As we like to do at the conclusion of every month, it's time to review our October Performance. Our service followed the market's rise in October and it was our best month so far in our short 5 month existence.
Here are the statistics:
We had 47 stocks trigger. Out of those:
13 losses (maximum 1% loss)
6 flat
28 wins (1-5% with 12 wins over 3%)
This gives us a 60% win rate against the total but more importantly the average win is much larger (over 2% average win versus maximum 1% loss) than the average loss.
If you want a pure win/loss ratio (thus exclude the flat trades) then the ratio increases to 68%. These are pretty good numbers and we have no complaints.
Nevertheless, we know that many traders actually had a very difficult October, regardless of the rise in the market. We dug a bit deeper into our statistics, not the numbers, but rather the stocks themselves, and found out what possibly could be a reason for the underperformance of some traders. Even though we had some good runs on our big-cap selections of EBAY NVDA TIE ATI during the month, we also were handed losses on other big-caps such as WFMI(2x) PD RIMM SNDK HANS. Some of the absolute best moves we had were from more speculative stocks such as NVEC TZOO GROW ILMN NTRI. Many traders are wary of the more speculative issues and thus were sticking with the big names. However, the success rate on the more speculative names we found, in October any way, was much higher than the big liquid stocks that everyone watches. Why is that? No idea -- but the numbers don't lie.
So what's the conclusion? Try out the speculative stocks more often. It might be a good idea to use smaller size in the beginning, especially since they are often thinner and more volatile, but with the risk comes greater reward. The straight win/loss rate for our service was 70% this month -- you delete the big-caps and the rate will even go higher. Those are numbers that should make you think twice about automatically passing on the more speculative names. So the next time ILMN TZOO NVEC GROW EZPW set-up on the daily chart, take a shot. Play small if you want, but get involved, because right now, the success of making money on the smaller, wilder 700k volume puppy, is higher than on the big-cap 10 million volume elephant.
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