Zynga (ZNGA)

BUY signal the week of 2.4.13 at $3.43. My first stop was $2.20, so my risk (R)/share was $1.23. Closed Friday at $3.36 with a $2.37 stop. My new stop for this week is $2.46. The percentage loss on this trade is -2.0%, and the reward-to-risk ratio is -$0.07/$1.23 = -0.06.

History (beginning in 2013):

Winning Trades: 0 | 0.0% | +$0.00/share avg.

Losing Trades: 1 | 100.0% | -$0.07/share avg.

Average Trade: -2.0% | -$0.07/share | Reward-to-Risk (R): -0.06
Compound Annual Growth Rate (CAGR): -14.2%

Precision Castparts (PCP)

BUY signal the week of 9.13.10 at $126.68. My first stop was $103.19, so my risk (R)/share was $23.49. Closed Friday at $189.62 with a $174.19 stop. My new stop for this week is $174.81. The percentage gain on this trade is +49.7%, and the reward-to-risk ratio is +$62.94/$23.49 = +2.68.

History (beginning in 2003):

Winning Trades: 3 | 100.0% | +$65.33/share avg.

Losing Trades: 0 | 0.0% | -$0.00/share avg.

Average Trade: +212.5% | +$65.33/share | Reward-to-Risk (R): +13.54
Compound Annual Growth Rate (CAGR): +32.0%

Mastercard (MA)

BUY signal the week of 10.18.10 at $242.64. My first stop was $202.75, so my risk (R)/share was $39.89. Closed Friday at $541.13 with a $481.98 stop. My new stop for this week is $490.15. The percentage gain on this trade is +123.0%, and the reward-to-risk ratio is +$298.49/$39.89 = +7.48.

History (beginning in 2006):

Winning Trades: 4 | 80.0% | +$110.07/share avg.

Losing Trades: 1 | 20.0% | -$35.79/share avg.

Average Trade: +55.4% | +$80.89/share | Reward-to-Risk (R): +2.88
Compound Annual Growth Rate (CAGR): +31.9%

LinkedIn (LNKD)

BUY signal the week of 1.7.13 at $118.00. My first stop was $96.40, so my risk (R)/share was $21.60. Closed Friday at $176.06 with a $148.33 stop. My new stop for the coming week is $149.67. The percentage gain on this trade is +49.2%, and the reward-to-risk ratio is +$58.06/$21.60 = +2.69.

History (beginning in 2013):

Winning Trades: 1 | 100.0% | +$58.06/share avg.

Losing Trades: 0 | 0.0% | -$0.00/share avg.

Average Trade: +49.2% | +$58.06/share | Reward-to-Risk (R): +2.69
Compound Annual Growth Rate (CAGR): +563.0%

Facebook (FB)

BUY signal the week of 11.26.12 at $28.00. My first stop was $19.07, so my risk (R)/share was $8.93. Closed Friday at $25.58 with a $25.40 stop. My new stop for the coming week is $25.63. The percentage loss on this trade is -8.6%, and the reward-to-risk ratio is -$2.42/$8.93 = -0.27.

History (beginning in 2012):

Winning Trades: 0 | 0.0% | +$0.00/share avg.

Losing Trades: 1 | 100.0% | -$2.42/share avg.

Average Trade: -8.6% | -$2.42/share | Reward-to-Risk (R): -0.27
Compound Annual Growth Rate (CAGR): -24.2%

Deckers Outdoor (DECK)

BUY signal the week of 2.4.13 at $43.56. My first stop was $29.97, so my risk (R)/share was $13.59. Closed Friday at $55.69 with a $37.46 stop. My new stop for the coming week is $41.62. The percentage gain on this trade is +27.8%, and the reward-to-risk ratio is +$12.13/$13.59 = +0.89.

History (beginning in 2005):

Winning Trades: 3 | 75.0% | +$30.22/share avg.

Losing Trades: 1 | 25.0% | -$16.82/share avg.

Average Trade: +118.4% | +$18.46/share | Reward-to-Risk (R): +3.47
Compound Annual Growth Rate (CAGR): +35.9%

Crocs (CROX)

BUY signal the week of 2.19.13 at $15.43. My first stop was $12.46, so my risk (R)/share was $2.97. Closed Friday at $14.82 with a $13.14 stop. My new stop for this week is $13.21. The percentage loss on this trade is -4.0%, and the reward-to-risk ratio is -$0.61/$2.97 = -0.21.

History (beginning in 2006):

Winning Trades: 2 | 50.0% | +$20.41/share avg.

Losing Trades: 2 | 50.0% | -$3.02/share avg.

