Tuesday, May 31, 2011

Crocs (CROX)

Since my first long signal back in October 2006 (when the stock was trading at $19.44) through the end of last week, Crocs is up just 17.6%.

But using the Volatility System to trade the stock over the same time period has brought a total return on investment of 4,219.2%.  



1. LONG the week of 10.9.06 at $19.44. Using $14.31 for my stop, the initial risk (R) was $5.13. Stopped out and reversed to short at $47.52 the week of 10.29.07. The percentage gain on the trade was 144.4%, and the reward-to-risk ratio was $28.08/$5.13 = 5.47.

2. SHORT the week of 10.29.07 at $47.52. My stop was $77.67, so R = $30.15. Stopped out and reversed to long the week of 5.4.09 at $2.52. The percentage gain on the trade was 94.7%, and the reward-to-risk ratio was $45.00/$30.15 = 1.49.

3. LONG the week of 5.4.09 at $2.52. I used $0.47 for a stop, so the risk on the trade was just $2.05. Closed last week at $22.87 with a $17.37 stop. The percentage gain on this trade is 807.5%, and the reward-to-risk ratio is $20.35/$2.05 = 9.94.

Bottom Line:
Winning Trades: 3 | 100.0% | $31.14/share avg.
Losing Trades: 0 | 0.0% | -$0.00/share
Average Trade: Gain of 348.9% | $31.14/share | Reward-to-Risk Ratio (R): 5.64

Sunday, May 29, 2011

Netflix (NFLX) Update

I've actually blogged about Netflix three times beginning on March 8th (here, here, and here), and my position has not changed by even one share since that first post, so like we did with Research In Motion a few days ago, let's keep this short by focusing on just the current trade:

- LONG the week of 12.29.08 at $29.87. My stop was $19.25, so that means my risk (R) on the trade was $10.62/share. Yesterday the stock closed at $264.51 with a $193.15 stop, so our gain over about 2 1/2 years is 785.5%, and the reward-to-risk ratio is almost off the charts at $234.64/$10.62 = 22.10.

Bottom Line:
Winning Trades: 5 | 62.5% | $50.53/share avg.
Losing Trades: 3 | 37.5% | -$3.80/share avg.
Average Trade: Gain of 106.5% | $30.15/share | Reward-to-Risk Ratio (R): 3.01

By the way, I use a 1% risk model for position sizing, which means the trade above was initially weighted at just 2.69% of my portfolio, so a 785.5% gain, while it might sound impressive, actually only contributes 21.12% to my overall gains.

Thursday, May 26, 2011

Research In Motion (RIMM) Update

Back on April 14th I blogged about the short signal I got for Research In Motion at $54.78. Normally, in the interest of full disclosure and context, I'd break down all of the trades I've made starting in 2003 (you can see them here), but for once let's just take a quick look at the current trade:

- SHORT the week of 4.4.11 at $54.78 with an initial stop of $67.68. Our risk (R) for the trade calculates to $12.90/share. Last Friday the stock closed at $43.52, so our gain after a little less than 2 months is 20.6%, and the reward-to-risk ratio is pretty healthy at $11.26/$12.90 = 0.87.

Bottom Line:
Winning Trades: 4 | 28.6% | $39.41/share avg.
Losing Trades: 10 | 71.4% | -$7.06/share avg.
Average Trade: Gain of 53.4% | $6.22/share | Reward-to-Risk Ratio (R): 2.13

Wednesday, May 25, 2011

OpenTable (OPEN)

Unfortunately, at least for my own portfolio, both OpenTable and Lululemon occupy that tiny space on page 101 of Seth Godin's awesome book Linchpin that is the intersection of Would Have, Could Have, and Should Have: Didn't.



1. LONG signal (which I did not take) the week of 2.8.10 at $31.10. My stop would have been $23.68, so the risk (R) on the trade would have worked out to $7.42. It closed last week at $90.14 with an $80.55 stop. The percentage gain on this trade would be 189.8% with a reward-to-risk ratio of $59.04/$7.42 = 7.96.

Bottom Line:
None

Actually, I shouldn't be too upset about not pulling the trigger on OpenTable last February. Heck, I only missed out on a 189.8% gain.

Lululemon Athletica is the one that really hurts. I've mentioned it on this blog before - I passed on a long signal back in March 2009 when the stock was trading at $10.20. Where did it close last week? $96.29. Just an 844% gain, that's all.

It's funny, but I can honestly say I don't regret pulling the trigger on any of the losing trades I've made over the years, even that terrible Priceline.com short last June, but not taking these two trades continues to bother me. 

Mark Twain was right. 
 

Monday, May 23, 2011

CF Industries (CF)

Our return on investment trading CF Industries is 1,079.5% since late 2006, while a basic buy-and-hold strategy over the same period would have realized a gain of 676.4%, so we've added a little bit of value here.



