Tuesday, June 7, 2011

Hewlett-Packard (HPQ)

I do not trade Hewlett-Packard. I've wanted to trade the stock for years, especially the short signals, but it has consistently ranked in the high 40s to low 50s in my ranking algorithm (currently its 47th), and I only trade stocks that rank in the top 30.

It's not a huge loss, but our total return on investment since June 2003 would be 172.8% vs. the stock's rise of 63.9%, so we have left a little bit of money on the table.    



1. LONG the week of 6.2.03 at $22.03. The stop was $16.83, so the initial risk (R) on the trade was $5.20. Stopped out and reversed to short at $21.67 the week of 4.19.04. The percentage loss on the trade was -1.6%, and the reward-to-risk ratio was -$0.36/$5.20 = -0.07. 

2. SHORT the week of 4.19.04 at $21.67. Using $25.49 for a stop, R = $3.82. Stopped out and reversed to long at $19.69 the week of 11.1.04. The percentage gain on the trade was 9.1%, and the reward-to-risk ratio was $1.98/$3.82 = 0.52.

3. LONG the week of 11.1.04 at $19.69. With the stop set at $16.49 the risk was $3.20. Stopped out and reversed to short the week of 2.4.08 at $41.88. The percentage gain on the trade was 112.7%, and the reward-to-risk ratio was $22.19/$3.20 = 6.94.

4. SHORT the week of 2.4.08 at $41.88. The stop was $52.63, so R = $10.75. Stopped out and reversed to long at $37.35 the week of 6.1.09. The percentage gain on the trade was 10.8%, and the reward-to-risk ratio was $4.53/$10.75 = 0.42.

5. LONG the week of 6.1.09 at $37.35. With $28.63 for a stop the R on the trade was $8.72. Stopped out and reversed to short at $47.07 the week of 1.25.10. The percentage gain on the trade was 26.0%, and the reward-to-risk ratio was $9.72/$8.72 = 1.12.

6. SHORT the week of 1.25.10 at $47.07.  The stop was $53.49, so that means R was $6.42. Stopped out and reversed to long the week of 3.22.10 at $53.42. The percentage loss on the trade was -13.5%, and the reward-to-risk ratio was -$6.35/$6.42 = -0.99.

7. LONG the week of 3.22.10 at $53.42. Using a $48.29 stop, the risk on the trade was $5.13. Stopped out and reversed to short at $46.73 the week of 5.3.10. The percentage loss on the trade was -12.5%, and the reward-to-risk ratio was -$6.69/$5.13 = -1.30.

8. SHORT the week of 5.3.10 at $46.73. The initial stop was $55.74, so the R = $9.01. Stopped out and reversed to long the week of 1.3.11 at $45.09. The percentage gain on the trade was 3.5%, and the reward-to-risk ratio was $1.64/$9.01 = 0.18.

9. LONG the week of 1.3.11 at $45.09. With a stop set at $39.27 the risk was $5.82. Stopped out and reversed to short at $42.68 the week of 2.22.11. The percentage loss on the trade was -5.3%, and the reward-to-risk ratio was -$2.41/$5.82 = -0.41.

10. SHORT the week of 2.22.11 at $42.68. The beginning stop was $50.58, so R = $7.90. Closed last week at $36.11 with a $42.82 stop. The percentage gain on this trade is 15.4%, and the reward-to-risk ratio is $6.57/$7.90 = 0.83.

Bottom Line:
Winning Trades: 6 | 60.0% | $7.77/share avg.
Losing Trades: 4 | 40.0% | -$3.95/share avg.
Average Trade: Gain of 14.5% | $3.08/share | Reward-to-Risk Ratio (R): 0.72

2 comments:

  1. Can you explain your ranking algo? thomasfindlan@hotmail.com

    ReplyDelete
  2. can u explain in detail your volatility trading method. it seems to meet my personality. thanks

    ReplyDelete