Sunday, May 15, 2011

Aruba Networks (ARUN)

I think we've done a pretty good job trading Aruba Networks since 2007. 

Starting from our initial buy signal at $17.75 in May 2007, a simple buy-and-hold strategy, which I often use as a measuring stick, would have resulted in an 81.6% total return.

But trading the volatility system, our total return on investment has been 1,021.3%.  



1. LONG the week of 5.21.07 at $17.75. My stop was $12.72, so the initial risk (R) on the trade was $5.03. Stopped out and reversed to short the week of 11.5.07 at $15.53. The percentage loss on the trade was -12.5%, and the reward-to-risk ratio was -$2.22/$5.03 = -0.44.

2. SHORT the week of 11.5.07 at $15.53. Using $23.05 for a stop, the R on the trade was $7.52. Stopped out and reversed to long at $4.33 the week of 4.13.09. The percentage gain on the trade was 72.1%, and the reward-to-risk ratio was $11.20/$7.52 = 1.49.

3. LONG the week of 4.13.09 at $4.33.  My stop was set at $2.45, so my R was just $1.88. Closed Friday at $32.24 with a $24.72 stop. The percentage gain on this trade is 644.6%, and the reward-to-risk ratio is $27.91/$1.88 = 14.85.

Bottom Line:
Winning Trades: 2 | 66.7% | $19.56/share avg.
Losing Trades: 1 | 33.3% | -$2.22/share
Average Trade: Gain of 234.7% | $12.30/share | Reward-to-Risk Ratio (R): 5.30

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