On June 28, 2005, Tradesight launched our “Swing-only” report. This $49 monthly service provides four or five picks off of our main and/or small cap report on a daily basis with triggers, first targets, stops, and swing targets. The purpose of this report is to give technically sound stock plays for people who don’t have time to monitor the markets during the day. This form of trading ignores key supplemental indicators, such as market direction, volume, news, etc. By using an execution system, such as MB Trading, orders are entered before the bell to go long or short once a trade triggers, maintain a stop on the entire trade, sell half at the first target, and sell the balance at the swing target. Based purely on the rules of the report, we update stops only overnight.
Obviously, there are a lot of things that a trader can do, time-permitting, to improve his/her results using this report. For example, when a stock hits the first target, it would be logical to move a stop up on the second half of the trade. However, because many people simply have day jobs and cannot make these adjustments, we calculate the results of this report as if no adjustments were made except overnight. The only thing a trader needs to do is put his/her orders in the system before the bell, and then be able to cancel any stocks that gap past their triggers, as those trades are not valid.
We are pleased to report that we have updated the results of this trading method. Understand that in some cases, your platform may or may not get you the exact price, and there is no way for us to adjust to that. Also, there are costs associated with trading, although in today’s world, you should not be paying more than $0.01 round-trip. People who trade larger size will see their “cost of trading” lessen.
Our results assume a $25,000 starting account so that you can utilize intraday margin. In general, it is rare for more than a couple of trades to be on “full size” at any given time. There are two ways that we track results, as we have seen two different styles of play. Therefore, the spreadsheet has two tabs at the bottom to represent this.
The first method uses a “dollar” amount per transaction, in this case, $10,000 per trade, selling half at the first target, etc. Using this methodology, the results on a $25,000 would have netted you $10,259 minus costs and slippage in ten months or so on a $25,000 account.
The second method uses a “share” amount per transaction. We chose 500 shares as an example because you should be able to trade that amount with margin and a $25,000 account. Using those figures, the net gain would have been $16,370 on a $25,000 account in about ten months.
So, 41% or 66%, depending on your risk-tolerance (note that trading 500 shares versus $10,000 worth of each stock definitely uses more money, but is largely in the same ballpark). And again, this is without making ANY intraday adjustments to your trading. Depending on how available you are during the day, there are definitely some trades that could be adjusted.
Here is the spreadsheet:
We believe these results speak volumes about the importance of finding key technical patterns for trade entry and maintaining a projected 2-to-1 or better risk/reward ratio on any trade. We hope that those of you that have been having good results with the swing report and have extra time during the day will consider the main stock report, which gives you several more picks as well as key intraday updates via the Tradesight Messenger. In addition, those of you that trade for a living should consider the Trading Room, where we walk you through trades as they happen and give tons of educational material daily about how to trade the markets.
If you have questions about these results, feel free to contact me directly.
Chris Mercer