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Friday, July 13, 2007

What's in my DISK 3

You have seen my numerous articles explaining the PCCRC. But some may say that the articles don't explain everything in detail enough to reproduce it. Perhaps you may say that one would have to read the countless articles to reproduce the PCCRC. This is one of the reasons I decided to create the videos. Then you may say, how do I know that it works? what kind of performance should I expect? This is why I started a fictitious (paper trading) account with Think or Swim, to show you all of my strategies and entry rules, and then follow up with the results. Yes, I opened 4 trades following my 4 game plans. From candidate search and selection to entry an fill of the positions.

I particularly hate commercial companies that promise you big profits (enough to pay for the courses), and then you find out that they are light on specifics and strong on clichets. You feel taken when you realize that everything you ever learned from those commercial ventures could be found in books you pay a few bucks for, or even in the internet for free. Yet when you ask about specifics, they ask you to wait until their next course. They can't even answer the question, what kind of return should I expect from following their strategies. Ironically, I believe that their salesmanship is understandable.

While making my videos, I soon realize that to make a business out of this effort, I would probably lie about what to expect, trying to hide the weaknesses of the system while overselling the successes. I decded that I am going to share my knowledge freely as a way of disseminating good will. This is because I am perfectly happy with the returns I am getting with my trading, and I have no interest in making money from people's hopes, fear and greed. I am interested in sharing because I want to learn from you, from your experiences testing my systems, making your own improvements to it and share with all of us here what you have done. Perhaps one day there will be thousands of us in this blog!

I followed the very specific approach of entering trades following my methodology so I could show you the good, the bad and the ugly. I don't make claims that this is easy or a "sure thing'. Quite the contrary, it has taken me many years of experience and trial and error. I don't believe that you can be consistent because the markets are not consistent. But the PCCRC is as close as you can get to profits good enough to reach 30% per year, although I already have made 40% so far this year. Further, the PCCRC leaves opened the possibility of a homerun, such is the case of AQNT.

Here below is a description of the paper account I started in my Video Disk 3. I opened 4 positions (CMI, NVDA, IRF and RIMM), following 4 different approaches, all are PCCRC.

Figure 1 shows the Account status. Note that the 4 positions take about $10,000 in cash each, so there are still $62,000 in the account for trading and entering new positions. All 4 positions are profitable as of today.




Figure 2 shows the current % gain on each position.


Figure 3 shows the balance and entry of each position at specified dates.


One can conclude that it is easy to turn a profit and limit the loss. Although each trade required a capital of about $10,000, none of them exceeds $2000 at risk.

Please send me an e-mail to ask for details on how to get this and the other 2 disks on this series. REMEMBER to pay if FORWARD

e-mail me to Paperprofit1@mac.com

8 comments:

Guppy Galaxy said...

Juan,

Could I confirm that the paper trades are not back test trades ? They are actually live trades but using paper account.

And the video are recorded progressively from the entry of the trades.

Awaiting on the DVD to come.

Best regards.

Chiu

Juan Sarmiento said...

Yes, indeed chiu, the trades you see were placed in a paper trading account (not real cash), LIVE, REAL TIME, PROSPECTIVELY, as the conditions were met. The disk shows the process as it occurred.

There was NO KNOWLEDGE in my part what the outcome is going to be (the positions are still in place).

Otherwise it would be cheating!

The purpose is not just to show success, but how to handle failure too... Commercial courses show you only the good, and NEVER real time. I don't think that such an approach helps anyone.

By telling you what to do when things go wrong, I am teaching you the other half no one wants to teach, but that is soooo important.

Happy Trading said...

hi
great work
please check your email for my request.
anyway i have some questions on it
IRF you place an order on 28/6/7 but there is no vol. spike on 27/6?! there is a vol spike on 21/6 but the price change is only 6.83% not >10%

CMI and NVDA i don't really know how you pick them

thank you
Happy trading

Juan Sarmiento said...

Hi Happy.

The purpose was to demonstrate 4 different methods of Candidate selection.

Once you get the disks it will become clear to you. I have posted extensively on the different methods, and the disks will help a lot as I go step by step on the selection process, as well as the entry using TOS.

Once you get the disks, we should be able to discuss it all better.

Juan

Anonymous said...

Juan,

You were saying many times “If stock declines with volatility decline, then most probably stock will rebound”
My observations showed that often when stock rebounds, volatility rises as well.
Isn’t it good setup for PCCRC?

Juan Sarmiento said...

I have not made this as a regular set up. If you are following individual stocks and see that:

1. Front month volatility is the same or higher than the back month volatility.
2. The volatility of the back month does not exceed 40%.
3. You understand the risk regarding earnings reports: generally IV declines strongly.
4. IV/SV is at or below 1.

Then you could safely enter any position in a stock you believe will move strongly, in either direction. You could adjust the number of long calls to make the PCCRC bearish or bullish.

Do not exceed the cash invested to more than 10% of your account, and NEVER risk more than 2% of your account in any PCCRC.

Other than that, go ahead and experiment, or simply follow my instructions to the letter.

I think the best way to take advantage of the PCCRC is to enter it the day after earnings if the stock moves >10% and there is an increase in earnings guidance going forward.

Midas said...

Hello to all
I would like to present a PCCRC candidate(my humble analysis follows)
HUM
1 .9% jump after earnings
2. Better than expected earnings with higher guidance
Humana (nyse: HUM - news - people ) surprised Wall Street on Wednesday by reporting better-than-expected earnings and boosting its full-year guidance for a second straight quarter.
The Louisville, Kentucky-based company, which specializes in Medicare cases, also lifted its full-year guidance by 25 to 30 cents. Humana is now expecting $4.40 to $4.50 a share for 2007. In the first quarter, the company predicted $4.10 to $4.25 a share. For comparison, Humana pulled in $2.90 a share last year.
3. Average daily volume aprox 1 million with large surge on earnings release
4. IV/SV ratio below 1
5. Front month vol aprox the same as back month
6. Back month vol below 40%

Juan what do you think about this candidate?
I am looking forward to receiving the DVD’s and your comments
Thanks for all your hard work
Midas

Juan Sarmiento said...

I did look at HUM yesterday. Today I am looking at JNPR as well.

I think you get the idea!!

Remember to keep your risk low. If you have Platinum, or TOS analysis, you would see where the risk graph bulges out below the strike price, that is your max risk. Be sure that you keep it below 2% of your account.

Also, the total capital (not the risk) necessary to enter the trade should not be more than 10%. You may want to keep about 10 trades at any one time. If you put too much money in a single trade, you won't have enough for other opportunities.

I won't say go ahead and trade, but HUM does meet my profile..... Your call!

EWI