This information pertains to the swing trading system we run on the collective2 site.
Welcome Aboard. My name is Dave Johnson and I am one of the developers of The Trading Digest Portfolio system. I wanted to pass along a few basics of what the system is about and how the signals should be applied. The system typically will hold 8 open positions of equal 12.5% equity per position position. At times we can split a holding so theoretically we could have 16 positions. With 8 positions we would be at 100% equity- no margin. All orders are market orders entered at the market open. Hit that opening price! If you are having problems getting the opening price, please feel free to email us and we can provide advice on the best way to route the orders for your broker. At times you may see entries in the SPY- the SP-500 tracking stock. This is a separate system and can have 3 entries of 10% of equity. This coupled with a full boat of equity holdings could bring equity to 130% - 30% margin. These extra signals are up to the individual users discretion to follow or not. I am risk averse and believe most traders should be as well. This system is a swing trading system. It holds no longer than 10 days and may exit after 1 day.
It is absolutely imperative that all signals are followed for the 8 position swing portfolio. You must allocate a segment of you portfolio to the system, and take into consideration commissions when setting up position size. So if the subscriber were to allocate $20,000 to the system- in the beginning each position would be $20,000 divided by 8 - or $2500.00 per trade. As the portfolio grows always allocate based on the size of your portfolio.
One of the reasons we only charge $40.00 per month is so the average investor will be able to use this system without major negative impact on performance. Another major advantage of this system over others on the Collective2.com is that you can easily trade this system with a full-time job because orders are at the market open. Expect the signals to arrive by email each morning typically before 8:30 AM EST. If you ever have a question about the latest signal log into the Collective2 site and you’ll be able to see any changes that have been made.
This system is derived from a system that myself and John, the co-developer, developed from years of backtesting, live trading, and adjusting based upon walk forward market knowledge. I am a full time trader who trades futures and equities. John is a former Microsoft engineer who helped me implement trading concepts into automated signal generation. I ran a simple version of this system on my former blog to prove a simple concept such as this could outperform the market handily:
http://dayvejohnson.blogspot.com - many trades are archived there
and I now post full time at our joint blog:
http://www.thetradingdigest.com
In backtesting swing systems there are a coupleways that you can attack the trade entries. One being with limit order entries ans the other is with Market Orders. We decided to make this system as friendly to people with full-time jobs as possible. By using Market Orders the process of entering and exiting positions is a simple process that can be done the night prior or the morning of the market open. Here is a backtest from 2001 in the depths of the bear market up until 2007.
In actual trading we have been able to enhance and smooth returns with the occasional short or long entry in the SP-500 to smooth things out a bit. As you can see the concept has been very persistent and has put together some consistent returns. At the end of a year we would like to be up 30-60% regardless of what the market did that year. The key with this system as with any trading system is to trade it religiously. Taking every signal is so very important. At times it may seem illogical or against the grain. Other times it will be against everything you have learned about trading. All I can say is that is why it works.
Also another quick note. This system is unlike other systems on Collective2. It is not meant to gain 50% in one month through the use of outrageous leverage. It is meant to take into account market risk and return in a sensible systematic way. This is one reason our system is ranked so highly.
And if you ever have a question feel free to contact us through the collective2 site. Do not hesitate. We’re here to make you successful.