1. LONG the week of 10.2.06 at $17.91. My initial stop was at $14.99, so the risk (R) on the trade was $2.92. Stopped out and reversed to short at $90.78 the week of 9.22.08. The percentage gain on the trade was 406.9%, and the reward-to-risk ratio was $72.87/$2.92 = 24.97.

2. SHORT the week of 9.22.08 at $90.78. Using $164.45 for my stop, R = $73.67. Stopped out and reversed to long the week of 3.23.09 at $72.76. The percentage gain on the trade was 19.9%, and the reward-to-risk ratio was $18.02/$73.67 = 0.24.

3. LONG the week of 3.23.09 at $72.76. With the stop set at $45.63 the risk was $27.13. Stopped out and reversed to short at $84.88 the week of 4.19.10. The percentage gain on the trade was 16.7%, and the reward-to-risk ratio was $12.12/$27.13 = 0.45.

4. SHORT the week of 4.19.10 at $84.88. The stop was $102.29, so my risk was $17.41. Stopped out and reversed to long at $84.21 the week of 8.2.10. The percentage gain on the trade was 0.8%, and the reward-to-risk ratio was $0.67/$17.41 = 0.04.

5. LONG the week of 8.2.10 at $84.21. With the stop set at $62.02 my risk on the trade was $22.19. Closed last week at $139.06 with a $115.27 stop. The percentage gain on this trade is 65.1%, and the reward-to-risk ratio is $54.85/$22.19 = 2.47.

Bottom Line:
Winning Trades: 5 | 100.0% | $31.71/share avg.
Losing Trades: 0 | 0.0% | -$0.00/share
Average Trade: Gain of 101.9% | $31.71/share | Reward-to-Risk Ratio (R): 5.63

Sunday, May 22, 2011

Cimarex Energy (XEC)

My return on investment trading Cimarex since June 2003 stands at 614.9%, which more or less doubles the stock's 309.5% rise over the same time period. Not too bad.

But as you'll see below, I was reversed to short at the start of this month, and while I try hard not to have an opinion about the future direction of the stocks I'm trading, I honestly can't help but feel neutral or even slightly bullish on this one. That has me contemplating something I don't do very often: writing $90 June (covered) puts.



1. LONG the week of 6.2.03 at 22.41. My stop was $18.68, so the initial risk (R) on the trade was $3.73. Stopped out and reversed to short at $19.23 the week of 9.22.03. The percentage loss on the trade was -14.2%, and the reward-to-risk ratio was -$3.18/$3.73 = -0.85.

2. SHORT the week of 9.22.03 at $19.23. Using $23.06 as a stop, R = $3.83. Stopped out and reversed to long the week of 12.1.03 at $24.72. The percentage loss on the trade was -28.5%, and the reward-to-risk ratio was -$5.49/$3.83 = -1.43.

3. LONG the week of 12.1.03 at $24.72. With the stop set at $20.73 my risk was $3.99. Stopped out and reversed to short at $37.52 the week of 6.5.06. The percentage gain on the trade was 51.8%, and the reward-to-risk ratio was $12.80/$3.99 = 3.21.

4. SHORT the week of 6.5.06 at $37.52. The stop was $46.18, so R = $8.66. Stopped out and reversed to long the week of 4.16.07 at $37.27. The percentage gain on the trade was 0.7%, and the reward-to-risk ratio was $0.25/$8.66 = 0.03.

5. LONG the week of 4.16.07 at $37.27. I used $33.42 for a stop, so the risk on the trade was $3.85. Stopped out and reversed to short at $51.71 the week of 7.28.08. The percentage gain on the trade was 38.7%, and the reward-to-risk ratio was $14.44/$3.85 = 3.75.

6. SHORT the week of 7.28.08 at $51.71.  My stop was $68.85, so that means R was $17.14. Stopped out and reversed to long the week of 4.20.09 at $26.67. The percentage gain on the trade was 48.4%, and the reward-to-risk ratio was $25.04/$17.14 = 1.46.

7. LONG the week of 4.20.09 at $26.67. The stop was $16.07, so my risk was $10.60. Stopped out and reversed to short at $95.30 the week of 5.2.11. The percentage gain on the trade was 257.3%, and the reward-to-risk ratio was $68.63/$10.60 = 6.47.

8. SHORT the week of 5.2.11 at $95.30. The initial stop was $120.95, so R = $25.65. Closed yesterday at $91.76 with a $117.73 stop. The percentage gain on this trade is 3.7%, and the reward-to-risk ratio is $3.54/$25.65 = 0.14.

Bottom Line:
Winning Trades: 6 | 75.0% | $20.78/share avg.
Losing Trades: 2 | 25.0% | -$4.34/share avg.
Average Trade: Gain of 44.7% | $14.50/share | Reward-to-Risk Ratio (R): 1.60

Saturday, May 21, 2011

Boeing Co. (BA)

I think I've traded Boeing pretty well since the middle of 2003. The stock is up 162% from my initial $29.59 buy signal that June, but my total return on investment over 5 trades covering that time span stands at 390.5%.


