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Trading System

We originally created this site in order to help level the playing field for the average investor. Access to the available borrow and fee rates for every US-listed stock is and will be free for everyone forever. Recently though we decided that we wanted to share something even more important: investing philosophy. People talk about things like the importance of diversification and how risky margin trading can be. These concepts are very often just nebulous and intangible. What we want to try to do is to quantify them with math and statistics.

Every day on social media people share their stock portfolios. It is alarming the number of people who hold fewer than 5 stocks. Here's a nice thought exercise for you:

# of stocks135
Effect on portfolio of
50% drop in one stock
50%16.67%10%
With 2x leverage100%33.33%20%

A 50% drop in any one stock is devastating and is also fairly common. By simply avoiding the use of margin and by holding a sufficient number of stocks you can dramatically reduce drawdown. This article discusses this extremely important subject. The bottom line is that the optimal number of stocks to hold is 20 to 30. Look again at this table:

# of stocks203040
Effect on portfolio of
50% drop in one stock
2.5%1.67%1.25%
With 2x leverage5%3.33%2.5%

We don't actually recommend the use of margin for one simple reason. If you use margin, you need to be prepared for a margin call at any time for the entire amount borrowed. At 2x leverage on a $10,000 portfolio you would need to keep a cash reserve of $10,000. If you have the cash why not just put it all in the stock market, avoid paying margin interest, and consequently never have to worry about getting a margin call or being forced to sell your stock at fire sale prices!

If you take away nothing else from this portion of our site, learn this important fact. Diversification is crucial.

Now if you add to these two simple rules (diversification and no margin) a trading system that outperforms the market consistently you really have a winning strategy. Lots of people have asked us: if you have such a great trading system, why don't you trade it yourselves? We do! We have had great success with the system, and in fact have largely automated it. It is quite simple yet extremely powerful.

You supply the stocks and we supply the trading signals.

It is really that easy. Every subscriber is able to maintain a list of 50 stocks that they can change at any time. And every day after the close our system tells you to either buy or sell each stock at the open of the next trading day or continue to hold that position. You can place your orders with your broker the night before to be executed at the market when the regular trading session opens.

We will never divulge the trading algorithm. That is proprietary. You can read more about the trading system below.


"Thank you for this site! It has helped me a ton. Just getting going on your trading system and already making money. Looking forward to the future!" Bill C. from Myrtle Beach, SC

"I've tried for years to put together a winning strategy to make money in the stock market. Your site does it all for me. When to buy and when to sell. Membership fee pays for itself. Thanks!" JR from Orlando, FL

"I wish I knew about shortable stocks before. I would of been making better trading decisions for longer. Thank you so much!" Randall P. from Los Angeles, CA

Our trading system is based on technical analysis and is the result of years of backtesting and development.
Below are the lifetime results for a large number of S&P 500 and Russell 2000 stocks. The gains are extraordinary. In each case the beginning capital was $10,000. All profits (and losses) are considered to be reinvested, and taxes and commissions are not factored in. When we talk about annualized gains on this site what we mean is that the gains are expressed in yearly terms. A stock that was backtested since 2014 (as PAYC below) with an annualized gain of 34.67% means that it earned that gain every single year on average.

Furthermore, we tested an equal weighting of $10,000 invested in a random sample of S&P 500 stocks as it's presently constituted. The statistical analysis is provided below. There were losses, of course, but the winners exceeded the losers by far. You are encouraged to investigate performance for any and all stock tickers. Most large cap stocks have been backtested. A similar study of Russell 2000 stocks was performed as well with the statistical results below.

We performed a rigorous statistical analysis on our trading system. We bootstrapped 1000 instances using 1, 2, 3, 5, 10, 20, 30, 40, 50, 60, 70, 80, 90, and 100 random stocks from the S&P 500 and calculated annualized return and maximum drawdown from inception (1990-01-02). Below are the results of these tests:

S&P 500 Results
20 random S&P 500 stocks bootstrapped 1000 times
Leverage:None
Average maximum drawdown for entire portfolio:29.31%
Standard deviation:6.61
95% Confidence Interval:16.35, 42.27


30 random S&P 500 stocks bootstrapped 1000 times
Leverage:None
Average maximum drawdown for entire portfolio:27.13%
Standard deviation:5.02
95% Confidence Interval:17.28, 36.98


40 random S&P 500 stocks bootstrapped 1000 times
Leverage:None
Average maximum drawdown for entire portfolio:26.14%
Standard deviation:4.19
95% Confidence Interval:17.93, 34.35


The graph clearly shows that performance suffers when there are too few stocks in a portfolio. There is also clearly an upper limit to the increase in performance by adding stocks to the portfolio. The importance of all this is that there is safety in numbers. Even during the depths of the great financial crisis of 2008 a diversified portfolio using our system outperformed the market. There are no future guarantees, of course, but this exercise helps to give you an idea of what to expect in terms of performance and drawdown. Drawdown is calculated from every new all-time high.


Bitcoin and Ethereum Trading Signals

We have developed a trading system for Bitcoin and Ethereum. These are based on hourly signals and trade extremely often. The backtested results are below:
Bitcoin 0.5% Stop
Bitcoin 1% Stop
Ethereum 0.5% Stop
Ethereum 1% Stop


Requests are limited to 60 per hour. Trading signals are generated approximately 1 minute after the hour every hour.

Bitcoin and Ethereum are traded 24 hours/day, 7 days/week. No system can guarantee 100% availability. While we strive to maintain the highest level of service, there are disruptions from time to time. We are not responsible for service disruptions.

No margin was used to generate these results, and we do not recommend the use of margin for most people. You are responsible for honoring the stop loss on every trade. Taxes have not been factored in to these results. You must also be aware of day trading rules. These systems day trade, and you will be subjected to day trading restrictions if you follow them.

These results have been generated by backtesting our Bitcoin and Ethereum trading systems. They are not necessarily indicative of the future, and they cannot factor in your influence on the market. Nothing here should be considered investment advice, and you are responsible for your own trades.

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FYI