Average Trade: +154.9% | +$8.69/share | Reward-to-Risk (R): +2.64
Compound Annual Growth Rate (CAGR): +43.8%

Salesforce.com (CRM)

BUY signal the week of 2.21.12 at $143.64. My first stop was $108.52, so my risk (R)/share was $35.12. Closed Friday at $178.83 with a $157.88 stop. My new stop for the coming week is $158.43. The percentage gain on this trade is +24.5%, and the reward-to-risk ratio is +$35.19/$35.12 = +1.00.

History (beginning in 2004):

Winning Trades: 4 | 80.0% | +$34.86/share avg.

Losing Trades: 1 | 20.0% | -$0.67/share avg.

Average Trade: +68.2% | +$27.75/share | Reward-to-Risk (R): +2.02
Compound Annual Growth Rate (CAGR): +29.7%

CF Industries (CF)

BUY signal the week of 1.9.12 at $172.55. My first stop was $125.48, so my risk (R)/share was $47.07. Stopped out yesterday at $193.25. The percentage gain on this trade was +12.0%, and the reward-to-risk ratio was +$20.70/$47.07 = +0.44.

History (beginning in 2006):

Winning Trades: 4 | 100.0% | +$36.22/share avg.

Losing Trades: 0 | 0.0% | -$0.00/share avg.

Average Trade: +120.5% | +$36.22/share | Reward-to-Risk (R): +6.91
Compound Annual Growth Rate (CAGR): +42.0%

Intuitive Surgical (ISRG)

BUY signal the week of 1.22.13 at $577.82. My first stop was $473.57, so my risk (R)/share was $104.25. Stopped out yesterday at $459.44. The percentage loss on this trade was -20.5%, and the reward-to-risk ratio was -$118.38/$104.25 = -1.14.

History (beginning in 2003):

Winning Trades: 4 | 66.7% | +$130.54/share avg.

Losing Trades: 2 | 33.3% | -$76.64/share avg.

Average Trade: +136.3% | +$61.48/share | Reward-to-Risk (R): +3.52
Compound Annual Growth Rate (CAGR): +19.3% 

You know, I had a feeling this trade might not work, but I didn't think it would go this badly.

Still, every once in a while, trades like this can be a good thing. Not for my trading account of course, but they do serve as a very powerful (and painful) reminder that I need to stick with my 1% risk model.

Invariably, when several of my trades are working pretty well, like Mastercard or LinkedIn, I'll start thinking about taking larger positions using a 3% or 5% risk model. 

And then a trade like this will come along and remind me that outsized gains are not my top priority. Containing losses/preserving capital actually ranks higher for me.

By the way, when I talk about a 1% risk model, I'm not talking about portfolio weighting. It just means that based on my stop, I'm risking 1% of my capital on the trade. So on this particular trade, that gave the position a 5.5% portfolio weight, and the loss of -20.5% means an overall portfolio loss of just -1.1%. Painful for sure, but it doesn't knock me out of the game.

On a side note, I'm adding Compound Annual Growth Rates (CAGR) to my metrics because I think they better represent how this system trades a given stock over time. My holding periods are perhaps longer than other traders/investors, so while it's true that the average ISRG trade is +136.3%, that doesn't factor time into the equation. I wouldn't say it's misleading, I just think there's a better way to describe the actual results of trading stocks in this system. 

So in this particular case, trading ISRG in this system since 2003 has yielded a CAGR of +19.3%.  

Zynga (ZNGA)

BUY signal the week of 2.4.13 at $3.43. My first stop was $2.20, so my risk (R)/share was $1.23. Closed Friday at $3.43 with a $2.10 stop. My new stop for this week is $2.07. The percentage gain on this trade is +0.0%, and the reward-to-risk ratio is +$0.0/$1.23 = +0.0.

History (beginning in 2013):

Winning Trades: 0 | 0.0% | +$0.00/share avg.

Losing Trades: 0 | 0.0% | -$0.00/share avg.

Average Trade: +0.0% | +$0.00/share | Reward-to-Risk (R): +0.0

There sure are a whole lotta zeroes here right now... but seeing as the stock dipped as low as $2.84 last week, I'm not really all that upset about it sitting at breakeven right now.

Precision Castparts (PCP)

BUY signal the week of 9.13.10 at $126.68. My first stop was $103.19, so my risk (R)/share was $23.49. Closed Friday at $185.81 with a $169.39 stop. My new stop for this week is $169.44. The percentage gain on this trade is +46.7%, and the reward-to-risk ratio is +$59.13/$23.49 = +2.52.

History (beginning in 2003):

Winning Trades: 3 | 100.0% | +$64.06/share avg.

Losing Trades: 0 | 0.0% | -$0.00/share avg.

Average Trade: +211.5% | +$64.06/share | Reward-to-Risk (R): +13.49

Mastercard (MA)

BUY signal the week of 10.18.10 at $242.64. My first stop was $202.75, so my risk (R)/share was $39.89. Closed Friday at $518.30 with a $478.32 stop. My new stop for this week is $477.52. The percentage gain on this trade is +113.6%, and the reward-to-risk ratio is +$275.66/$39.89 = +6.91.

