Performance

Extreme-os trading system  is up 46% for 2010 and up 28% for 2011 so far.

Details at extreme.collective2.com

Subscribe for only $100/month

5 straight months of profitability

This is a nice stat.  We have not had a streak like this since 2006.  The market has been kind to this strategy.  We did not have downgrades nor negative earnings surprises for our stock picks.  May is a down month with the NAS100 down about 3% which provided us with many opportunities to buy oversold stocks.  The market usually pullbacks about 2-3 days then bounce back allowing us many profitable trades.  The energy sector had pulled back hard and rebounded nicely.   The following chart of  BWA showed our entry point.   BWA have been dropping for 2 weeks without any significant bounce.  It finally hit its support of 66 back in February.   We enter the trade on May 24 and got a nice bounce the next day.

  I hope our subscribers are doing well.  To trade well, you need confidence in the system, take all the trades and have the discipline to exit a few days after. 

June is starting out with  a -270pt in the DOW.  We are not in any stocks. That is a good sign.  Let’s make June a profitable month as well.

What I learned from James Altucher

This week’s news is all about the death of Bin Laden.  I have to say the US Navy Seals are the best military unit in the world.  While browsing the internet for news, I came upon this post from James Altucher.  James is my favorite financial writer.  A lot of what we do here is based on the principles illustrated in his book Trade Like A Hedge Fund.  Anyway, he was describing his trades during 9/11 .  I really feel his trades.  As traders, we will always have those moments.  To survive, we have to manage risk.  Sometimes , in the heat of the moment, we throw all risk management out the window and overleverage.  That is how we blow out our account.  Happened to me before. I hope I learned.

Buy new lows, not new highs

I came across this article from the MarketSci blog.

I think this reaffirm our strategy of buying recent weakness in stocks, rather than chasing momentum.

FSLR trade

FSLR had been pulling back from its high of 2/18.   For 8 out of the last 9 bars, FSLR had closed lower than its open and had dropped almost 30pt straight from its high.  We entered on 3/3 at around 146.5.  Turned out we were still 6 days early.  FSLR  dipped down as low as 137.1 intraday along with a very weak solar sector.  On 3/14 the nuclear crisis in Japan stirred interest in the solar sector as the alternative energy source.  We got out a day later as we chalked up another very profitable trade.

get ready for more action

Markets are turning more volatile.  It should be even more volatile according to this. (Surly Trader)

This is the first week without a higher high since November (Quantifiable Edges)

Market retraces generate many more trades for mean reversion systems.

Free online stock screener

Finviz is a powerful online stock screener that I use often to see what is currently in play.  Screeners are programs that search thru thousands of stocks with specific parameters.  Finviz offers screening criteria such as stocks that are down 5%, having an average true range of at least 1pt,  below 200 moving average, etc.   Give it a try.  You might even see the same stocks alerted by Extreme-os

10 profitable trades in a row !

Despite the NASDAQ dropping 69pt on 1/28, we managed to close 10 profitable trades in a row.

APKT trade was the most profitable trade.   Below is the chart of APKT pulling back and reverse.

This only happened once in my trading career

This will be the 33rd-straight trading day that the S&P 500 closes above its 10-day moving average.  (Crossing Wall Street)

The last time it happened was in 97.  I just started trading then and did not even pay attention to the event.

Mean reversion rocks

Mean reversion daytrading strategies just kick #$%& in 2010.

My own Extreme-os system gain 46% for the year with 17% drawdown.

C2′s most popular system Topaz,  also a mean reversion buy the dip stock trading system also had an outstanding year at 39% gain and 16% drawdown.

I am happy that I sort of outperform Topaz.  Had I not screwed up at end of 2008 by one trade DRYS, Extreme-os would have been in the most popular list now.  At least, I learned and hopefully will not commit the same error in the future.

Other mean reverting stock systems on C2: ATS gained 31%,  Rainier 30%.  I am convinced that the only profitable trading strategy for the retail trader is buy the dip short term trading.  No other type of systems on C2, futures or Forex can sustain gain in the long run. 

I looked at the trades on the other stock systems on C2 and noted that they all traded different stocks than Extreme-0s, yet the returns are almost as good as mine.  Maybe I will start another buy the dip system on a different set of stocks.