Have a look at these names…
Hewlett-Packard, Microsoft, Apple, Google, Ben & Jerry’s, Yahoo!, Intel.
What do they have in common?
Information & Technology is probably your first thought. The list contains some of the biggest names in the industry.
But where does Ben & Jerry’s fit in? The ice-cream empire isn’t an obvious match. Its speciality is choc chip…not microchips. There must be another connection.
Okay, let me tell you. It’s not an easy answer.
The common link is a partnership. Each business began because of two people.
Partnerships can be a potent combination. They take the best from each partner. This often results in a sum greater than its parts.
You don’t need to be an all-star to form a super partnership. In fact, the best parings recognise their individual limitations.
Take Ben & Jerry’s for instance. One of the co-founders — Ben Cohan — has a condition that inhibits his sense of smell and taste. This hardly sounds like the makings of an ice-cream king.
But this is the magic of a partnership. It’s a special blend of skills. Cohan’s issue with flavour was brand defining. It led to the inclusion of other sensory features like chunks and colour.
We’ll never know if Ben or Jerry would have made it on their own. The same goes for the co-founders of the other global giants. But as a duo, they shot the lights out.
So how’s it doing in a market meltdown?
Quant Trader is also a partnership. It’s a pairing of two trading strategies — long and short.
You saw the performance of each strategy over the past two weeks. In a moment, I’ll show you what happens when we combine them. The results will surprise you.
But first, let’s recap on the components. There’s been a lot happening in the markets.
I’ll start with a chart for Quant Trader’s long trades…
This shows the hypothetical performance of Quant Trader’s long signals. It assumes $1,000 on every long signal. There is no allowance for costs or dividends.
There are now over 10 months of live signals. This is a meaningful amount of data. It includes 167 open and 143 closed trades.
The number of trades is important. It gives us key feedback on the system. It shows that many trades contribute to performance. Meaning the results are not solely dependent on a handful of trades.
I always look for a broad base of gains with my systems. I want to see that a method works many times and across hundreds of trades. This reduces the risk that the results are due to chance.
A robust strategy is a repeatable formula. It should work over and over again. Quant Trader’s live signals are doing just that…despite the falling market.
So that’s the long side. Now let’s refresh on the shorts…
The chart shows the hypothetical performance of Quant Trader’s short trades. It assumes $1,000 on every short signal. There is no allowance for costs or dividends.
Trading short is typically less profitable. So it often doesn’t stack up as a standalone strategy. The reason for this is simple — maths. The most a short trade can make is 100%. But there is no limit on a long trade’s potential. Gains can compound indefinitely.
Shorting still serves an important purpose. A good short strategy can reduce a portfolio’s volatility. This makes it an excellent partner for a long strategy.
Merging the parts
Let me now show you how the two partners perform as one.
This is what happens when you trade long AND short. The performance chart is the result of real signals. These are the very signals Quant Trader’s members are trading.
The graph shows the performance of every trading signal since Quant Trader went live. It assumes placing $1,000 on each trade. And it doesn’t take account of costs or dividends.
Go back and compare this to the other two charts. It may be worth printing them all out and laying them side by side. What you notice is the changing shape of the performance curve.
Take the period from May for instance. This was a tough stretch for many traders. The All Ordinaries is down over 10%.
But have a look at Quant Trader over the same period. It’s well ahead of where it was in May. In fact, Quant Trader’s hypothetical profits are at an all-time high.
Again, these are actual signals that members are following.
So how is Quant Trader doing this? Well, that’s where the partnership of strategies comes in. A combined long/short approach is doing better than either of the parts.
I have one more chart to show you. This is what the All Ordinaries looks like over the same period…
This makes for an interesting comparison. Quant Trader’s performance chart and the All Ordinaries bear little resemblance. The partnership is creating a robust trading system.
A good partnership can take you a long way. I should know, it’s how I got my start in business.
Quant Trader does something similar. It combines two strategies. Just like a human paring, this gives the system capabilities that a signal strategy lacks.
Until next week,
Editor’s note: Is your portfolio performing like the All Ordinaries? Don’t worry if it is — Quant Trader can help you turn it around. Remember, the results you saw before are from real signals. They could easily be hitting your inbox from Monday.
Take the next step…see what Quant Trader could do for you.