Sand2Pirls Market Signal

Risk Management

Please understand that no market timing system is perfect, including ours. If you trade securities, you will experience draw-down as well as trading losses, and should only invest risk capital. However, it is important to have enough confidence in your trading system to be able to be patient with it through the draw-downs and losses. An unfortunately common scenario for new investors is to select a system which has recently experienced unusual success, but soon goes through a very difficult, high draw-down period. At this point, many inexperienced investors sell their positions at a loss, move on to select another system that was successful during this difficult period, but which soon also experiences great difficulty, thus repeating the cycle and loosing even more precious capital. To avoid this scenario, wise investors determine their investment strategy carefully, and know how much more than the historical draw-down they can weather.

Free Risk Management Game

Based on the position sizing experiment by Ralph Vince reported in Technical Traders' Bulletin, March 1992, and Van Tharp's marble game discussed in his book, Trade Your Way to Financial Freedom, Sand 2 Pirls has developed a Risk Management Game to help you acquire the position sizing skills essential for successful trading and investing. Van Tharp's game is available free from his web site but requires a 63.8 MB download and installation.

You can play our game right now. It only takes a few minutes or even seconds to play. No installation is required, but you must have Microsoft Excel installed. Turn off your pop-up blocker and click the button above. Import the Sand 2 Pirls, Inc. digital certificate and allow macros when prompted. If you have trouble launching the game from this site, you can download the game in zip format, extract it on your PC and play it there.

Our Track Record: Real Time Portfolios

Our portfolios published here are not "back tests." They were managed in real time using S2P Market Signal timing and various stock selection strategies. 

2005 Portfolios
These are all our 2005 tracking portfolios. We did not discard any poor performers.

Portfolio 1: 104% Summary Transaction Detail

Portfolio 2: 124% Summary Transaction Detail

Portfolio 3: 225% Summary Transaction Detail

Portfolio 4: 143% Summary Transaction Detail

Portfolio 5: 175% Summary Transaction Detail

How about 2006?  Our three 2006 portfolios will be posted this week. We did not do nearly as well in 2006 as we did in 2005.  Why? Its really not too surprising for a year in which the S&P outperformed the NASDAQ.

Until the end of July, the market was not trending strongly and we had 3 market calls quickly reverse. At least one prominent long term market observer and advisor commented that this period was the most difficult he had seen in over a decade. After extensive analysis of our 2006 signal calls, we decided against modifying our trend following model, since the required changes would hurt more than help in other recent years and in our estimation would be likely to make future signal calls less reliable with greater draw down.  In short, 2006 was not a good year for long term trend following systems, but the lack of a strong trend prior to August does not justify modifications to S2P Market Signal version 4.268.

In 2006 we began to use a a wider range of strategies in our portfolios. Our 2005 portfolios are all a variation on one strategy which we standardized in one portfolio 'A' in 2006. Our two other 2006 portfolios are Portfolio 'B' which uses a long strategy of finding undercapitalized stocks with strong fundamentals (like TASR in 2003), and Portfolio 'C' which selects longs from strongly trending low price ($2-6) stocks.  All portfolios use our same proven shorting strategies in market down trends.

Membership plans: S2P Market Commentary: Free... S2P Market Signal: $17.95/month... S2P Market Signal $44.50/3 months (Bitcoin only)

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