   
1. LONG the week of 6.2.03 at $29.59. Using $23.72 for my stop, the risk (R) on the trade was $5.87. Stopped out and reversed to short the week of 9.5.06 at $65.22. The percentage gain on the trade was 120.4%, and the reward-to-risk ratio was $35.63/$5.87 = 6.07.

2. SHORT the week of 9.5.06 at $65.22. With the stop set at $76.96 the R was $11.74. Stopped out and reversed to long at $76.98 the week of 11.6.06. The percentage loss on the trade was -18.0%, and the reward-to-risk ratio was -$11.76/$11.74 = -1.00.

3. LONG the week of 11.6.06 at $76.98. The stop was $65.37, so my risk was $11.61. Stopped out and reversed to short at $80.66 the week of 12.10.07. The percentage gain on the trade was 4.8%, and the reward-to-risk ratio was $3.68/$11.61 = 0.32.

4. SHORT the week of 12.10.07 at $80.66. With $94.79 for a stop the R on the trade was $14.13. Stopped out and reversed to long the week of 5.4.09 at $43.65. The percentage gain on the trade was 45.9%, and the reward-to-risk ratio was $37.01/$14.13 = 2.62.

5. LONG the week of 5.4.09 at $43.65.  My first stop was set at $32.10, so R = $11.55. Closed yesterday at $77.52 with a $70.10 stop. The percentage gain on this trade is 77.6%, and the reward-to-risk ratio is $33.87/$11.55 = 2.93.

Bottom Line:
Winning Trades: 4 | 80.0% | $27.55/share avg.
Losing Trades: 1 | 20.0% | -$11.76/share
Average Trade: Gain of 46.1% | $19.69/share | Reward-to-Risk Ratio (R): 2.19

Wednesday, May 18, 2011

Another (better) way to trade Google

We talked yesterday about our less-than-stellar results trading Google since 2007, but before we move on to another stock, let's take one more quick look at Google and see if we can do better.

For a number of reasons, the most important being my desire to follow long-term trends and trade less frequently, I trade on weekly price data. 

But what if we traded Google on a daily basis?

For reasons that will be obvious (the significantly larger number of trades), I'm not going to cover the daily results on a trade-by-trade basis like I normally do. I'm just going to provide a summary for each time frame (weekly vs. daily), and we'll see how they compare.

Weekly:
Total # of trades: 9
Winning Trades: 6 | 66.7% | $71.29/share avg.
Losing Trades: 3 | 33.3% | -$64.87/share avg.
Average Trade: Gain of 7.6% | $25.90/share | Reward-to-Risk Ratio (R): 0.36 
Total Return on Investment: 68.3% 

Daily: 
Total # of trades: 51
Winning Trades: 23 | 45.1% | $63.91/share avg.
Losing Trades: 28 | 54.9% | -$23.03/share avg.
Average Trade: Gain of 3.9% | $16.18/share | Reward-to-Risk Ratio (R): 0.68
Total Return on Investment: 335.7%

So there you have it. To make a long story short (not sure if that's a trading joke?), we could have made 3.5 times more money while taking just 1/3 of the risk trading Google daily instead of weekly.

So going forward, obviously I'm going to start trading Google daily, right?

No.

I'm going to stick to trading on weekly information. It's just a much better fit for my own personal mental approach to the game.

By the way, if anyone wants my daily trading worksheet for Google, just let me know, and I'll be happy to send it by email in an MS Excel format. After all, I'm not using it.

Tuesday, May 17, 2011

Google (GOOG)

In dollar terms, Google has been a pretty good stock for me to trade since early 2007, averaging a profit of $25.90/share per trade. 

In percentage terms? Well, not so much. Just an average gain of 7.6%. 

But there is (sort of) an upside to all of this. Since February 2007 our trading has produced a total return on investment of 68.3%, whereas if I'd simply held the stock from my first buy signal at $500.40, I'd only be up 5.8% today.   



1. SHORT the week of 2.26.07 at $438.68. Using $510.33 for my stop, the initial risk (R) on the trade was $71.65. Stopped out and reversed to long the week of 5.29.07 at $500.40. The percentage loss on the trade was -12.3%, and the reward-to-risk ratio was -$61.72/$71.65 = -0.86.

2. LONG the week of 5.29.07 at $500.40. With the stop set at $443.10 my risk was $57.30. Stopped out and reversed to short at $566.40 the week of 1.22.08. The percentage gain on the trade was 13.2%, and the reward-to-risk ratio was $66.00/$57.30 = 1.15.

