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                                                                 EARNINGSTRADER FAQ                 WANT THE BEST OPTION SELECTION?-FREE                WHY WE TRADE OPTIONS?


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Stock Screening

Current Trade Statistics - 2003 to 2005

MANUAL ADDENDUM

THIS IS A COMPARISON OF THE ORIGINAL UNFILTERED TRADING SELECTIONS VS THE NEW TRADE FILTERS BELOW


These stats are based on the implementation of a new filter described below for original system manual owners and subscribers.  Additionally we have added an auto-update cut loss column to all trades to indicate where stops should be located for maximum protection or profit preservation.
These are used to cull final selections from the method taught by the manual.
 

USING FILTERS TO LIMIT TRADES?

Those of you that have been following this system know that we had the potential for about 395 trades over the last year. While better than 80% were winners it still provided too many for any investor to follow, let alone afford. I have spent the last two months divining a simple culling process that gets us down to around 6 trades a month, yet gets the closed trade percentages up above 90% and takes average profits from 8-12% per trade up into the high 20 percentile. The time in trade has been increased (which gives you more time to roll trades if you are trading options, thus compounding gains), but still allows you plenty of profit compounding turns per year. You will find that as strong trends develop this holding period will reduce to an average of around 50 days.

The "Magic"???... Eliminating all stocks that have less than 50 days until earnings will be announced, and the "big one", only picking stocks that have a 'CPM" (Current Price Multiple) of over 2.0....(Actually 1.96 as illustrated below). If you need to reduce the number of stocks even further you can only pick those stocks that are optionable (even if you don't trade options). Optionable stocks tend to be more liquid and draw more investor attention than those that are not.

This insures that we have strongly accelerating stocks. The CPM is simply today's price divided by the lowest price in the last year. This Factor will be self adjusting on the following basis. Every day we look at the CPM of the SP500 and multiply by 1.5. That means as the SPX ratio fluctuates, so will the CPM so that we are always evaluating performance of the stocks balanced against the broad market indicator.

HOW ABOUT STOPS?

Probably the most asked question outside of why we buy negative pre-announcements (as opposed to selling or shorting them.

Because I use options to limit the risk, the amount I put up is the equivalent of a stop.  I am prepared to lose it all because I am working on the 80% + odds of winning overall.  Those who do not use options should follow the new recommended stops which are updated daily.  These are protective and trailing in nature and will keep you from getting in serious trouble and/or protect your hard earned profits from winning trades.

Here is how a sliding scale works:

1. For stocks from $5 to $10 a 1.50$ trailing stop
2. For stocks from $10 to $20 a 3$ trailing stop
3. For stocks from $20 to $30 a $3.50 trailing stop
4. For stocks from $30 to $40 a $4 trailing stop
5. For stocks from $40 to $50 a $5 trailing stop
6. Above $50 pick a % drop, (your comfort level-7 to 10%),from the highest price that the stock achieves during the time you hold it and place a stop updated as required.

 

pitbullinvestor.com Established 1994
 
Recent Trades:
AMTD WEBX MON WFII CMOS AMAT ERTS TQNT PSUN STN POSS CMOS
 76.7%  41.1%  24.8%  -12.4%  42.8%  -6.9%  23.7%  19.1%  28.4%  14.5%  50.9% 42.8%