BACK TESTING STOCKS
Back testing to produce 7,979% gain in 4 year 7 months.
I spent 5 year developing a formula that tells me what to buy and when to sell.
I encourage anyone new to the stock market to spend your time and money developing your own personal back testing strategy that can be repeated through back testing over a number of years. The strategy must be able to be started at any date and run over a number of years and produce similar or impressive results.
Here are my stats:
Start with $34,500 on May 4, 2001 to December 30, 2005.
Investment: $34,500
Ending Total Value: $2,787,253.32
%Gain: 7,979.00%
Average Annual Rate of Return, (ARR): 1,713.3%
Compounded Rate of Return, (CROR): 156.78%
Market Overall Rate of Return: 7.52%
Winners/Losers: 47/19
Percent Winners (trades): 71.21%
Max Drawdown: 19.5%
Calmar Ratio: 8.04
Please note that I also blocked AMPX since it shot my %Gain to 13,049%. The formula bought AMPX on 11/5/2004 for $3.88 and sold it on 2/11/2005 for $42.00. The reason I blocked this one stock is that AMPX was a 982% gain in a little over 3 months. This is not a normal buy!
By excluding AMPX I was able to improve the formula without having this stock sway the outcome. With AMPX in the mix the formula had 54 winners and 31 losers for a 63.53% winners and a 6.2 Calmar Ratio.
By excluding AMPX and working with the formula I increased the percent winners to 71.21% (see above).
I worked on the formula to not only pick good stocks but worked on the sell formula to get rid of losers faster. The results were amazing!
To see my graphs of past year testing, see below. On these links I show you which stocks to buy and sell before I buy and sell the stocks!!! My actual buy and sell portfolios are doing better than the test portfolio because I do a better job buying and selling then the test portfolio.
In summary, don't learn by losing money. Learn by back testing! Make sure you believe in your formula. By knowing your formulas patterns you will not panic and sell just as your test stocks shoot up!!!
PS: At my web site the formula that I show is only about 1/2 as strong as my latest formula shown above. I probably will not put my latest results on the web site because nobody will believe me!
You can see the two pages below for my history of stocks under $5.00 and my live ongoing selections of stocks under $5.00
- Biggest Gainers for 2007 [Current Trades] Follow My Trades as they Happen
- Biggest Gainers [History] to build your confidence