Make 20% profit in a year?

Hey,

I went to a introductionary evening for WINtrading last night. Basically pitched as a free course in trading but really a sales pitch for their £££ 3 day course to trading.

The talk had a very good sales person using the right skills to get people in the room thinking that its an opportunity NOT to be missed. tbh i thought it was a bit overkill and got me instantly on the backfoot.

I looked at the course book and it all looked a bit simple and i would prob get more from reading a few decent books and chatting on forums. I think id need to sit down and watch a daytrader make money in real time, that would be the only course that would interest me i think. Anyone have any good reports on this course?

Anyway one good thing i picked up was this longer term strategy. Do you think this would work...

Make 20% profit in a year
1) Get a list of the Dow Jones 30 stocks from www.stock1.com
2) Select the 10 with the highest dividend yield
3) from these 10 select the 5 with the lowest stock price
4) on the first day of the year buy equsal amounts of each of these 5
5) hold for one year then sell them all
6) repeat the process next year

Few questions:
1)Would this strategy work?
2)What broker would it be best to use to buy american stocks. I use selftrade and would they still give a good spread on american markets?
3)Do they mean at the start of the financial year or in january? when do i need to buy in order to get dividend rights?

Good to know what people think!
Craig

Truely original work ! Ever hear of "Dogs of the Dow" ? Must be about the oldest mechanical strategy around. It might or might not have an edge, but I reckon 20% PA is stretching it a bit.

I also think this sounds like spam.

carnold said:

Hey,

I went to a introductionary evening for WINtrading last night. Basically pitched as a free course in trading but really a sales pitch for their £££ 3 day course to trading.

The talk had a very good sales person using the right skills to get people in the room thinking that its an opportunity NOT to be missed. tbh i thought it was a bit overkill and got me instantly on the backfoot.

I looked at the course book and it all looked a bit simple and i would prob get more from reading a few decent books and chatting on forums. I think id need to sit down and watch a daytrader make money in real time, that would be the only course that would interest me i think. Anyone have any good reports on this course?

Anyway one good thing i picked up was this longer term strategy. Do you think this would work...

Make 20% profit in a year
1) Get a list of the Dow Jones 30 stocks from www.stock1.com
2) Select the 10 with the highest dividend yield
3) from these 10 select the 5 with the lowest stock price
4) on the first day of the year buy equsal amounts of each of these 5
5) hold for one year then sell them all
6) repeat the process next year

Few questions:
1)Would this strategy work?
2)What broker would it be best to use to buy american stocks. I use selftrade and would they still give a good spread on american markets?
3)Do they mean at the start of the financial year or in january? when do i need to buy in order to get dividend rights?

Good to know what people think!
Craig

Click to expand...

I think that you would need to work this out yourself and it probably would not be difficult to get which shares would be the highest yielders on Jan 1 over the last ten years and check how they performed. I think it may be as well to add a couple of your own rules, though. For instance, put a stop loss under each one, raising it if the share goes up and sell any share at any time that you see its stop loss breached. You would not want to wait the year out while looking at a dead duck, would you? I can't see the point in torturing yourself until after Christmas!

Adapt the rules to your own satisfaction, i.e. sell when you think fit but do not replace until the end of the year.

Good luck

Split

dcraig1 said:

Truely original work ! Ever hear of "Dogs of the Dow" ? Must be about the oldest mechanical strategy around. It might or might not have an edge, but I reckon 20% PA is stretching it a bit.

I also think this sounds like spam.

Click to expand...

It is as old as the hills, and yes historically it has worked well, and certainly the back testing suggests 15-20% is a reasonable expectation.
Jim Slater has also analysed it thoroughly as a strategy for the FTSE in one of his books.

The book costs £10!!! so I hope you havent paid more than that!

20% is lame.

There are better schemes around.

carnold said:

I looked at the course book and it all looked a bit simple and i would prob get more from reading a few decent books and chatting on forums.

Click to expand...

You are probably right there.

I think there are 3 ways of educating yourself.

1. Go to an expensive course and get a good deal of information to get started.
2. Attend a proper diploma/degree type course
3. Educate yourself through books and Internet stuff.

In my opinion, option 1 will give you a fast track to some insightful information.
Option 2 & 3 will eventually give you the same information and then more.

In each case you will have to continue educating yourself anyhow.

The advantage is really with 2 & 3. You don't want to take the view that this is an easy gig that can be learnt on a X day course. If you can graft your way through 2&3 and get to the point that you are happy to start paper trading with your own system, then I think the fact that you have stuck with it for 6 months (more even) bodes well for your future and indicates that you are dedicated to being successful and not just looking for a get rich quick scheme.

