I recently wrote an article that claimed you could make a living trading primarily Apple stock and options. And in that article I listed seven trades that have all proven to be excellent money makers, that can be traded in small or large accounts, and under many different market conditions.
So, what I’m going to do now is provide detail for one of those trades, so that you can try it out yourself. And maybe then you will be a believer, that using even a small account, one could make seriously good money trading just Apple.
Over The Weekend (OTW)
This is one of the coolest trades I have discovered with Apple, because it is not based on any kind of indicator or chart pattern, or price movement, although we can apply some simple indicators to improve the win rate of the trade. The trade is based almost exclusively on Apple’s historic closing price behavior over the weekend.
What I found was that better than 60 percent of the time, Apple would close higher on Monday than it did on Friday. In other words, you would have a winning trade 60 percent of the time if you went long on Friday and closed the trade on Monday. Further I found that it was best to open the trade Friday morning and close the trade on Monday afternoon.
I also found that you could improve the return on capital if you held the trade until Tuesday afternoon, but there was a sharp decline in win rate and return on capital if you held it beyond Tuesday. Again, the time of day the trade is taken is very important.
Performance of the Strategy
So that’s simple enough. But there’s more. The trade could be improved even more by using a simple moving average filter. If you applied a 25 day moving average to the Friday potential open, and there was no detectable uptrend in the indicator, then you skip the trade. This has the effect of filtering out about 20 percent of the trades, but it increases the win rate to nearly 70 percent and also increases the return on capital.
The chart to the right can be enlarged by clicking on it. Direct your attention to a few very important statistics. First is the Profit factor of 5.87. That means the return on your money is six times greater than the risk. And then scroll your eyes down some and look at the Percent Profitable, that is a win rate of nearly 75%. Of course these are the results from two filters, including a moving average and volatility. The strategy I described in this article will have a win rate of around 69 percent.
The chart below shows the strategy at work with the price chart and recent trades on the right, and the 5 year equity curve on the left. Every green dot on the chart is a new equity high. If you can find me a more beautiful equity curve, especially over such a long period of time, please do, I would love to see it.
As I said in my previous article, I am putting together a course called Step-by-Step: How to make a Living Trading Seven Core Apple Strategies. This will be a complete online video course with live online support. If you are interested in this course, enter your name and email address below, and I will send you information when the course is ready.
Leave your comment below…
