Thursday, August 17, 2006

How opening up our business has helped us become better traders

What has pleased us immensely since we started up our service is the realization that more often than not, when our stock picks are going to go in the opposite direction than the one we hope for, they usually do so BEFORE confirming our picks. For example, we liked WIRE 36.8/37 and AKAM 40.4 from last night-- today they went down several percent, but they behaved well in that they did not first trigger our pick and then go down (therefore of course we did not enter the trades since they did not trigger our prices). We had not realized how "well-behaved" most stocks are until we started keeping statistics for our newsletters.

Opening up this newsletter has helped us also to become better traders. For example, we used to set alerts on many different stocks, including minor buy points and somewhat questionable set-ups. However, once we started writing the newsletter we decided to include only the cleanest, best selections for our readers. We realized after a month or so that our own performance improved by focussing on those same stocks and disregarding the "minor" buy/sell points which were distracting us from the best moves of the day.

Another way the newsletter has helped us is that we now only trade from the lists provided to our subscribers. Most days there will be at least a few good opportunities in the provided selections. The advantage is that you are prepared for the day and you are familiar with the stock, as compared to scanning intraday for a possible set-up and often taking third-rate set-ups just because you were rushed to make a decision. We don't like feeling rushed into entering a position, so trading only from a pre-defined list from the night before is very appealing.

The only stocks we look at during the day are the stocks mentioned in the lists given to our subscribers every night. This might seem "limiting" to some of you but upon closer introspection the numbers will surprise you. For example, if you had ONLY watched our stocks this week (last 4 trading days) and entered a position in each stock that triggered from the trading lists and the watch-list, without regard to volume, intraday set-up, market conditions, et cetera, these would be your day-trade results:

Flat :


Losses maximum 1%:


Profits minimum 1% to maximum 8%:

GPRO short , CRDN short, RIMM, OXPS,

The results are 10 wins ranging from minimum 1% to 8% maximum daytrade profit (depending on where you took profits) versus 2 losses of 1% maximum. We're happy with these results and feel that if you are patient enough to wait for quality set-ups (which means that some days you only trade once or none at all), you can achieve a very respectful win-loss ratio. The more experienced we become in this career (and in life), the more we realize how critical controlling greed and fear is to becoming successful.