Can superior return be achieved through active trading?
The answer is a definite yes. If you buy and hold, you will likely suffer during
the bear market of 2000 to 2002. Those years were very profitable using our
strategy.
The use of high percentage trades with small gain daily, frees up funds so we
can repeat the strategy again day after day, racking up profits.
This strategy is based on the tendency of stocks to reverse to their mean.
The trick is to identify which stocks to trade, and we provide that service.
Trading this strategy also has its pitfalls. You will occasionally encounter a
stock that releases negative news after the trading day, resulting in a large
gap down the next morning. This is why we diversify and only trade 20% of
our account per stock. More conservative traders may even want to use 15%
of their account per trade. More aggressive traders can use margin and use
up to 40% per trade. In any case, we do not want to hold on to any stocks
long term and will most likely sell on the next trading day.
In order to successfully trade this strategy, one needs to be extremely
disciplined. You need to have the confidence to trade all of our picks. You
can gain confidence by studying our past histories.
One needs to pick the right stocks, meaning picking stocks that would most
likely having greater than a 50% chance of moving in the right direction in the
near future. We are here to help you achieve that.
One needs to hold no longer than two trading days, even with a big loss. A
lot of work and backtesting had been done, and we find out that the optimum
profit is achieved when we sell at the opening of the next day.
Nothing is worse than holding on to a loss, watching it grow larger and larger
day after day, tying up capital, creating unnecessary stress.
Trading is like any other business, and you will need sufficient capital to
succeed. Our average win has been about 1 to 3%. Suppose your account is
$10,000 and you use $4,000 per trade. Suppose your broker's commission is
10$ per trade, that is 0.5% in transaction costs. Suppose your account is
$50,000 and you use $20,000 per trade, your transaction cost is now only
0.1%.
So, if you have a small account, you will need to choose a broker with the
lowest commission possible. If you have a larger account, the broker's
commission can be more negligible.
************
Additional notes regarding exits:
The performance results for 2001-2004 were obtained thru backtesting using
the opening price of the next day as exits. In real trading, sometimes we get
better exit prices than opening, sometimes we get worse exit prices.
Currently, our entry is mechanical, but our exit is very much discretionary. As
long as we sell the next day, we should be fine. The results of real trading so
far has been very encouraging. You can follow our exit alerts, or you can try
your own exits, just remember the goal of duplicating or outperforming the
opening price.
The answer is a definite yes. If you buy and hold, you will likely suffer during
the bear market of 2000 to 2002. Those years were very profitable using our
strategy.
The use of high percentage trades with small gain daily, frees up funds so we
can repeat the strategy again day after day, racking up profits.
This strategy is based on the tendency of stocks to reverse to their mean.
The trick is to identify which stocks to trade, and we provide that service.
Trading this strategy also has its pitfalls. You will occasionally encounter a
stock that releases negative news after the trading day, resulting in a large
gap down the next morning. This is why we diversify and only trade 20% of
our account per stock. More conservative traders may even want to use 15%
of their account per trade. More aggressive traders can use margin and use
up to 40% per trade. In any case, we do not want to hold on to any stocks
long term and will most likely sell on the next trading day.
In order to successfully trade this strategy, one needs to be extremely
disciplined. You need to have the confidence to trade all of our picks. You
can gain confidence by studying our past histories.
One needs to pick the right stocks, meaning picking stocks that would most
likely having greater than a 50% chance of moving in the right direction in the
near future. We are here to help you achieve that.
One needs to hold no longer than two trading days, even with a big loss. A
lot of work and backtesting had been done, and we find out that the optimum
profit is achieved when we sell at the opening of the next day.
Nothing is worse than holding on to a loss, watching it grow larger and larger
day after day, tying up capital, creating unnecessary stress.
Trading is like any other business, and you will need sufficient capital to
succeed. Our average win has been about 1 to 3%. Suppose your account is
$10,000 and you use $4,000 per trade. Suppose your broker's commission is
10$ per trade, that is 0.5% in transaction costs. Suppose your account is
$50,000 and you use $20,000 per trade, your transaction cost is now only
0.1%.
So, if you have a small account, you will need to choose a broker with the
lowest commission possible. If you have a larger account, the broker's
commission can be more negligible.
************
Additional notes regarding exits:
The performance results for 2001-2004 were obtained thru backtesting using
the opening price of the next day as exits. In real trading, sometimes we get
better exit prices than opening, sometimes we get worse exit prices.
Currently, our entry is mechanical, but our exit is very much discretionary. As
long as we sell the next day, we should be fine. The results of real trading so
far has been very encouraging. You can follow our exit alerts, or you can try
your own exits, just remember the goal of duplicating or outperforming the
opening price.
| Copyright © 2008 Extreme Trading Inc. |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
| Extreme Trading |