Taking 103K to 1.2million by Year End 2008

[carbtrader]

Quote from neke:

This is an example of what I call the "leverage handicap". You are shorting a stock in two trades. The stock goes from 120 to 100 in the first trade, and then back to 120 in the second trade. You would think that is a break-even trade (minus commissions). But it is not, especially if you go with leverage like I do.

At the first trade, with a balance of say 150K in account and buying power of 300K (2Xaccount), you could short 2500 shares @ 120. You cover at 100, gaining 50K. You now have 200K and a buying power of 400K. You can now short 4000 shares @ 100. You cover at 120, losing 80K. On the whole you have lost 30K (20%) through pure stock volatility. Does not really matter whether the stock goes down first and up or the reverse.

So to make it in those times, your edge need to be stellar.

Interesting... seems that even without using leverage you'd still lose -10K, although it's less than with leverage due to the amount of capital/shares in use during the loss.

 

[NoDoji]

Quote from neke:

This is an example of what I call the "leverage handicap". You are shorting a stock in two trades. The stock goes from 120 to 100 in the first trade, and then back to 120 in the second trade. You would think that is a break-even trade (minus commissions). But it is not, especially if you go with leverage like I do.

At the first trade, with a balance of say 150K in account and buying power of 300K (2Xaccount), you could short 2500 shares @ 120. You cover at 100, gaining 50K. You now have 200K and a buying power of 400K. You can now short 4000 shares @ 100. You cover at 120, losing 80K. On the whole you have lost 30K (20%) through pure stock volatility. Does not really matter whether the stock goes down first and up or the reverse.

So to make it in those times, your edge need to be stellar.

In your example, using your own strategy of taking a loss at no more than 10% of your trading account, your buy stop on the 2nd trade would be $105, the resulting loss would be $20,000, and the net gain of the two trades would be $30,000. The risk:reward ratio and ability to follow through on a trading plan is a major edge in any kind of market.

 

[JB3]

Quote from JB3:

Nice Neke. Very Impressive.

To infinity...and beyond!!!

See, right after I made this comment. The equity curve went into dot com mode.

 

[Rimping]

Quote from BillBebinger:

This strategy is suicidal and the account statements were photoshopped. Nice try.

You're probably not a trader yourself to think that such results are impossible in this market.

 

[Tonkadad]

With that kind of money or potential on the line, why don't you go with the best broker you can find?

 

[neke]

Quote from NoDoji:

In your example, using your own strategy of taking a loss at no more than 10% of your trading account, your buy stop on the 2nd trade would be $105, the resulting loss would be $20,000, and the net gain of the two trades would be $30,000. The risk:reward ratio and ability to follow through on a trading plan is a major edge in any kind of market.

Just used that as illustration. Cutting losses at 10% does not solve the problem. You could try that on 110 down to 100 back to 110.

 

[NoDoji]

Quote from BillBebinger:

This strategy is suicidal and the account statements were photoshopped. Nice try.

To those of you who think Neke's account statements are photoshopped and these kinds of gains are impossible, please take a moment to study how options work. Buying options let you leverage your $$ hugely. I invested $3300 on 5 AMSC calls at the end of a day last spring and upon the opening bell the next morning closed the position for $5350, a 63% gain. Invested $7500 on 10 V calls in the spring when the stocked tanked, and later that day closed the position for $14,700, nearly a 100% gain. Made $3800 in a matter of minutes on a small position in MA calls when they tanked to a major support level after their last earnings announcement and bounced.

Now if I had bought 100 or 200 contracts (Neke lately has been trading 100 contracts or more) on these trades, my gains in those same brief time periods would've been 10- to 20-fold.

This is Neke's style - limited risk, huge reward. Why would he post this journal, bare his soul during weeks from hell, admit his mistakes, then suddenly decide to start making stuff up???

 

[short&naked]

limited risk, huge reward. [/B]

This only exists in your imagination.

 

[NoDoji]

Quote from short&naked:

This only exists in your imagination.

Yes, if you're short and naked, you are absolutely right

 

[FGBS]

Hey Neke,

Awesome stuff. It is great to have 3 solid weeks of results, but I especially love the evolution of the replies in your journal.
Solid week one: "Its luck, take it out while you can."
Solid week two: Less negative replies, more discussion between the fans and the disbelievers, a couple of just wait this can't last's.
(very) Solid Week three: Fans roaring, and disbelievers can't resort to anything but "PHOTOSHOP!!!" "Prove it, audit it!"

All I can say is great stuff, awesome entertainment and keep the good work. I'm keeping my fingers crossed that the disbelievers won't be back in force next week, as it will only take a tiny slip for them to fill pages of i told you so's.

S/N: Very very valid point.

FGBS