50% Annual Returns

Quote from rainerblue:

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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Good point.

A couple of issues, if you pay $5 per trade you are paying too much. Interactivebrokers charge $0.005 per share for a min of $1 per trade. I have been using them for many years and they are the best and cheapest broker I have come across. No reason to pay more.

The system trades more than 4 trades per day on average, probably more like 6.

Although you will do better than most professionals over a year the 50% return claim is based on past performance and does not guarantee those returns in the future.

That said, with a $10,000 account your estimated com would be $6 *250 = $1,500 or 15% of the account. I would not trade the full system with less than this account size. It is very possible to only take half of the trades, but that would increase the risk and make it more volatile.
 
STOCK TO SHORT FOR OCT 06, 2006 (GE)

STOCK TO SHORT FOR OCT 06, 2006 (GS)

STOCK TO COVER FOR OCT 06, 2006 (BLUD) -5.8% est. RETURN

STOCK TO COVER FOR OCT 06, 2006 (TROW) -4.3% est. RETURN
 

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I think these next few of weeks could be tough for the market. I have reduced my long exposure and I also own several 118 puts on the DIA from a couple of days back.
 
STOCK TO BUY FOR OCT 10, 2006 (NTG))

STOCK TO BUY FOR OCT 10, 2006 (MGPI)

STOCK TO BUY FOR OCT 10, 2006 (ONNN)



STOCK TO SELL FOR OCT 10, 2006 (GMRK) 9.4% est. RETURN

STOCK TO SELL FOR OCT 10, 2006 (PLCE) 6% est. RETURN

STOCK TO SELL FOR OCT 10, 2006 (HYDL) -10.3% est. RETURN
 

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