History (beginning in 2006):

Winning Trades: 4 | 80.0% | +$104.36/share avg.

Losing Trades: 1 | 20.0% | -$35.79/share avg.

Average Trade: +53.5% | +$76.33/share | Reward-to-Risk (R): +2.76

LinkedIn (LNKD)

BUY signal the week of 1.7.13 at $118.00. My first stop was $96.40, so my risk (R)/share was $21.60. Closed Friday at $170.46 with a $131.69 stop. My new stop for the coming week is $136.71. The percentage gain on this trade is +44.5%, and the reward-to-risk ratio is +$52.46/$21.60 = +2.43.

History (beginning in 2013):

Winning Trades: 1 | 100.0% | +$52.46/share avg.

Losing Trades: 0 | 0.0% | -$0.00/share avg.

Average Trade: +44.5% | +$52.46/share | Reward-to-Risk (R): +2.43

Intuitive Surgical (ISRG)

BUY signal the week of 1.22.13 at $577.82. My first stop was $473.57, so my risk (R)/share was $104.25. Closed Friday at $553.40 with a $496.98 stop. My new stop for this week is $472.24. The percentage loss on this trade is -4.2%, and the reward-to-risk ratio is -$24.42/$104.25 = -0.23.

History (beginning in 2003):

Winning Trades: 4 | 66.7% | +$130.54/share avg.

Losing Trades: 2 | 33.3% | -$29.66/share avg.

Average Trade: +139.0% | +$77.14/share | Reward-to-Risk (R): +3.67

Facebook (FB)

BUY signal the week of 11.26.12 at $28.00. My first stop was $19.07, so my risk (R)/share was $8.93. Closed Friday at $27.78 with a $24.24 stop. My new stop for the coming week is $24.54. The percentage loss on this trade is -0.8%, and the reward-to-risk ratio is -$0.22/$8.93 = -0.02.

History (beginning in 2012):

Winning Trades: 0 | 0.0% | +$0.00/share avg.

Losing Trades: 1 | 100.0% | -$0.22/share avg.

Average Trade: -0.8% | -$0.22/share | Reward-to-Risk (R): -0.02

Deckers Outdoor (DECK)

BUY signal the week of 2.4.13 at $43.56. My first stop was $29.97, so my risk (R)/share was $13.59. Closed Friday at $46.62 with a $30.53 stop. My new stop for the coming week is $32.28. The percentage gain on this trade is +7.0%, and the reward-to-risk ratio is +$3.06/$13.59 = +0.23.

History (beginning in 2005):

Winning Trades: 3 | 75.0% | +$27.20/share avg.

Losing Trades: 1 | 25.0% | -$16.82/share avg.

Average Trade: +113.2% | +$16.19/share | Reward-to-Risk (R): +3.31

Crocs (CROX)

BUY signal the week of 2.19.13 at $15.43. My first stop was $12.46, so my risk (R)/share was $2.97. Closed Friday at $15.14 with a $12.46 stop. My new stop for this week is $12.54. The percentage loss on this trade is -1.9%, and the reward-to-risk ratio is -$0.29/$2.97 = -0.10.

History (beginning in 2006):

Winning Trades: 2 | 50.0% | +$20.41/share avg.

Losing Trades: 2 | 50.0% | -$2.86/share avg.

Average Trade: +155.4% | +$8.77/share | Reward-to-Risk (R): +2.67

Salesforce.com (CRM)

BUY signal the week of 2.21.12 at $143.64. My first stop was $108.52, so my risk (R)/share was $35.12. Closed Friday at $182.00 with a $150.89 stop. My new stop for the coming week is $152.18. The percentage gain on this trade is +26.7%, and the reward-to-risk ratio is +$38.36/$35.12 = +1.09.

History (beginning in 2004):

Winning Trades: 4 | 80.0% | +$35.65/share avg.

Losing Trades: 1 | 20.0% | -$0.67/share avg.

Average Trade: +68.6% | +$28.39/share | Reward-to-Risk (R): +2.04

CF Industries (CF)

BUY signal the week of 1.9.12 at $172.55. My first stop was $125.48, so my risk (R)/share was $47.07. Closed Friday at $201.50 with a $195.27 stop. My new stop for the coming week is $194.52. The percentage gain on this trade is +16.8%, and the reward-to-risk ratio is +$28.95/$47.07 = +0.62.

History (beginning in 2006):

Winning Trades: 4 | 100.0% | +$38.28/share avg.

Losing Trades: 0 | 0.0% | -$0.00/share avg.

Average Trade: +121.7% | +$38.28/share | Reward-to-Risk (R): +6.95