<b>Are we there,<i> yet?</i></b> Apparently NOT! According to my system(s) parameters to make exponential jumps to equity for <i>multi-year</i> periods - I HAVE to have conservative loss measures in place. . .and I do! Unfortunately in the short-term this hasn't worked out SO well. But if you look from a long-term perspective this is fine. After all <i>what did you do when the stock market suddenly took a HUGE clip down late last year?</i> When my covered call trades (momo/market-leading stocks) fall to my "break-even" or stop-loss point (stock price minus call option sell price) -- more often than not the market is sitting on a precarious cliff. Problem is, it has been doing this - "missing out" on gains/slowly eroding equity - for four months now!!! I've never seen what I describe as an innocuous market. The positive to this is even though I have under-performed in 2009 for the first time in 11 years - my HUMONGOUS out-performance in 2008. . .to the tune of nearly 70%, does provide some perspective. Therefore, it is my conclusion that although we are not there - yet (ANOTHER 24 hr. 50 point NQ swing) - good gains will again soon naturally fall into system(s) equity. This truly is the worse case scenario. . .a slightly uptrending market with volatile swings up and down to appear to my signals as rather directionless. Either way, good money management skills has kept DD under 20%. A decent correction - no doubt - is pending and when that happens watch my LONG-SHORT (futures and ETF systems) take off like bandits. Entry into these will no longer be FREE! FYI - most can easily see from past key market turns accurately tracked (and verifiable) over the years. . .that indeed this routine shall be a boon to my funds. Decent correction call and re-entry in 2006 Decent correction call in early 2008 and re-entry. Decent correction - turned Bear Market in late 2008 - call turned accurate market bottom call in 12-Mar-2009!!! Where is that elusive next market correction and will my funds adjust well with the market loss? <b>Are we there, yet?</b> p$
Now that was funny! The OP is a legend in his own mind, he is the West Coast's best 50 year old paper trader, he'll even verify it on C2! He is after all a "Hedgefund Guru"!
It may be hard to connect the dots, but the above graphic describes the following exponential growth curve, which I'm certain has been seen before: My futures systems are a lot easier to trade, take less margin, are more diversified AND thus far have doubled the output of my CC Fund (above) - with the same risk (max DD). <b>[see my profile for more info]</b> We are at lows and only traded for almost 2 years - but this is an anomaly. It will be a rare commodity at Collective2.com to see a "system" perpetuate gains (CAGR will increase as market adjusts) for longer than two years. I am SO looking forward to this, since any marketing plan will then reap $$$ for me to trade it. Apparently with 20,000 C2 views gets 200 paid monthly subscribers. I have seen a couple systems (Exlence and ETF Timer) jump 5-10k (views) once their systems reach these milestones. ET may then very well <i>need</i> a sponsor to offer a true long-term winning strategy for "managed accounts". After all, making an extra million dollars with 5 years of "scalping" is one thing - however making 10's of millions for you and your friends in 5 years is another story altogether. Yes, I know I could proliferate the 1000's of certified financial planner and accountant Yahoo! Groups members or elsewhere regarding taking on capital now (these guys probably WANT to step into a proven, high-prospect business model/proposition) - but I am gonna have to be patient and let this come to me (market withstanding!). Yes, we've come a long way from my defense of CC trades versus selling naked puts "discussions" and the "hedge fund" guffaws along the way Unfortunately, I couldn't generate (but got a lot of views) a general discussion regarding what I want/try to achieve (results) - along the way. . . Just connecting the dots. p$ (special thx to David Lindq that directed/challenged me to C2 to get trades "audited")
<b>Some History</b> I've been trading covered calls since 1998. Results-oriented efforts have produced a long-term "winner". I came to C2/ET in May 2007 to trade a hybrid CC Fund/Index Spread System. The market was very rocky, but after initial and contained DD I did uptrend back toward and through breakeven, within 5 months. I then unsuccessfully traded some futures contracts (for the first time) incurring a quick and sudden gain - then loss forcing me to close the system and learn how to trade what I (correctly) perceived to be a superior (for me) trading instrument. These efforts are a result of what you now see as my "new" futures and ETF systems. Anyways, this post is just to say my covered call system is doing quite well. REMEMBER - I am not a "scalper", but a long-term system developer/manager, so instant gains - albeit short-term - with minute DD is not the norm. Prolonged (6-12 months) periods of "lackluster" performance may incur as well as ~25% DD - but over time MUCH HIGHER gains can be expected (at least by me). So how has my CC Fund done? I had a cash out in early 2008 and highly-accurate re-entry very near the market bottom in March 2008 - with all trades posted at EliteTrader.com (PM me if you want *proof*) - along with complete documentation at C2 (audited by Beau Wolinsky for Q4 2008 including the CRASH/cash out. Additionally I had an accurate LONG call 12-Mar-2009. . . The following return has been provided: <u>2008</u> Market lost ~40%. CC Fund gained ~30% [again, supporting proof is providable] Actual Collective2 "audit" of my purely covered call system started in <u>2009</u> Market gains ~20% CC Fund lost ~10% So how does this system that I've repeated from the very beginning to be a TRUE winner stack up since Jan 2008? Total 2008-2009 (you do the math): Market lost ~28% CC Fund gains ~17%!!! DD has been kept just under 20% [not bad, even if I do say so myself - in a bad market climate for these systems] The 2009 system equity as you see it now may not look appealing, but it will. . .for years. <b><u>2010 looks to - once again - be setting up for some very good gains and out-performance.</b></u> Since 2009 C2 inception, this innocuous market has prevented me from getting to (need at least a gain) and staying on the C2 "Best systems" list <i>- but it can't escape me for long!</i> I guess I could plot 2008-2009 (and provide proving links for 2008) versus the market to show risk (day-to-day movement) and how - even during turbulent period, lower system gains look good...with 2010 looking to propel further!!! Yours Truly, Happy Holidays Pay$ense PS Keep posted. I will be looking for a few volunteers (paper-trading newbies are best) - to follow and track all trades versus the market in 2009 to "learn" for free this method and to share/generate discussion at a new covered call Yahoo! Group. Hope this helps, someone. along the way since - "My success is your success."