3. SHORT the week of 1.22.08 at $556.40. The stop was $717.94, so my risk was $151.54. Stopped out and reversed to long at $581.29 the week of 4.28.08. The percentage loss on the trade was -2.6%, and the reward-to-risk ratio was -$14.89/$151.54 = -0.10.

4. LONG the week of 4.28.08 at $581.29. Placing my stop at $431.69, the R on the trade was $149.60. Stopped out and reversed to short the week of 8.25.08 at $463.29. The percentage loss on the trade was -20.3%, and the reward-to-risk ratio was -$118.00/$149.60 = -0.79.

5. SHORT the week of 8.25.08 at $463.29. My stop was $566.50, so that means R was $103.21. Stopped out and reversed to long the week of 3.30.09 at $369.78. The percentage gain on the trade was 25.3%, and the reward-to-risk ratio was $93.51/$103.21 = 0.91. 

6. LONG the week of 3.30.09 at $369.78. My stop was $269.70, so my R was $100.08. Stopped out and reversed to short at $550.01 the week of 1.19.10. The percentage gain on the trade was 48.7%, and the reward-to-risk ratio was $180.23/$100.08 = 1.80.

7. SHORT the week of 1.19.10 at $550.01. The initial stop was $631.14, so R = $81.13. Stopped out and reversed to long the week of 9.20.10 at $527.29. The percentage gain on the trade was 4.3%, and the reward-to-risk ratio was $22.72/$81.13 = 0.28.

8. LONG the week of 9.20.10 at $527.29. With the stop set at $447.16 the risk on the trade was $80.13. Stopped out and reversed to short at $561.06 the week of 3.14.11. The percentage gain on the trade was 6.4%, and the reward-to-risk ratio was $33.77/$80.13 = 0.42.

9. SHORT the week of 3.14.11 at $561.06. My initial stop was $631.23, so the risk was $70.17. Closed last week at $529.55 with a $596.80 stop. The percentage gain on this trade is 5.6%, and the reward-to-risk ratio is $31.51/$70.17 = 0.45.

Bottom Line:
Winning Trades: 6 | 66.7% | $71.29/share avg.
Losing Trades: 3 | 33.3% | -$64.87/share avg.
Average Trade: Gain of 7.6% | $25.90/share | Reward-to-Risk Ratio (R): 0.36

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

Saturday, May 14, 2011

Salesforce.com (CRM)

Since our first trade at $15.67 back in September 2004 our total return on investment trading Salesforce.com is 728.2%. If you'd simply held the stock over that same time period you would have realized a 760.9% return. Doing the math, our results clocked in at 95.7% of the basic buy-and-hold strategy, so our grade on this one is an A. And just so you know, I grade on a curve.



1. LONG the week of 9.13.04 at $15.67. My stop was $9.27, so the initial risk (R) on the trade was $6.40. Stopped out and reversed to short at $15.00 the week of 1.10.05. The percentage loss on the trade was -4.3%, and the reward-to-risk ratio was -$0.67/$6.40 = -0.10. 

2. SHORT the week of 1.10.05 at $15.00. Using $20.85 for a stop, R = $5.85. Stopped out and reversed to long at $18.49 the week of 5.16.05. The percentage loss on the trade was -23.3%, and the reward-to-risk ratio was -$3.49/$5.85 = -0.60.

3. LONG the week of 5.16.05 at $18.49. With the stop set at $13.24 my risk was $5.25. Stopped out and reversed to short the week of 5.8.06 at $31.20. The percentage gain on the trade was 68.7%, and the reward-to-risk ratio was $12.71/$5.25 = 2.42.

4. SHORT the week of 5.8.06 at $31.20. The stop was $40.12, so R = $8.92. Stopped out and reversed to long at $32.85 the week of 8.14.06. The percentage loss on the trade was -5.3%, and the reward-to-risk ratio was -$1.65/$8.92 = -0.18.

5. LONG the week of 8.14.06 at $32.85. With $21.67 for my stop the risk on the trade was $11.18. Stopped out and reversed to short at $50.65 the week of 9.22.08. The percentage gain on the trade was 54.2%, and the reward-to-risk ratio was $17.80/$11.18 = 1.59.

6. SHORT the week of 9.22.08 at $50.65.  The stop was $71.15, so that means R was $20.50. Stopped out and reversed to long the week of 3.30.09 at $37.27. The percentage gain on the trade was 26.4%, and the reward-to-risk ratio was $13.38/$20.50 = 0.65.

7. LONG the week of 3.30.09 at $37.27. My stop was $23.04, so the risk on the trade was $14.23. Closed last week at $134.91 with a $118.86 stop. The percentage gain on this trade is 262.0%, and the reward-to-risk ratio is $97.64/$14.23 = 6.86. 

