I am new to the RW Community. It seems to be relatively inactive. Moreover, it is difficult to use. For example, the latest post is not listed at the top of the page, but rather the bottom, forcing one to page down many pages to find it. Also, I have been unsuccessful in downloading .und files posted by other members. It seems that all that I get is a file of html source code for the web page in question rather than the .und file. A new issue of "Tips and Tricks" supposedly is posted every other week, but I have yet to see any new ones posted. Any one have any tips to make this site more user friendly?
Thanks for this detailed response. I followed the same kind of reasoning when I responded to JTW’s original blog. He sent me his screen for analysis, and I’ll quantify here the aspects of the strategy he is using. I hope he allows me to do that, but it quantifies his initial concern whether he could use this strategy in practice. And my answer is yes. I would not call it an overstretched fit, but I would warn him that his 160%/year weekly single stock strategy on average may not give him more than $900/year with years that he may lose even more than that amount. Here is the quantified rationale.
JTW’s strategy selects a single stock per week, with a minimum daily trading liquidity of $250000. For me, this implies that I would buy the stock at Monday closes as MOC orders and invest not more than 1% of the average daily trading liquidity, hence $2500/trade. I have the possibility to back test the slippage from Friday to Monday closes, and that slippage is roughly 5%/year. I heard from Kevin that he is working on getting that feature programmed in RW. RW’s newest feature of testing with a trailing stop relative to yesterday‘s high, shows that his expected (not compounded) annualized return is of the order of 60%/year. I pay $4/trade transaction costs. Let us suppose that JTW invests each week the same amount of $2500. He pays $8/week on transaction costs. That eats away 17% of his profit on an annualized basis. RW’s back test shows that he makes 60%/year excluding slippage and costs. So when you have the discipline to keep applying this strategy for years, you’ll roughly make 35%-40%/year net which is roughly $900/year, net.
Would I put in all that effort? No. Is it worth the effort? That depends on what you are after. Each trading day you have to spend five minutes to set your trailing stop for the next day. There are timespans of 1.25 years that the strategy is ranging and you will lose 17% during such a year, purely based on transaction costs. Is it worth the effort of making $900/year working 5 minutes/day with some years when you lose more than $1200? Each person is different. I would caution people that the original 160%/year of this strategy only translates into an average of $900/year net in real life, and that there will be years that you will lose more than that amount.
If I missed some of the rationale you explained, please let us know.