What a great year!  I learned a lot and I am looking forward to 2011.  One single strategy returning 21% more than its benchmark the S&P500! I can't say enough about the system, it really does surprise me all the time (it knows better than I do about the markets). 

There were easy money days, hard money days, losses, sell-offs, monster rallies, Euro crises, Greek and Irish bailouts, QE2, Flash Crash, it was an amazing year and through it all, there was a trading system that took everything in stride. 

Yes, there were areas of the market that returned 30% or more, but not many advisors and managers beat their benchmarks by 21%!  What is really surprising is we only trading 9 months, and with no leverage! 

So, what's next?  We are going to do it again, but this year starting in February (a full year's trading) we will provide a 2:1 levered trading system, and we will trade various products including Treasuries, Forex (Euro/USD), and other commodities.  We will also look into some other strategies including Covered Calls, and some Statistical Arbitrage at various points along the S&P/Nasdaq/Dow curves.

I look back on the last couple of years and the development of the software for the technical components and this newsletter for the fundamental aspects and I am just absolutely filled with a sense of accomplishment. I think in the near future, for those that are interested, I will hold luncheon and go over the trading system because the truth is this:  I could give away the system and it all comes down to belief in the system; can you hold a losing position knowing that this is part of the business; can you watch profits slip away and absolutely have faith that this is normal or like most will you cover your position because fear or greed got the better of you. 

Trading for this last year has been more about the emotions than about the money.  Hedging with a short AFTER the market has already sold-off is tough, but not hedging and then watching it go lower eats at your soul!  Which would you rather deal with?

Other Trading Systems and Seminars

 I have spent a good amount of time watching and reading other seminars.  They are all good and bad.  The good being that they send the message "you must have a plan" but the bad is that most are taught by educators who have made a few bucks here and there for a while and don't trade professionally.  Some systems have had great 2009, but can't show you any historical performance except for 2009.  Some systems show you a great historical, but can't handle 2008 and 2010.  Most don't show anything except for some charts that  "fit" a winning day.

I hate all other trading systems, not because they are bad, but because no one ever releases all the facts about the system or the psychology of the system.  Can a system have a psychology?  Absolutely, and this is where the system either makes money or doesn't.  All system providers and seminars focus too much on the "signals" and I am here to tell you that you can take a moving average and trade it with success if you can simply suffer through the times when its "not working" and "losing money." 

A real test of trading is entering the market at random (during back testing) and see if you can stomach taking a loss because you need to be in the other direction--does the system still make money or at least have only a small loss?  Or apply the trading system to 2007,2008,2009, and 2010 and then apply it to 1987 and then to 1999-2002.  That should be some of your first questions: 

I think we developed a system that is resilient and can change with the market over long periods of time and has the potential of earning 30% every year.