Obviously there are a lot of reasons people fail in trading but one of the main ones has to be that those people perceive trading as easy money and have not put in the work to learn their new trade.

dcraig1 said:

Truely original work ! Ever hear of "Dogs of the Dow" ? Must be about the oldest mechanical strategy around. It might or might not have an edge, but I reckon 20% PA is stretching it a bit.

I also think this sounds like spam.

Click to expand...

LOL
http://www.fool.com/school/dowinvesting/dowinvesting.htm
http://www.winninginvesting.com/dogs.htm
http://www.andrewtobias.com/bkoldcolumns/970130.html
Some reading on this, please do not take it a recommendation from me, I am simplyaware of the strat, and know nothing more of it than I have read here and there.

The Ripples continue unabated............

*JDR* said:

but one of the main ones has to be that those people perceive trading as easy money and have not put in the work to learn their new trade.

Click to expand...

And the other reason is that there are far more scams than there are proper trading schemes, but there is no way to tell which is which from the advertising litereature - in fact the scams are probably far better marketed!

KIMMRUNNER said:

And the other reason is that there are far more scams than there are proper trading schemes, but there is no way to tell which is which from the advertising litereature - in fact the scams are probably far better marketed!

Click to expand...

Consider the possibility that anyone with a "proper trading scheme" is less likely to want to sell it . . .

dbphoenix said:

Consider the possibility that anyone with a "proper trading scheme" is less likely to want to sell it . . .

Click to expand...

Very true. If I had magically hit upon a system that gives me 2% return a week guaranteed (using that number as I am sure i have seen some market that return), then the best offer you would get out of me is that for a hefty cut of the profits, I will manage your money.

carnold said:

Hey,

I went to a introductionary evening for WINtrading last night. Basically pitched as a free course in trading but really a sales pitch for their £££ 3 day course to trading.

The talk had a very good sales person using the right skills to get people in the room thinking that its an opportunity NOT to be missed. tbh i thought it was a bit overkill and got me instantly on the backfoot.

I looked at the course book and it all looked a bit simple and i would prob get more from reading a few decent books and chatting on forums. I think id need to sit down and watch a daytrader make money in real time, that would be the only course that would interest me i think. Anyone have any good reports on this course?

Anyway one good thing i picked up was this longer term strategy. Do you think this would work...

Make 20% profit in a year
1) Get a list of the Dow Jones 30 stocks from www.stock1.com
2) Select the 10 with the highest dividend yield
3) from these 10 select the 5 with the lowest stock price
4) on the first day of the year buy equsal amounts of each of these 5
5) hold for one year then sell them all
6) repeat the process next year

Few questions:
1)Would this strategy work?
2)What broker would it be best to use to buy american stocks. I use selftrade and would they still give a good spread on american markets?
3)Do they mean at the start of the financial year or in january? when do i need to buy in order to get dividend rights?

Good to know what people think!
Craig

Click to expand...

Craig,

Investors Chronicle did an exposé of Darren Winters' courses a few months back - try this link, or if it's for subscribers only (not sure what cookies I've got on my PC), PM me with an email address and I can send it on.

http://www.investorschronicle.co.uk/public/Winterswonderland.pdf

great article.

Hi All - just seen this thread.

I am absolutely astounded that people are still successfully selling such old and commonly-known strategies.

It seems that anyone these days can dress anything up under the guise of a seminar.


Thanks


Damian

carnold said:

Anyway one good thing i picked up was this longer term strategy. Do you think this would work...

Make 20% profit in a year
1) Get a list of the Dow Jones 30 stocks from www.stock1.com
2) Select the 10 with the highest dividend yield
3) from these 10 select the 5 with the lowest stock price
4) on the first day of the year buy equsal amounts of each of these 5
5) hold for one year then sell them all
6) repeat the process next year

Click to expand...

Easier just to go to:

http://www.dogsofthedow.com/doggish.htm

But if you at this URL, you'll see it's not had the same 20% pre-discovery performance:

http://www.dogsofthedow.com/dogyrs.htm

Although it has done well YTD 2006!

A study in psychology? Is it a fake $50 bill?

*JDR* said:

Very true. If I had magically hit upon a system that gives me 2% return a week guaranteed (using that number as I am sure i have seen some market that return), then the best offer you would get out of me is that for a hefty cut of the profits, I will manage your money.