Bottom Line:
Winning Trades: 4 | 57.1% | $35.38/share avg.
Losing Trades: 3 | 42.9% | -$1.94/share avg.
Average Trade: Gain of 54.1% | $19.39/share | Reward-to-Risk Ratio (R): 1.52

Friday, May 13, 2011

Riverbed Technology (RVBD)

Unlike Akamai Technologies and Apple, where a simple buy-and-hold strategy would have slightly outperformed the trading system we're using in terms of total return, I think we've traded Riverbed Technology pretty well. 

From November 2007, when we made our first trade at $13.66, through the end of last week, Riverbed Technology is up 151.4%. 

Trading the Volatility System, our total return on investment is 509.3%. I'm going to give this one an A+.



1. SHORT the week of 11.5.07 at $13.66. Using $24.09 for my stop, the initial risk (R) on the trade was $10.43. Stopped out and reversed to long the week of 3.30.09 at $7.98. The percentage gain on the trade was 41.6%, and the reward-to-risk ratio was $5.68/$10.43 = 0.54.

2. LONG the week of 3.30.09 at $7.98. My stop was $4.73, so the R was $3.25. Closed last week at $34.34 with a $32.38 stop. The percentage gain on this trade is 330.3%, and the reward-to-risk ratio is $26.36/$3.25 = 8.12.

Bottom Line:
Winning Trades: 2 | 100.0% | $16.02/share avg.
Losing Trades: 0 | 0.0% | -$0.00/share
Average Trade: Gain of 186.0% | $16.02/share | Reward-to-Risk Ratio (R): 4.33

Wednesday, May 11, 2011

Apple (AAPL)

We started talking about total return on investment with Akamai Technologies yesterday, so what about the current value of just $1 invested/traded in Apple back in May 2003? 

Based on the 7 trades detailed below, the current value of that dollar is now $31.05. That's a total return of 3,005.2% over 8 years. Of course, just like with Akamai, a basic buy-and-hold approach covering the same time period would have generated slightly better results: a 3,688.6% return on investment. I'm going to give myself a B- on my Apple trading. 



1. LONG the week of 5.5.03 at $9.15. Using $7.03 for my stop, the initial risk (R) on the trade was $2.12. Stopped out and reversed to short at $63.19 the week of 3.6.06. The percentage gain on the trade was 590.6%, and the reward-to-risk ratio was $54.04/$2.12 = 25.46. 

2. SHORT the week of 3.6.06 at $63.19. With my stop at $81.60 the R was $18.41. Stopped out and reversed to long at $68.30 the week of 7.31.06. The percentage loss on the trade was -8.1%, and the reward-to-risk ratio was -$5.11/$18.41 = -0.28. 

3. LONG the week of 7.31.06 at $68.30. Our stop was $51.80, so R = $16.50. Stopped out and reversed to short the week of 1.22.08 at $130.01. The percentage gain on the trade was 90.4%, and the reward-to-risk ratio was $61.71/$16.50 = 3.74.

4. SHORT the week of 1.22.08 at $130.01. With my stop at $187.58 the risk was $57.57. Stopped out and reversed to long at $161.04 the week of 4.14.08. The percentage loss on the trade was -23.9%, and the reward-to-risk ratio was -$31.03/$57.57 = -0.54.

5. LONG the week of 4.14.08 at $161.04. My stop was $118.71, so R = $42.33. Stopped out and reversed to short the week of 9.8.08 at $148.94. The percentage loss on the trade was -7.5%, and the reward-to-risk ratio was -$12.10/$42.33 = -0.29.

6. SHORT the week of 9.8.08 at $148.94. Setting my stop at $188.95, the R on the trade was $40.01. Stopped out and reversed to long at $115.99 the week of 3.30.09. The percentage gain on the trade was 22.1%, and the reward-to-risk ratio was $32.95/$40.01 = 0.82. 

7. LONG the week of 3.30.09 at $115.99. The stop was $84.39, so R = $31.60. Closed last week at $346.66 with a $311.05 stop. The percentage gain on this trade is 198.9%, and the reward-to-risk ratio is $230.67/$31.60 = 7.30.

Bottom Line:
Winning Trades: 4 | 57.1% | $94.84/share avg.
Losing Trades: 3 | 42.9% | -$16.08/share avg.
Average Trade: Gain of 123.2% | $47.30/share | Reward-to-Risk Ratio (R): 5.17

Tuesday, May 10, 2011

Akamai Technologies, Inc. (AKAM)

Average gains of 69.2% per trade are okay I guess, middle of the road really, but what's the actual return on investment of trading Akamai Technologies since 2003? For the sake of simplicity (my own sake at least), let's start with just $1 invested/traded in April 2003. The current value of that $1 is $13.58, so that's a total return of 1,258% over about 8 years. Is that good? A simple buy-and-hold strategy over the same time period would have produced a return of 1,405.2%, so I'm going to have to give this one a B+. 



