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+.
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
Can you explain how you personally trade the volatility system? Thanks
ReplyDeleteThomas,
ReplyDeleteI use the system exactly the way Welles Wilder lays it out in his 'New Concepts in Technical Trading Systems' book.
First I calculate True Range (TR), then Average True Range (ATR). I multiply the ATR by an Average Range Constant (ARC) of 3.0, and that determines my Stop-and-Reverse (SAR) price. Then I use the variance between the SAR and the current price to determine whether I should be long or short. With a positive variance (price above the SAR), I'm long; and when the price crosses below the SAR I reverse to short.
I use it as a true reversal system, meaning I'm always in a stock either long or short.
But here's probably the most important thing about how I use the system: I use weekly price data. I'm trying to follow long-term trends, and I don't want to trade a lot. In fact, I only place trades at the close on Fridays and sometimes at the open on Mondays.
I hope that answers your question? If not, just let me know where I need to give more details.
Thanks,
Johnny