Why Are You Here?

Trading and Markets
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Why am I here? It’s a great question for you and me. There has to be a reason, right?

I have been trading for many, many years. I’ve had great results, even some home runs and I’ve had my butt handed to me just as much if not more often.

I have purchased dozens of books, spent money on trading courses and viewed countless webinars. So have you, I know this. We just want to find something that works…ALL THE TIME, am I right?

Most of us are cut from the same cloth. We are like the old cigar smoking guys that gathered in the OTB parlors when I was a kid. Everyday looking for the magic formula. The difference is that they had community better known as human interaction. Unfortunately, we do not have that.

A few years ago I purchased a very expensive software program from a very well known and very well respected stock trading website. I won’t mention the name but I’m sure many of you have heard of them or maybe even subscribed to one of their programs at one time or another.

I have spend hundreds of hours researching stock picking angles, backtesting and even trading some of the strategies I created. I have made money and lost money. The problems have been many but I never gave up. I wanted to create a strategy thar withstood the test of time.

I believe I have found it. The numbers are incredible… In the last month. I have back tested this strategy through thick and thin. The COVID crash, the 2009 crash, late 2018 and the most recent 2022 bear market.

The method trades a very specific group of stocks. The members of the S&P 600. For those that are unfamiliar Google SP 600 Index… They are highly liquid small cap stocks.

I’ve been able to design a stock selection and re-balancing method that requires no chart reading, no technical indicators and no fundamental analysis like earnings, earnings surprises, extravagant ratios or analysts ratings.

I believe it works because of the pool of stocks it fishes in. Small caps can really move with the right catalyst. Think about the excitement on CNBC when a stock like Nvidia moves from $600 to $900. It’s comical to me because small caps regularly have 50% or more gains in a single day!

So, my friends, this is why I’m here. I am taking the exact strategy I’ve developed and tested and putting it here on Collective 2. In fact, yesterday was day one.

Let’s see if this can perform like it did with all my testing.

~A 106% Annual rate of return from 3/2012 to present day. A max drawdown of just 36%. In the same period the SP500 returned 13% with a 30% drawdown.

~ 52% return in 2022 with a 20% drawdown while the SP500 was down double digits with a higher drawdown.

~My favorite of all from 8/2008 to 8/2009 which had the SP500 down 13% with a 39% drawdown. This method did a whopping 400% return!! It did however have the same 39% drawdown though.

~Finally in the last one year period it returned 106%.

If you’ve read this far, you will want to know what it is called. Simple name, SK Small Caps. The S and K are my initials.

My suggestion is to follow it for a while and see what happens. I know one thing, I am very hopeful.

Now back to the title of this post…WHY ARE YOU HERE?

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I hope you’re right but your optimism reminds me of my misplaced optimism when years ago I purchased backtesting software and found similar results in backtest but not in reality. Once slippage came into play and I accounted for survivorship bias in the software my results were not so good. Suddenly the software I bought from Zack’s didn’t seem quite so fun. The 100% plus annual returns turned out to be just an illusion. That was my experience so just be careful and make sure the backtests account for survivorship bias. I imagine you already have. :pray:

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I’m here for very similar reasons.

My main goal is to become financially free. That’s why I’m publishing my strategy here, which I trade 100% myself (100% TOS). My story looks similar. I also did a lot of system development and backtesting. My system has been running on Collective2 since May 2022. Every day I compare my live trades with the theoretical backtest results. The differences are limited and cancel each other out.

Unlike you, I bet on all stocks from the S&P 500. The system trades long and short trades. There are a maximum of 60 trades in my system that can be open at the same time. For each trade, 1/60 of the available capital (including leverage) is always used.

Time will tell how good our systems are.

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Small cap stocks typically have limited liquidity and wide bid/ask spreads, both of which can be deleterious to strategy followers’ returns, especially given that their entry and exit trades are typically entered by C2 at market–a market that can move rapidly given a sudden influx of orders. The more successful the system, the greater the deleterious effect. For an example, check out the trade history detail of https://collective2.com/details/143032509. Just something to bear in mind should your strategy become widely followed. One way to combat this effect would be to limit your number of subscribers. Perhaps scaling gradually into your positions might also be beneficial.

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I am very happy to meet you Fabi. Keep posting, keep communication lines open as I intend to do. I want to check your system out so can you send me the link?

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100% agree. This is exactly why I am putting it to the test here. I appreciate your feedback. I’d like to see what you are working on as well. Can you respond with your link?

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Hey Old_Goat. As I mentioned in the first post, I have had this software for quite some time. I can remember creating amazing systems with astronomical returns only to lose miserably due to many of the reasons you indicated. The main reason is low liquidity.

I am hopeful this will not be the case here which is why I fish in the pool of the SP600 small caps.

I really appreciate your input. Do you have any systems on C2?

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My strategy is probably similar to yours. In years where the S&P 500 has produced a good return, my system is not so good (2023). In years when the S&P 500 performed poorly, my system performed a lot better (2022).
Max leverage 3.5, draw down still slightly lower than the S&P 500. But things only get really exciting in my system when we see another crash. In the backtest, my system had a maximum draw down of around 25% in the crash years 2000, 2008, 2020. YTD performance of 2000 was 107%, of 2008 49% and 2020 75%.

The all-important question:
Can my system maintain draw down and performance in future crashes?

This is my TOS strategy:

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I like your thinking. I believe C2 offers a great place to “put it to the test”. Of course, I am hoping for the same thing with my strategy. In backtesting, it performs well in all market conditions but from the month of August 2008 to August 2009 it did over 400%! Wouldn’t that be nice?

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Are you willing to share what trades it did during that month? Could be educational on whether is is a high or low chance of having a survivability bias.

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2008-09 was a fabulous period for mean reversion strategies.

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It was actually a year. Let me see if I can figure out how to extract the trades easily from the software when I get a chance. I know how to do it the slow way but it would take way to much time. I’m sure I can figure a way.

Maybe I can pull some more recent big months actual trades as it would be much easier.

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Monetization: C2 allows strategy providers to earn income by charging subscribers for access to their strategies.

If your strategy proves successful and attracts followers, you may generate revenue from subscription fees.

That’s why Im here :slight_smile:

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:grinning: Great Answer! To the point.