1. LONG the week of 4.21.03 at $2.30. My stop was $1.21, so the initial risk (R) on the trade was $1.09. Stopped out and reversed to short at $12.80 the week of 11.15.04. The percentage gain on the trade was 456.5%, and the reward-to-risk ratio was $10.50/$1.09 = 9.62. 

2. SHORT the week of 11.15.04 at $12.80. Using $17.03 for a stop, R = $4.23. Stopped out and reversed to long at $14.54 the week of 7.11.05. The percentage loss on the trade was -13.6%, and the reward-to-risk ratio was -$1.74/$4.23 = -0.41.

3. LONG the week of 7.11.05 at $14.54. With the stop set at $11.45 my risk was $3.09. Stopped out and reversed to short the week of 4.23.07 at $44.80. The percentage gain on the trade was 208.1%, and the reward-to-risk ratio was $30.26/$3.09 = 9.81.

4. SHORT the week of 4.23.07 at $44.80. The stop was $57.87, so R = $13.07. Stopped out and reversed to long at $40.33 the week of 5.12.08. The percentage gain on the trade was 10.0%, and the reward-to-risk ratio was $4.47/$13.07 = 0.34.

5. LONG the week of 5.12.08 at $40.33. With $29.01 for my stop the R on the trade was $11.32. Stopped out and reversed to short at $23.50 the week of 7.28.08. The percentage loss on the trade was -41.7%, and the reward-to-risk ratio was -$16.83/$11.32 = -1.49.

6. SHORT the week of 7.28.08 at $23.50.  The stop was $36.21, so that means R was $12.71. Stopped out and reversed to long the week of 2.2.09 at $17.41. The percentage gain on the trade was 25.9%, and the reward-to-risk ratio was $6.09/$12.71 = 0.48.

7. LONG the week of 2.2.09 at $17.41. My stop was $10.19, so the risk on the trade was $7.22. Stopped out and reversed to short at $16.44 the week of 7.27.09. The percentage loss on the trade was -5.6%, and the reward-to-risk ratio was -$0.97/$7.22 = -0.13.

8. SHORT the week of 7.27.09 at $16.44. The initial stop was $23.89, so R = $7.45. Stopped out and reversed to long the week of 11.2.09 at $23.32. The percentage loss on the trade was -41.8%, and the reward-to-risk ratio was -$6.88/$7.45 = -0.92.

9. LONG the week of 11.2.09 at $23.32. With my stop set at $17.44 the risk was $5.88. Stopped out and reversed to short at $41.43 the week of 2.7.11. The percentage gain on the trade was 77.7%, and the reward-to-risk ratio was $18.11/$5.88 = 3.08.

10. SHORT the week of 2.7.11 at $41.43. The initial stop was $54.06, so R = $12.63. Closed last week at $34.62 with a $44.48 stop. The percentage gain on this trade is 16.4%, and the reward-to-risk ratio is $6.81/$12.63 = 0.54.

Bottom Line:
Winning Trades: 6 | 60.0% | $12.71/share avg.
Losing Trades: 4 | 40.0% | -$6.61/share avg.
Average Trade: Gain of 69.2% | $4.98/share | Reward-to-Risk Ratio (R): 2.09

Monday, May 9, 2011

SandRidge Energy, Inc. (SD)

While Chesapeake brings a slightly higher Reward-to-Risk ratio per trade, SandRidge is actually the better stock to trade based on overall dollar and percentage returns. 

1. SHORT the week of 8.4.08 at $37.59. With my stop at $61.31 the initial risk (R) on the trade was $23.72. Stopped out and reversed to long the week of 5.4.09 at $11.11. The percentage gain on the trade was 70.4%, and the reward-to-risk ratio was $26.48/$23.72 = 1.12.



2. LONG the week of 5.4.09 at $11.11. The stop was $5.30, so R = $5.81. Stopped out and reversed to short at $8.60 the week of 11.30.09. The percentage loss on the trade was -22.6%, and the reward-to-risk ratio was -$2.51/$5.81 = -0.43.

3. SHORT the week of 11.30.09 at $8.60. Using $13.17 for a stop, my risk was $4.57. Stopped out and reversed to long the week of 9.27.10 at $5.89. The percentage gain on the trade was 31.5%, and the reward-to-risk ratio was $2.71/$4.57 = 0.59.

4. LONG the week of 9.27.10 at $5.89. My initial stop was $3.84, so the R = $2.05. Closed last week at $10.36 with a $9.52 stop. The percentage gain on this trade is 75.9%, and the reward-to-risk ratio is $4.47/$2.05 = 2.19.

Bottom Line:
Winning Trades: 3 | 75.0% | $11.22/share avg.
Losing Trades: 1 | 25.0% | -$2.51/share
Average Trade: Gain of 38.8% | $7.79/share | Reward-to-Risk Ratio (R): 0.87

Saturday, May 7, 2011

Chesapeake Energy Corporation (CHK)

1. LONG the week of 5.12.03 at $8.98. My stop was at $6.71, so the initial risk (R) on the trade was $2.27. Stopped out and reversed to short at $28.08 the week of 2.6.06. The percentage gain on the trade was 212.7%, and the reward-to-risk ratio was $19.10/$2.27 = 8.43.