Similar to typical market action (correction followed by a market "bottom") the market <i>eventually</i> will enter into the next phase. We have not had a classic "run for the exits" scenario as volatility has spiked to unheard of levels and is now back into the 20's. I am looking to see things spike and move back into the teens as we enter the next new Bull Market. Yes I know we rallied (after all I avoided the 2008 plummet and traded the 12-Mar-2009 "bottom") quite a bit since. . .but there is still much uncertainty out in the marketplace: no real leadership and institutions have largely been non-participants. I am saying all of this to give the heads-up that I have found some interest in a Yahoo! Group to demonstrate covered call gains with the next transition. Perhaps some here will be interested as the year-long learning curve can benefit traders with a real long-term winning trading strategy. Stay tuned. p$
I've heard a lot of banter regarding analyzing systems and seen a lot of systems come and go in just 2.5 years at Collective2. It is not by chance that my initial verdict still holds true and will always hold true (even if ignored by many). The only system analysis parameter that holds any weight is age or longevity. All the rest of the statistics will fall off and die with virtually every C2 system. If after 2-5 years a system has established a routine to lock in annual gains, all of the stats will normalize or move closer to a constant. These do not matter too much. Having just a $1 profit after 3 years at C2 is rare. Having a system profit and good stats after 3+ years is 2-10 times better than any brief success you may happen into by temporarily jumping into a sudden 'success". Success with a short-term system can never be compounded and by rule will NEVER attain gain heights accomplished with a REAL winning long-term system.p$
An example of results from a high compounded annual growth rate CAGR over time (more than a few years Initial investment: $150,000 CAGR: 50% Can you visualize a 75k annual first year gain jumping to 350k in a couple more years and then $1M in a couple more and then to $5M in a few more? All it takes is getting started and stick to the plan. As the locomotive creeps forward for 6 months and then starts to roll in the next 6. . .it starts to HOOT-HOOT along with confidence and UNDERSTANDING of how you reached that point -- soon thereafter. This then garners even MORE certainty of visualized goals within sight. Yes, some minor adjustments will need to be made along the way, but this high growth long-term trading approach will become apparent as BEST soon enuf!p$
Some may be aware of my covered call system efforts being tracked at Collective2.com (see profile for more info). So here are excerpts from a recent post - KC Update - Two years of verifiable data. The CC return is still great even if less than my new systems - but the key is I manage long-term trading systems. 2008 calls were posted at my website, EliteTrader.com and Collective2.com. There are many covered call websites, but I post my results. I cashed out in early 2008. My 20-Mar-2008 market "bottom" call was successful and gains ramped up as I posted my trades at ET. The "rally" didn't last long, so my stop-loss methods were again successful in kicking me back into cash - also posted at ET. 21 days were especially troubling for investors as I posted at EliteTrader.com and Collective2.com my in "Stop Losses" calls <i>when the Nasdaq plummeted 25%!</i> Then it was suggested that I post all CC trades for "audit" by "Beau" (known here as "bwolinsky") - prior to starting my CC system at C2 on 01-Jan-2009, which I complied for all to see. Remember my 4th quarter trades in and out of CC positions?!? Then you now see me in 2009 avoid even more losses (salvaging gains) - as the market crashed even more?!? - until another successful "bottom" call on 12-Mar-2009. Yes, my trading signals - tested for more than 10 years - have dictated CAUTION these last 5 months or so. . .but my website results mirrored at C2 and ET these last 2 years <u>ain't bad</u>: See for yourself my 2-year RESULT- So where are you, astute investors? Not HUGE gains (yet), but with an improved market (NEED a correction). . .we will soon be taking off. My website results are really good. <b>My future systems, better.</b> Gilbert Could you become a long-term system trader? Once I get going (now starting to add funds to trade my new systems) with supporting brokerage statements. . .high CAGR management can be done solo. But in the meantime, sponsoring at ET - to convert interested (predominantly scalping) persons, might be eventful. A bit more time to tell. Stay Tuned or PM me to learn more about my 100% mechanical EOD systems. Collaborating with my results won't be indefinite. (I do not think it is against ET policy to discuss via PM, options). <b>Mods, please PM me if so.</b> G aka p$