Online Stock Trading Made Easy - Lazy Trader...Crazy Returns

Hi, 

I don't know from where to start...ok..let me start by saying a BIG thanks to Sriganeshh, yesterday he asked me how I calculate SAR for my trades.You can check the comment section here,for details of conversation.

He also asked me what is my success rato in SAR.I had no clue about that,so after a reply to his question,I thought let me go back and check the performance of SAR.Although I am confident of system and returns but checking the actual performance revealed some interesting facts

I checked the returns of bank nifty in specific, as I track it very often and it compliments my trading style

You can do it by going to Indian market calls label and check the past performance.

I found out that the system has been long since 09 February 2010 from the level of 8421

Bank nifty closed at 9180 and made a high of 9230 on 12 March 2010 (last trading day)

So total return comes to around 800 points approximately 8.5 percent 

But since we buy futures of bank nifty the returns goes up significantly.Lot size is 50 and approximate margin requirement is around Rs 50000 and gain is 800*50=Rs 40000 that comes to 80 percent returns 

So its 80 percent returns in a month, in one trade and the trade is still not closed.Considering these facts I feel these are excellent returns

Now we should just not look at facts and get too excited about the returns.We should try to read between the lines and find out the real reasons for this kind of performance.

Some important details about the system's  characteristics which I mentioned in yesterday's post

Since this is a trend following system and uses trailing stops(SAR)...you will see it does well in trending markets (will perform better for bank nifty than nifty....and will perform better in case of icicibank than reliance)
It will have the disadvantage of trailing stops which is you will always enter away from market tops and bottoms...thus giving back your accumulated profits...and also have advantage of trailing stops...will let profits run to maximum limit,and will not take you out when oscillators scream "OVERBOUGHT"
What ever system you choose it will favor certain market conditions and perform badly in other conditions

With that knowledge my task becomes easy...I am on look out for stock about to breakout in trend...or simply trade in trending stock and ignore sideways markets and stocks(FMCG and Pharma)

After this trade's analysis I truly understand the following quote.

"The reason is that a man may see straight and clearly and yet become impatient or doubtful when the market takes its time about doing as he figured it must do. That is why so many men in Wall Street, who are not at all in the sucker class, not even in the third grade, nevertheless lose money. The market does not beat them. They beat themselves, because though they have brains they cannot sit tight."

                                                                                                                        - Jesse Livermore

So "sitting tight" is what I take away from this trade,although I did not trade in Bank nifty this time,but it still gives me important insights into my trading system...and more importantly my own psychology

Wishing you good luck and hope everyone has a nice weekend

Cheers