November Review

November was, we hope, an anomaly for us. We had very few stocks trigger from the Trading Lists (even though there was a lot of action on stocks for active traders from the Forming Lists which are not logged). This was also the first month in which we moved our stop-loss from 1% to 0.5% -- this possibly made us more conservative. Here are the numbers:

12 stocks triggered

5 losses of 0.5% stop-loss
7 wins of minimum 1% (with 2 of these being 4% +)

With our new stop/loss (0.5%) each win (minimum 1%) automatically guarantees a 2-1 risk-reward ratio.

If we had used our old stop-loss of 1% then the results would have been dramatically better:

1 loss
1 draw
10 wins

The reason we switched from 1% to 0.5% was that we saw very little difference statistically between stocks that would go down 0.5% and 1% -- that is, usually when our stocks went down 0.5%, they also went down 1%. This definitely was not the case this month as many of the break-outs whipped around much more, thus hitting our tight 0.5% stop, before resuming the uptrend and yielding profits (which is the reason the win-loss ratio increases so much with the previous wider stop-loss number).

We think that this month was an exception and are going to stick to the 0.5% stop-loss for the time being. If these results continue on for several month then we will obviously switch-back to the old wider stop-loss as it would prove more profitable.

Another big change for us was the lack of triggers. We had only 12 stocks trigger in November while we had 47 stocks trigger in October. That is a huge difference and the only explanation we can give is that the type of charts that we seek did not appear as often this month -- mostly because of the lack of basing the market experienced.

To conclude the win rate was 58% with wins equalling at least 1% and losses maximum 0.5% (thus minimum 2-1 risk-reward for wins). If we had used our old stop-loss of 1%, with wins being calculated also from 1%, then the win-rate for November would have been 83%. We'll see what the future holds.