Click to expand...

The psychology of trading schemes and advertising is fascinating.

There is an interesting mindgame in psychology that says
" if you dropped a $50 bill on any pavement in new york, nobody would pick it up because they would never believe there could be a real $50 bill left lying on a pavement in new york" so it would stay there for ever.

Same goes for trading schemes.

Reality is that you can advertise a working scheme however much you like ,that really does deliver, and nobody buys it presumably because they do not believe it is real!!

I have a scheme that has delivered a reliable 250% return year on year in index trading, which has back tested for even 20 years!. Simple it is too, and it worked through all the years of both bull and bear, giving a worst case drawdown of only 10% in all that time.

More complex derivations of that scheme eliminate many of the loss trades, but whose details I have never released, and give over 85% successful trades. ( the scheme above is only 62% win, but wins are much bigger than losses)

The interesting thing is I advertised the scheme for a period, and had few takers. There is a fascinating problem in peoples psychology.

If you sell it cheap nobody believes it, and if you sell it expensive they may believe it but wont part with the cash! - there is a destructive psychology that says if it existed and worked it would be too expensive to buy!!"

The worst aspect of this is that the most clever marketing is applied to the worst products, so that people become accustomed to expecting to get ripped off.

How for example the "UK number one trading scheme" ( or so they call themselves beginning with G) DARE to sell a scheme for thousands that has a realistic win% of about 40 and a drawdown of 70% whilst trading in massive gearing!!! OUCH!!!, and yet they claim they are the most popular EVEN MORE OUCH!!!

So the problem is , nobody believes that it is a real $50 bill!

And that is how these expensive trading courses that charge a fortune for spewing up
for the most part old myths about trading flourish -(eg I defy anyone to show me a successful long term back test of a scheme involving the crossing of moving averages)

and allow trading courses to charge for schemes readily available in books that do at least backtest well to charge £hundreds for info you can buy in a book for £10

Peoples own psychology can bar them from ever finding a successful purchase of trading information.

So repeating the quote

*JDR* said:

Very true. If I had magically hit upon a system that gives me 2% return a week guaranteed (using that number as I am sure i have seen some market that return), then the best offer you would get out of me is that for a hefty cut of the profits, I will manage your money.

Click to expand...

There are no guarantees ever in trading. But there are high probabilies. And it is my opinion
that if JDR was offered what he is looking for , his own psychology would prevent him from buiying it!

All IMHO

KIMMRUNNER said:

The psychology of trading schemes and advertising is fascinating.

I have a scheme that has delivered a reliable 250% return year on year in index trading, which has back tested for even 20 years!. Simple it is too, and it worked through all the years of both bull and bear, giving a worst case drawdown of only 10% in all that time.

More complex derivations of that scheme eliminate many of the loss trades, but whose details I have never released, and give over 85% successful trades. ( the scheme above is only 62% win, but wins are much bigger than losses)

All IMHO

Click to expand...

Any chance of you letting the penny drop and PM'ing me details of your scheme?

KIMMRUNNER said:

There are no guarantees ever in trading. But there are high probabilies. And it is my opinion that if JDR was offered what he is looking for , his own psychology would prevent him from buiying it!

Click to expand...

You are correct. However, I DO believe there are people that make a lot of money from trading. I DO believe that anyone can be a successful trader. I DO believe that it takes a bit of hard work on the part of the trader and the only real Get Rich Quick scheme is winning the lottery.

I do NOT believe that someone who has a truly successful trading system needs to try and sell it to the public. I do NOT believe that a successful trading system is based predominantly on the selection of trades, which is mostly what you are purchasing when buying a "system"

Example : Your system returns you 250% a Year.
Starting with £10k, and compounding 20.8% per month (i.e 250%/12), by year 2 you would have almost £1 MILLION. By year 3 you have £9 MILLION....
Even if you do it more simply of only getting 250% at year end... Year1 = £35k, Year2 = £122k, Year3 = £428K

Why do you require a full time job of marketing and selling your system? A full time job sounds rather dull to me if I can be sitting in the Carribean trading my system and becoming a millionaire. Unless you are truly a generous person and you give it away.

*JDR* said:

I do NOT believe that someone who has a truly successful trading system needs to try and sell it to the public.

Why do you require a full time job of marketing and selling your system? A full time job sounds rather dull to me if I can be sitting in the Carribean trading my system and becoming a millionaire. Unless you are truly a generous person and you give it away.

Click to expand...