2. SHORT the week of 2.6.06 at $28.08. Using $36.62 for my stop, R = $8.54. Stopped out and reversed to long the week of 11.27.06 at $32.50. The percentage loss on the trade was -15.7%, and the reward-to-risk ratio was -$4.42/$8.54 = -0.52.

3. LONG the week of 11.27.06 at $32.50. With the stop set at $28.05 the risk was $4.45. Stopped out and reversed to short at $26.70 the week of 1.3.07. The percentage loss on the trade was -17.8%, and the reward-to-risk ratio was -$5.80/$4.45 = -1.30.

4. SHORT the week of 1.3.07 at $26.70. The stop was $31.27, so my risk was $4.57. Stopped out and reversed to long at $31.12 the week of 4.2.07. The percentage loss on the trade was -16.6%, and the reward-to-risk ratio was -$4.42/$4.57 = -0.97.

5. LONG the week of 4.2.07 at $31.12. With $26.89 for my stop the R on the trade was $4.23. Stopped out and reversed to short the week of 8.4.08 at $41.79. The percentage gain on the trade was 34.3%, and the reward-to-risk ratio was $10.67/$4.23 = 2.52.

6. SHORT the week of 8.4.08 at $41.79. I placed my stop at $63.57, so that means the R was $21.78. Stopped out and reversed to long the week of 4.13.09 at $21.11. The percentage gain on the trade was 49.5%, and the reward-to-risk ratio was $20.68/$21.78 = 0.95. 

7. LONG the week of 4.13.09 at $21.11. My stop was $12.36, so my R was $8.75. Stopped out and reversed to short at $22.03 the week of 3.22.10. The percentage gain on the trade was 4.4%, and the reward-to-risk ratio was $0.92/$8.75 = 0.11.

8. SHORT the week of 3.22.10 at $22.03. The initial stop was $28.09, so R = $6.06. Stopped out and reversed to long the week of 12.20.10 at $25.48. The percentage loss on the trade was -15.7%, and the reward-to-risk ratio was -$3.45/$6.06 = -0.57. 

9. LONG the week of 12.20.10 at $25.48. With the stop set at $21.44 the risk on the trade was $4.04. Closed last week at $30.95 with a $29.06 stop. The percentage gain on this trade is 21.5%, and the reward-to-risk ratio is $5.47/$4.04 = 1.35.

Bottom Line:
Winning Trades: 5 | 55.6% | $11.37/share avg.
Losing Trades: 4 | 44.4% | -$4.52/share avg.
Average Trade: Gain of 28.5% | $4.31/share | Reward-to-Risk Ratio (R): 1.11

Friday, May 6, 2011

Precision Castparts Corp. (PCP)

1. LONG the week of 9.15.03 at $18.08. Using $15.40 for my stop, the initial risk (R) on the trade was $2.68. Stopped out and reversed to short at $115.57 the week of 1.14.08. The percentage gain on the trade was 539.2%, and the reward-to-risk ratio was $97.49/$2.68 = 36.44.



2. SHORT the week of 1.14.08 at $115.57. With the stop at $152.58 the R was $37.01. Stopped out and reversed to long at $72.97 the week of 4.20.09. The percentage gain on the trade was 36.9%, and the reward-to-risk ratio was $42.60/$37.01 = 1.15.

3. LONG the week of 4.20.09 at $72.97. My stop was $49.45, so R = $23.52. Stopped out and reversed to short the week of 6.21.10 at $108.53. The percentage gain on the trade was 48.7%, and the reward-to-risk ratio was $35.56/$23.52 = 1.51.

4. SHORT the week of 6.21.10 at $108.53. Placing my stop at $134.39, the risk on the trade was $25.86. Stopped out and reversed to long at $126.68 the week of 9.13.10. The percentage loss on the trade was -16.7%, and the reward-to-risk ratio was -$18.15/$25.86 = -0.70.

5. LONG the week of 9.13.10 at $126.68. The stop was $103.19, so my R = $23.49. Closed last week at $154.52 with a $129.00 stop. The percentage gain on this trade is 22.0%, and the reward-to-risk ratio is $27.84/$23.49 = 1.19.

Bottom Line:
Winning Trades: 4 | 80.0% | $50.87/share avg.
Losing Trades: 1 | 20.0% | -$18.15/share
Average Trade: Gain of 126.0% | $37.07/share | Reward-to-Risk Ratio (R): 7.92

Thursday, May 5, 2011

Joy Global, Inc. (JOYG)

How many losing trades (in a row) does it take to shake off the effects of a 621% gain? I don't know, but it's more than five...

