What are your thoughts on this system?

Discussion in 'Strategy Development' started by wiesman02, Nov 26, 2006.

  1. I recently read a book entitled "Swing Trading" by Jon Markman. If you don't know who Jon Markman is, he is an editor from MSN money.

    While reading his book, he provided a strategy to use in swing trading. I would like your thoughts on this system. It is a very brainless system. It is composed of using stock screener called 'stock scouter' from msn money site, and using specific criteria to screen for stocks. Basically, u export this list of 50 to excel, and determine the top 10 stocks.

    Then you buy this 10 stocks, keep for a month, and then sell. next month, you find the next list of top 10 stocks and do this again. I don't want to tell you the exact criteria to use, b/c you can buy the book for that, but i will tell you the results from this strategy:

    RETURNS
    '90: 16.17%
    '91: 46.1%
    '92: 66.29%
    '93: 76.87%
    '94: 47.41%
    '95: 71.18%
    '96: 56.40%
    '97: 71.45%
    '98: 46.16%
    '99: 58.47%
    '00: 35.38%
    '01: 1.24%

    Annualized mean return: ~46.5%

    Pretty good rate of return IMO. But I'm just a newbie. Should professional position and swing traders be able to consistantly hit 46% on a regular per year basis ?

    And is the time period he used not long enough and/or not a good sample based on the backdated years ?
     
  2. To me a good month is 10% to 25% or compounded annually120 to 300% and an so so month is 2 to 10%. A bad month can be as bad as 10% loss or -120 compounded. A killer of a month the worse one I've had so far can be -18% I won't even compound that one.
    This year I've had 6 good months and 2 bad the rest were so so.
    But I don't really care about the upside, that takes care of it's self. It's the down side. When looking at a system or should I say strategy the most important item is maximum draw down for this can take you completely out of the game. The second most important is money management and the third is risk management. Even the worse system will work if these 2 are followed and your lucky enough not to have the max draw downs happen within the first few months.
     
  3. Pekelo

    Pekelo

    It is long enough, although it is all rally years. See once the shit hit the fan in 2001 the return went down to breakeven. What is the stats for the last 5 years??

    Looks like the strategy only works in bullmarkets. When everyone is a genius...
     
  4. Sometimes I wish there were a forum on making money.

    This is another discussion on a system and some logical questions on professional trading performance levels.

    The boutiques where pro's get the job done for people with capital do much better, rain or shine than the numbers cited in this manually operated mechanical system.

    In this thread the most limiting performance element mentioned is "month".

    The most performance related term can be characteristed as "Universe selection".

    The market tells you the standard for taking money out of the market. As a simple uncomplicated basic statement the market is giving everyone (although they do not seem conscious or unconscious of it)much much more than enough (everything needed is available to satisfy anyone's demands or requirements).

    The differences among systems and their inability to extract what is there to be taken boils down to decisions that people make.

    People go through a succession of choices that place them further and further from the potential offered in a deliborate way time after time after time.

    Your choice of reading material is an example.

    Month is an example.

    The non-informative stuff posted are examples.

    The memory will always have the stuff you read in it. "Once read and twice forgotten" is humorous to be sure. Rebuilding something sensible around all those things acquired can become a daunting task, certainly not an undaunting one.

    Since your mind doesn't have a reverse gear and you can't back up, the least you can do is sit down quietly for a moment and start to begin to ask yourself questions (all of whch you have the present answer for) and, at least, get organized to move forward.

    There is all the money in the world you need out there.

    How much you start with is very unimportant.

    All the data you need is available in real time.

    Get rich fast and then you can do some important things with your life and family.