Hi JDR,

This seems to be a common argument directed at those selling their expertise (and I'm not denying there are a hell of a lot of scammers out there...). On the other hand, I can well envisage why a successful trader might want to run a course, or do some mentoring, etc. Trading is a pretty lonely existence (that's one reason why we're all on these boards, right?) - for someone reasonably extrovert in nature, the opportunity to stand up in front of an audience and spout forth on one's area of expertise, might be quite rewarding, not only in the financial sense. There's not a lot I miss about my old job, but spending a lot of the day communicating to other people about ideas and concepts is certainly one thing I look back more fondly on. If I were ever at the stage where I felt other people might benefit from my advice, I might well consider running some kind of course. As someone else on these boards has as their signature (I can't remember who) - a candle loses nothing by lighting another candle. Maybe I'm just not cynical enough to think that everyone out there offering training is a shyster of some kind or another!

Psychology QED

*JDR* said:

You are correct. However, I DO believe there are people that make a lot of money from trading. I DO believe that anyone can be a successful trader. I DO believe that it takes a bit of hard work on the part of the trader .

Click to expand...

It took 5 years of looking to discover what I know.

But as regards anyone can be a succesful trader I am not at all convinced. It is very much the
same targument hat not many are equipped psychologically to run their own businesses. -
the background I am from. I get bored with trading and the discipline of following a system, and come unstuck when I go "off piste"!!!

*JDR* said:

Example : Your system returns you 250% a Year.

Even if you do it more simply of only getting 250% at year end... Year1 = £35k, Year2 = £122k, Year3 = £428K

Click to expand...

Latter numbers are more or less right - only discovered the scheme just over a year ago so it has 19 years back testing and a year trading ( and if you saw how it worked you would realise that it is so fundamental to the market that it gives confidence that it is unlikely to change)

*JDR* said:

I do NOT believe that someone who has a truly successful trading system needs to try and sell it to the public.

Click to expand...

QED the psychology I stated - the assumption that if it was any good it would not be for sale.!!!

Point proven.

But then back to my original question that got me into this debate. Why on earth are people
paying severa hundred pounds a throw for a mixture of myth and old hat most of which never did work!

I dont need to sell it - but since it was all extra income that did not affect me in the slightest, why not - we are all capitalists on this board arent we? . I dont need to trade & dont trade much at all (which incidentally I dont enjoy -and for me the challenge has always been in beating the system, which I now feel I have done).

I do enjoy writing and publishing.

*JDR* said:

I do NOT believe that a successful trading system is based predominantly on the selection of trades, which is mostly what you are purchasing when buying a "system"

Click to expand...

Cant answer that because I dont understand the distinction you are trying to draw The system tells me when to buy and sell an index, on the basis of daily trades at close. Dont know whether that fits your definition or not.

*JDR* said:

Why do you require a full time job of marketing and selling your system? A full time job sounds rather dull to me if I can be sitting in the Carribean trading my system and becoming a millionaire.

Click to expand...

Who said full or even part time? never spent more than a few hours on it in the evening.
I spend my life in a lot more creative ways - I am a creative person.

*JDR* said:

Unless you are truly a generous person and you give it away.

Click to expand...

Interesting logic - that it should be given away, when JDR has said that he would only part with such a thing for massive fees and a percentage!


The entire point I have been trying to make is summed up in JDR response
( no offense intended mate! but the psychology fascinates me)

The assumption that if it was any good it would not be for sale or it would be at a prohibitive price. That any $50 bill left lying about must me a fake. So there is almost no way as far as I can see that a legitimate system can ever be sold.

What continues to amaze me however is how many of these scams ( such as the " number one system" apparently prosper!. Where on earth do they summon up enough idiots to pay thousands for the lamentable performance that they put on their website? Most people it
seems to me dont even know the basics of how to evaluate a trading scheme, let alone
how to operate one.

And no, I have no intention of giving away what I know.
I never did release the full system for sale - only enough to achieve the performance I stated.

KIMMRUNNER said:

It took 5 years of looking to discover what I know.

But as regards anyone can be a succesful trader I am not at all convinced. It is very much the
same targument hat not many are equipped psychologically to run their own businesses. -
the background I am from. I get bored with trading and the discipline of following a system, and come unstuck when I go "off piste"!!!



Latter numbers are more or less right - only discovered the scheme just over a year ago so it has 19 years back testing and a year trading ( and if you saw how it worked you would realise that it is so fundamental to the market that it gives confidence that it is unlikely to change)

....

Click to expand...

250% returns in a year? - So what exactly are you doing on this board?