New Trade Data:

I spent some time drilling down into the Closed Trade page and found some very interesting data.  I am also analyzing past trades to see if I am missing something or if I can improve my performance.  I added the following data at the bottom of the table:

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1. I decided to "weight" the average returns of the Winners and Not Winners.  I believe this gives a better representation of how each of the three types of trades affect the overall performance of the model portfolio.

2. I am still presenting the average unweighted returns for Winners and Not Winners.

3. I added a completely new table breaking out the data for each type of trade.  I then added the average unweighted returns as well as the count of each and the average days held.

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The Data:​

• Core Trades had an average return of 88.63% and loss of -48.77%.

• Core Trades had more Not Wins than Winners: 16/14

• Core Trades Winners were held 9.71 days and Not Winners were held 13.50 days

• Lottery Trades had an average return of 71.47% and loss of -49.76%

• Lottery Trades had more Wins than Not Wins by a large margin: 8/3

• Lottery Trade Winners were held 11 days and Not Winners were held 3

• Earnings Plays had an average return of 222.26% and loss of -66.20%

• Earnings Plays had more Wins than Not Wins: 9/7

• Earnings Plays were held 4 days and Not Winners were held 7

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This is what I see:

1. By a big margin, the most profitable trades are Earnings Plays.  In fact, they are more than double the returns for the other trades,

2. Earnings Plays also had on average the least amount of time risk.

3. Core Trades need to be sold the day that they violate a stop at the close - they do not come back so to speak.  Holding longer only increases the time risk and the loss.

4. Holding longer than 11 days does not increase the probability of a positive outcome.

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Takeways:

• Instead of waiting for a "Stick Save" positions will be closed at the end of the day that they violate a stop.  TWLO is an excellent example of what happens when holding.  It violated the stop on Wednesday, stick saved Thursday and Friday the loss grew larger than the Wednesday stop.

• Earnings Plays will be increased to Core Trade size immediately.  For the Model Portfolio, that means 8%.

• Core Trades will remain at 8% for now.

• Lottery Trades will remain at 2 - 4% for now.

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This exercise is so important to do regularly.  By doing this, I am seeing how each class of trade is performing under CURRENT market conditions.  I do not continue to do something because it is working - I am always looking to improve to meet the first rule: PRESERVE CAPITAL.

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Finally, for those of you who are thinking: "Why don't you just take Earnings Plays" I won't do it because I think that the Core Trade performance will substantially improve by tightening up the stop as I discussed above. 

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