In the second half of last year I did 6 presentations about trading. 3 free seminars and 3 courses. At each one of those presentations I showed the rules and historical results of a particular system………before I even discussed or taught some of the better methods available.

I thought it would be good to have a look at that system and how it performed last year.

Course System 3, (which isn’t really a course system because it is discussed at the free seminars, to try and convince people of what’s possible) is shown below.

The system traded only the ASX 200, it uses easy to follow market filters keeping you out of the market when it is weak, and in the market when it is strong. (That big dark green section in the middle of the graph was the system cashing out because of the euro crisis uncertainty) If looks at stocks under $20, so plenty of scope to focus on the big companies if you wish. Some people feel safer in big companies, and feeling safe in your method is paramount to success.

So Course System 3: the 2012 results were:

28% p.a (if you employed a 100K it increased to 128K by year end)

27 trades (about one a fortnight)

55% win rate (by selling the 45% of losing trades reasonably quickly, then keeping the 55% of other trades for longer, is how the system makes the money)

12% Drawdown (the most the portfolio pulled back in the year before recovering or being sold out)

Maximum winners in a row 6 (at some time during last year of the 27 trades the system generated, it had six wins in a row)

Maximum losers in a row 2 (at some time during last year of the 27 trades the system generated it had 2 losers in a row)

All those results above were achieved by risking 1% of the portfolio per trade.

If you wanted to take more risk with 2% per trade and do about 14 trades for the year (2% risk per trade is not recommended for beginners) the result would have been 40% p.a. for 2012.

Below is a chart of MAD, the best performing stock the system took, a profit of 260%

BRG below was the second best performer at 70% and is still running up and yet to be stopped out.

As usual with trend trading, 20 to 30% of the trades make 70 to 80% of the money, that’s why it is imperative to hold your winning trades until you get a sell signal.

The stock below, SVW was the worst performer of the year, losing 16% before being sold out. A great example of why it is also imperative to sell the losing trades, holding this trade all year would have really damaged the results of the system and your portfolio.

A point to mention:
Some of my more astute clients have asked the question “were those stocks in the top 200 at the time they were a buy signal?”

The answer is maybe, some were some were not. A way around that problem is to look at stocks in the ASX 300, creeping their way up into the 200. For example MAD is currently in the 200, 12 months ago perhaps not, but it was most probably in the top 300, certainly in the 500 (the All Ords)

That’s one of the reasons why on the website I post the 52 week highs for the current top 200 and separately the 200 to 500. That way you can see which stocks in what sector are hitting new highs, soon I will post signals in the 200 to 300 as well.

Course Dates:

Some people have rung me to say the dates I picked to run the follow up courses don’t suit, so it looks like a wrong call on my part for the timing of the courses.

I have cancelled the weekend course  for the 19th.

However to repay my loyal clients that did book I have re scheduled them each to a one on one session with me…for the same price.

Also:

For the first few months of this year I will not be running any courses. I will be doing one on one session for those that are interested. I have a few projects and goals of my own lined up in the near future and unfortunately I don’t have the time to be preparing and organizing courses.

The one exception would be if a group of people (like a trading club) would like to organize their own date and venue, so I could come along and present or teach, I would consider that as an option.

That’s it for me this time; I hope you have a great year in the markets.

And remember…..the two reasons why traders don’t make money trading is

1/ they don’t have a method

and

2/ they don’t stick to it

If you can’t stick to it then the method you have does not suit you and it is time to look for something that does.

Cheers

Peter.