1. LONG the week of 6.9.03 at $6.33. My stop was $4.93, so the initial risk (R) on the trade was just $1.40. Stopped out and reversed to short at $45.65 the week of 7.3.06. The percentage gain on the trade was 621.2%, and the reward-to-risk ratio was $39.32/$1.40 = 28.07.



2. SHORT the week of 7.3.06 at $45.65. Using $64.91 as a stop, R = $19.26. Stopped out and reversed to long the week of 12.4.06 at $42.18. The percentage gain on the trade was 7.6%, and the reward-to-risk ratio was $3.47/$19.26 = 0.18.

3. LONG the week of 12.4.06 at $42.18. With the stop set at $31.81 my risk was $10.37. Stopped out and reversed to short at $39.93 the week of 2.26.07. The percentage loss on the trade was -5.3%, and the reward-to-risk ratio was -$2.25/$10.37 = -0.22.

4. SHORT the week of 2.26.07 at $39.93. The stop was $55.33, so R = $15.40. Stopped out and reversed to long the week of 5.29.07 at $54.78. The percentage loss on the trade was -37.2%, and the reward-to-risk ratio was -$14.85/$15.40 = -0.96.

5. LONG the week of 5.29.07 at $54.78. I used $42.00 for a stop, so the risk on the trade was $12.78. Stopped out and reversed to short at $44.58 the week of 7.23.07. The percentage loss on the trade was -18.6%, and the reward-to-risk ratio was -$10.20/$12.78 = -0.80.

6. SHORT the week of 7.23.07 at $44.58.  Our stop was $61.06, so that means R was $16.48. Stopped out and reversed to long the week of 11.26.07 at $54.95. The percentage loss on the trade was -23.3%, and the reward-to-risk ratio was -$10.37/$16.48 = -0.63.

7. LONG the week of 11.26.07 at $54.95. The stop was $40.38, so my risk was $14.57. Stopped out and reversed to short at $49.19 the week of 9.2.08. The percentage loss on the trade was -10.5%, and the reward-to-risk ratio was -$5.76/$14.57 = -0.40.

8. SHORT the week of 11.26.07 at $49.19. The initial stop was $74.43, so R = $25.24. Stopped out and reversed to long the week of 5.4.09 at $29.80. The percentage gain on the trade was 39.4%, and the reward-to-risk ratio was $19.39/$25.24 = 0.77.

9. LONG the week of 5.4.09 at $29.80. Using $17.74 for my stop, the R was $12.06. Closed last week at $100.95 with an $80.65 stop. The percentage gain on this trade is 238.8%, and the reward-to-risk ratio is $71.15/$12.06 = 5.90.

Bottom Line:
Winning Trades: 4 | 44.4% | $33.33/share avg.
Losing Trades: 5 | 55.6% | -$8.69/share avg.
Average Trade: Gain of 90.2% | $9.99/share | Reward-to-Risk Ratio (R): 3.55

Wednesday, May 4, 2011

Transocean Ltd. (RIG)

Honestly, Transocean isn't a great stock to trade. At least, not in the system we're talking about here. Sure, it's 4-for-4 on trades so far, but with an average gain of only 14.5% and a low 0.42 Reward-to-Risk ratio, you'd be better off trading Diamond Offshore (42.1% and 2.54). With a correlation of 95% between the two stocks the only downside would be slightly higher non-systemic risk. 



1. SHORT the week of 9.29.08 at $94.65. With my stop at $134.29 the initial risk (R) on the trade was $39.64. Stopped out and reversed to long at $68.20 the week of 4.20.09. The percentage gain on the trade was 27.9%, and the reward-to-risk ratio was $26.45/$39.64 = 0.67.

2. LONG the week of 4.20.09 at $68.20. The stop was $44.78, so R = $23.42. Stopped out and reversed to short the week of 4.26.10 at $72.32. The percentage gain on the trade was 6.0%, and the reward-to-risk ratio was $4.12/$23.42 = 0.18.

3. SHORT the week of 4.26.10 at $72.32. Using $95.77 for a stop, the R on the trade was $23.45. Stopped out and reversed to long at $64.35 the week of 9.27.10. The percentage gain on the trade was 11.0%, and the reward-to-risk ratio was $7.97/$23.45 = 0.34.

4. LONG the week of 9.27.10 at $64.35.  My initial stop was set at $47.86, so my risk was $16.49. Closed last week at $72.75 with a $70.57 stop. The percentage gain on this trade is 13.1%, and the reward-to-risk ratio is $8.40/$16.49 = 0.51.

Bottom Line:
Winning Trades: 4 | 100.0% | $11.74/share avg.
Losing Trades: 0 | 0.0% | -$0.00/share
Average Trade: Gain of 14.5% | $11.74/share | Reward-to-Risk Ratio (R): 0.42