Keep in mind that there are different ways of calculating growth rates depending on how often capital is compounded. It is possible to trade using any time intervals that you choose. Here are the results for a weekly price momentum system for McDonalds Corporation stock symbol MCD. This system buys when closing price value becomes greater than closing price 40 weeks earlier and sells when closing price value becomes less than the closing price value 40 weeks earlier. I have the position size set high here but there is no use of margin. Traders might want to trade a portfolio of stocks instead of one stock. This model uses 37.92 years of weekly price data. Number of trades 46 Total profit $ 438496 Profit after subtracting $ 10.00 commission per transaction: $ 437576 Greatest draw down is 0.2607 (26.07 per cent). Cumulative Annual Growth Rate (CAGR) is 115.39 per cent. Instantaneously Compounding Annual Growth Rate (ICAGR) is 10.02 per cent. Annually Compounding Annual Growth Rate (ACAGR) is 10.54 per cent. Information Ratio is 0.48 Initial capital is $ 10000 Long trades only. Compounding over a long period of time increases the growth rate of capital. Trading a portfolio of securities likely reduces the magnitude of the big losing streak (Greatest draw down is 26.07 per cent).
The reason for this thread is that I was wondering if it was worth looking at applying trend following techniques to intraday bars eg. 15min in order to increase trade frequency and compound the account quicker. BUT first I wanted to see if anybody was getting astronomical returns trading weekly systems. Just to clarify a few things. I don't want to use any sort of leverage, just straight stocks. Futures and forex unless you have $1mil+ you need leverage to trade them. In terms of returns, I'm talking compounded annualised returns (CAR). As for the McDonalds example, I know its only an example, but I never understood why people trade only 1 stock?? Or even why there are programs are backtest over only 1 security?? Doesn't make sense to me why this would be better than testing and trading over a portfolio. We traders we must think of how to maximise opportunity. I've only ever traded using the whole market but with several filters for my entry trigger eg. liquidity, momentum (ROC), breakout, white candle. Thank you everybody for your thoughts.
In a start of thread you told about 30-40%. And now you write about astronomical returns.What does it mean?
The probability that someone will make > 60% per annum profits trading stocks unleveraged, is greater than zero. The probability that one or more trading systems exist which use weekly data and will make > 60% per annum profits trading stocks unleveraged, is greater than zero. The probability that you will find one of these trading systems and use it to make > 60% per annum profits trading stocks unleveraged, using weekly data, is greater than zero. Therefore: yes, it is possible for you to make >60% per annum profits trading stocks unleveraged, using weekly data. What you didn't ask is: is it likely? How likely is it? What are the odds this will happen to you?
MGJ. Thanks for your response. OK, lets take this a little further. Has it been done by anybody here or somebody that you know? And did you (or they) do it trading one system or multiple systems?
To directly answer your question: Yes, I follow the signals of this system (note: I am not the developer). It trades NYSE-listed stocks Monday at the open with no leverage. Over the past 2 years it averaged 50% per year. I also keep a blog, where I show some analysis of this and other systems, in case you're interested .