Monthly Statistics for Real Time Trading for September 2011
9/01/11 9/02/11 9/06/11 9/07/11 9/08/11 9/09/11 9/12/11 9/13/11 9/14/11 9/15/11 9/16/11 9/19/11 9/20/11 9/21/11 9/22/11 9/23/11 9/26/11 9/27/11 9/28/11 9/29/11 9/30/11
Sept 1: -15686 4W 15L, Sept 2: +9665, 7W 5L, Sept 6: +8360 13W 8L, Sept 7: -44863 4W 17L, Sept 8: -20063 15W 26L, Sept 9: +17520 10W 3L, , Sept 12: +25,311 21W 6L, Sept 13: -4934 3W 9L, Sept 14: +9148 9W 3L, Sept 15: +4910 22W 8L, Sept 16: +9169, 4W 7L, Sept 19, +2179, 7W, 6L, Sept 20 -24959, 11W 23L, Sept 21: +18888 14W 15L, Sept 22: +22439 9W 1L, Sept 23: +62830 31W 21L, Sept 26: -6963 4W 10L, Sept 27: -20084 12W 12L, Sept 28: -43520 1W 21L, Sept 29: +44870 26W 0L, Sept 30: +16598 13W 2L
Gross winning trades = $251,909
Gross losing trades = (-$181,072)
Net Gross Profits = $70,837
Number of Markets = 80
Account size recommended to trade all 80 markets = $1,000,000
Number of trades in September '11 = 458
Win = 240
Loss = 218
% Win = 52%
Average Trade Profit (win loss) = $155
Profit/loss for September '11 AFTER taking out $91,600 for transaction costs = (-$20,763)
Combined Statistics for Real Time Trading for December 2009 through September 2011(22 months)
Gross winning trades = $3,832,551
Gross losing trades = (-$1,668,341)
Net Gross Profits = $2,164,210
Number of Markets = 80
Account size recommended to trade all 80 markets = $1,000,000
Amount of money committed to each trade if traded on margin = $25,000
Number of trades in 22 months = 5767 trades
Win = 3113
Loss = 2654
% Win = 54%
Average Trade Profit (win loss) = $375
Theoretical Real Time Profits for 22 months AFTER taking out $1,153,400 for Transaction Costs:
Please Note: On June 15 2011 we started trading from both the long and the short side. From 4/30/11 to 7/29/11 we encountered a nasty draw down of $184, 652 (22%) from our previous equity high.
I am going to call this the "Pajama Trade Formula" (see my article PAJAMA TRADING) for calculating a reasonable projection of transaction costs. I have traded accounts ranging from $6,000 to 6,000,000 and the figures I present here seem reasonable based on my experience. Actually I think I can do better than this formula calculates, but you may do worse than this formula calculates until you have had some practice and experience. Nevertheless pajama trading is not that difficult to learn and is the only way to go to effectively cut transaction costs.
To calculate transaction costs simply take the total number of trades (5767) and multiply by $200 to get $1,153,400. Then subtract $1,153,400 from the Net Gross Profits of $2,164,210 to get $1,010,810 real time profits.
Using $200 for transaction costs is a little arbitrary but is reasonable based on my experience trading million dollar accounts. Most people will be trading much less than one million dollars and if that is the case I would recommend to seek out brokers charging no more than $5 per trade (some will do it for as little as 40 cents). The transaction cost figure of $200 includes slippage and and is an estimate for a million dollar account. But the transaction costs will be much lower for a smaller account. For example the transaction costs on a $5,000 account may only be about $4 per trade.
Projected Real Time Profits for 22 months on a million dollar account AFTER taking out transaction costs of $1,153,400.
Divide $1,010,810 by 22 to get average profit per month or $45,946. Using this average projection we can figure that our profits for one year would be $551,350 (12 X $45,946) and that comes out to an annual return of 55.13% on an investment of $1,000,000.
STARTING JULY 1, 2010: Please note. In late June 2010 I made a decision to yield to the many money managers and high worth individuals who periodically contact me. They do not feel that my committing only $20,000 to our portfolio or $500 to each stock position is very helpful to them for understanding how this methodology can work when trading substantially larger sums of money. And quite honestly it is the money managers and high worth individuals who usually buy my stuff. Therefore I am bumping up our portfolio by a factor of 50 from $20,000 to $1,000,000. However the software I sell can be adjusted to any account size and I still maintain you can start with as little as $3,000. Please note also that I am not adjusting the individual days going back to December 1 2009. If you want to adjust those figures to match what we are presently reporting you need only multiply the figures by 50. I have, however, adjusted the individual months to reflect the larger dollar amounts.