Fearless Trading and Capital Preservation

Have you heard recently people using the old cliche “Cash is King”? The financial crisis, which seem to be spreading through the globalized financial world has gotten people really worried! The VIX (volatility index) reflects the fear, with a historical spike of almost 60%.

I have heard the fear in the voices of professional traders that have come out to lend support to their audiences but fail to be reassuring as they question the wisdom of their own trading such as selling puts even though premiums are at extremes. How could we have predicted the this strong declines in the market that challenge the “.com bubble” in speed and in points of decline?

If you’d forgive my lack of modesty, I have been telling you about preparing for this storm since I begun to describe my PCCRC methodology in 2005. I also told Tim Bourquin’s audience in my trader interview back in December of 2007:
http://www.traderinterviews.com/archives/2007december.php

I have also been talking about my strategy in my seminar at the Los Angeles Traders Expo and simultaneous interviews for the money show, which I encourage you to watch:
http://www.moneyshow.com/directory/Results.asp?q=Sarmiento

Back in mid July, I tried to convince my audience that “stock trading was too risky, while the PCCRC provides both leverage and risk management. The PCCRC takes advantage of Delta, Vega, and Theta, together or individually, to assure profits under most market conditions.” I showed you then how in a year I had grown a $100,000 account into $164,193.70, all under the scrutiny of the participants of my Google traders group.
[ Please click on each image to enlarge it.]

Figure 1. Performance of a paper trading account opened on June 2007 with a fictitious capital of $100,000 (see Cash Balance on the right). By 6/15/08, almost a year later, the account had grown to $164,193.70, a little less than a year later, for a 64% gain.

Since then, and still under the scrutiny of my group members, the account has grown an additional $20,000, almost 12% in just three months. In fact, my strategies have produced $50,286 in profits since the beginning of the year (Balance was $134,289.2), that is a 37.5% growth during a period that the S&P 500 alone, has declined almost 37%.


Figure 2. Balance of the paper trading account ($187,336.7) as of 10/9/08. Note the year to date profits of $53,047.5. A profit of 39.5% so far this year.

But all of these claims would be meaningless if I did not make these trades real time and entered in real time in front of an audience that could verify my every move real time. I am posting here the pictures for your careful analysis. I am confident that you’ll find the results quite consistent under most market conditions. In fact, I am showing you the growth chart (left), so you also see the reliability of my methodology, in producing consistent results with very little risk, and shallow and or short drawdowns.


Note the the strong decline in the stock market of the last few days have actually increased my profits to new highs, since I opened the paper trading account.
One of the best things about trading this way is the preservation of capital. My approach always takes profit in a timely manner, and reduces the risk routinely by rolling over shorts month after month. I always have capital in my account, ready for the next opportunity.

Do you want to learn now to do this? it is not a bad time to start because regardless of what the markets do from here, we will be able to recognize the opportunities and enter the positions which in all likelihood will become profitable in time.

You can choose to read the articles I have written in this blog, or you may choose to participate of my Google e-mail trading group, and take advantage of numerous tutorial articles, videos and now even Webinars on a weekly basis. Please contact me at paperprofit1@mac.com for further information.

Please, if you find the information in this blog useful, understand that what I have done is given to you generously, expecting that you PAY IT FORWARD by doing something really great for 3 other people in your world. Just be sure that you ask them also to PAY IT FORWARD so that the chain of good will continues and make the world a better place!