AB Analytical Services

Great Resource for Swing Traders: My Own Analyst

We continue to generate significant Alpha on the My Own Analyst blog, where I share short-term trade recommendations on a regular basis in addition to so much more.  For a complete description of the service, check out the brochure.

Since February, I have been tracking the trades, and we are have generated almost 1% profit per trade (0n 176 trades, including four currently open).  The trades, which expire after two weeks if they don't hit their target or get stopped, are set typically for 4:1 return vs. risk.  The average target has been about 10%.  We limit ourselves to four max at a time.  We end up with more losses than gains, but they are small while the gains are large.  

Here are the last ten trades we closed:

• 8/31 open, 9/7 close on BAC, +7.9%
• 9/4 open, 9/5 close on LUFK, -1.9%
• 9/4 open, 9/10 close on TITN, -6.8% (it opened below the stop - second worst trade of 176)
• 9/5 open, 9/13 close on RRGB, +9.7%
• 9/5 open, 9/7 close on MPR, -2.9%
• 9/7 open, 9/13 close on LUFK, +9.3%
• 9/10 open and close on TITN, -2.1%
• 9/10 open, 9/11 close on TITN, -2.4%
• 9/11 open, 9/13 close on TJX, -0.9%
• 9/13 open, 9/17 close on ENV, -2%

We were right on only three of ten and took a loss in excess of our stop due to a gap down on one name, yet the average return on the 10-trades over two weeks or so was 0.8% despite not a particularly impressive run.  As I said, this is a bit below average, as our average trade is returning 0.93%.  Interested?  Email me, and I will give you free access until October if you also sign up for a free trial at Invest By Model.

Short-Term Trade Ideas Working Well

One of the features of my private blog service, My Own Analyst, is that I offer short-term trading ideas with very specific parameters.  While I have been sharing the ideas for quite some time, it was in February that I moved to the following system:

• Maximum 4 Trades at a time
• Fixed Closing Price
• Fixed Stop-loss
• 2-week expiration if neither is hit

The trades are set up with risk/reward at about 4X, with upside targeting typically about 9-10%.  Recently, having noticed that many of the trades were working but not quite hitting the aggressive targets, I started also offering what I call a "take-the-money" level, which is a lower target at which it might make sense to take some (or all) profits, especially if it happened quickly.  The bottom line is that aiming for 4:1 leads to some big wins but lots of smaller losses.  The lower target level caps some upside but prevents some of the losses, possibly leading to an overall better return.

I have been carefully tracking trade performance.  While the markets have been flat (90% of trades are long) since I began the new rules-based system (as opposed to real-time calls for closing trades), the stocks have produced a fairly substantial gain (80%, or 20% on a portfolio basis assuming 4 trades at a time).  This number doesn't include commissions (0r the cost of the service!).  Still, there seems to be some value here.

Below are five trades that have been closed in July.  There have been two small losses and three big gains.  Two of the gains happened very quickly.  One of the losses and one of the gains took the entire two weeks, with the loss actually hitting the stop-out on the day the trade would have closed.  The two losses both hit the "take-the-money" (fast) level before moving back down to the stop.  Here are the 5 closed trades:

Trade Date	Ticker	L/S	PX on	Target	Stop	Fast	PX off	Date	Return
25-Jun	BAC	Long	7.64	8.30	7.44	8.10	7.44	10-Jul	-2.6%
26-Jun	CRK	Long	13.66	16.00	12.93	14.50	16.00	29-Jun	17.1%
27-Jun	MASI	Long	21.66	24.00	21.04	22.75	22.73	12-Jul	4.9%
2-Jul	IRBT	Long	22.00	24.20	21.45	22.75	21.45	9-Jul	-2.5%
11-Jul	MAKO	Long	13.64	15.00	13.37	14.40	15.00	12-Jul	10.0%
									5.4%

We have four open trades (all long) currently, all above the initial buy price.  If you would like to know what they are, email me and mention that you saw this on my blog.  I will share the four names and also give you a free trial for the rest of July to my private blog.  To learn more about the service, which is aimed at active investors, read the brochure.