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Author Topic: How to crush the stock market by TTBit  (Read 429 times)
TTBit
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April 12, 2013, 10:47:44 AM
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>>> Note: This post is for entertainment purposes only. It is not intended to be a complete portfolio solution.

Hope you don't mind me sharing this in the bitcoin forums. I've traded stocks/commodities/futures most of my life, and often asked where I believe the price of stocks/gold/bitcoin are headed. I'll always have an opinion and love to talk markets, but making money involves strategies, and managing those strategies.

Here is one. I applied this strategy to the Dow Jones Industrial Average for the last 90 years (April 1923 - April 2013). 12 trades a year, each one enters the market (long) with $100,000 and held for a week or so. The results:

Number of trades: 1058
Average trade net profit: $636 (0.636%)
Winning trades: 666 (62.95%)


Overall, you are in the market 37% of the time, flat the other 63%. The 90 year performance:


Skeptical? Here is the opposite strategy. 12 trades a year, you are long the market the 63% of the time, but flat 37%.

Number of trades: 1058
Average trade net profit: -$0.15 (-0.00%)
Winning trades: 567 (53.59%)


Here is the chart of the 90 year performance:


The super complex strategy:

Buy stocks on the 27th of the month, sell stocks on the 8th. The coded strategy gets in on the first trading day after the 26th, and out after the 7th.

as coded in Tradestation Easy Language:

Code:
buyx=100000/close;
If dayofmonth(date)>26 then buy buyx contracts today on the close;
If dayofmonth(date)>7 and dayofmonth(date)<20 then sell today on the close;

A 0.636% 12 times a year is 7.9% annualized, while only being in the market 1/3 of the time. Conversely, the Dow Jones has risen from 101.1 to 14865.14 in those 90 years, or 5.7%.

You could tinker with the strategy. Adjust position size based on volatility, add stops, etc. Thanks for reading, happy trading.

As always, past performance does not guarantee future results!

good judgment comes from experience, and experience comes from bad judgment
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btcminer021
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April 12, 2013, 12:38:56 PM
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I've traded options (calls mostly) and made some money, but I think I just got lucky. Now I'm in index funds. I've been looking to get back into trading based on something like this. What made you come up with this?

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TTBit
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April 12, 2013, 12:56:36 PM
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What made you come up with this?

The idea was that many people get their salary at the end of the calendar month, which is then put into the stock market. So buy a few days before they get their check, then sell after they have bought.

As for vehicles to trade, I would consider the S&P mini futures. Each contract is ~$60,000 right now. Great liquidity, and you can get $5 fills. As a bonus, if there are any profits at the end of the year you get to report 60% as long term cap gains (40% short term). Its a decent chunk of change to be sure, and you will want to be careful not to lever up which is so easy to do.

good judgment comes from experience, and experience comes from bad judgment
BTCBUDDY1
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April 12, 2013, 01:02:23 PM
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Sounds interesting but won't work if everyone does it.

I'm back.
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April 12, 2013, 02:18:18 PM
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god fucking dammmit. This is not me. I have been hacked, any activity that has been logged in the past 8 hoursis a hacker. they asked multiple members for 10+ btc loans because funds were "tied up" in gox. I never have or will use gox.

I'm back.
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