If your trading system/strategy does not beat a ‘buy and hold’ strategy on the FTSE 100, why are you bothering?
It’s a valid question about your results that I want you to ask yourself in a moment. However, i’ll come back to this shortly.
I started trading in 2010. I failed for my first 2 years, losing money. It took me that long to get to grips with what I was doing. To iron out my mistakes, to change my mindset and abandon my romantic views on how I should be making money trading. Simple fact was, those ideals didn’t work. But until I was ready to accept that, I would continue pursuing results using the wrong methods and the wrong mentality.
Turning things Around
Eventually things began to turn around. A 6.8% profitable year in 2012 yet riddled with mistakes. A 34.8% return in 2013. 35.1% in 2015.
It all fell into place, eventually.
As an avid blogger since I was 16 I was obviously blogging about my journey. Hundreds had followed my first 3 years of trading, witnessing my transparent results as I lost for 2 years and then finally posted a winning year. My blog bringing those who cared along for the ride.
The blog got busier and busier from that point onwards. More and more visitors checking out what I was up to.
Eventually, I was constantly being asked about my system and strategy. Only, despite it’s incredibly simple to understand nature, it was still tricky to cover all aspects of risk management, stop placement, stock selection, entries and exits etc into one email for people.
So I made a course that people could buy and learn.
Since 2013 i’ve worked with over 1600 traders and investors.
I am sometimes amazed at the number of those traders who came to me having previously lost their nest egg. Traders who lost £20,000 over the last few years.
Why? Because most traders out there are romantic about trading their “own system”. As if they lose credibility in the markets if they haven’t made it their own. It’s sooo important to people. I guess I can understand why.
What I truly struggle with is the stubborn intent traders have to trade their “own ” system, that they will take £20,000 losses over 4 years, over using a tried and tested system that could have made them a profit. It seems (for many traders) trading your own system trumps making a profit.
To the point where when someone comes to me and I ask them “If your trading system/strategy does not beat a ‘buy and hold’ strategy on the FTSE 100, why are you bothering?” it often knocks them for six.
They don’t know why.
Self Sabotage of Results
You see. Most of us are sabotaging our own results. We’re getting in our own way of success. You can take £20,000 in 2008, put it all on the FTSE 100 and today, 11 years later it would be worth £22,700.
Only £22,700? From £20,000??? Over 11 years! That’s an awful return!
Yep, it is. But it’s a damn sight better than what you’ve achieved trying to implement your “own” system and losing the whole £20,000. Instead of speaking to me £20k down, you’d be speaking to me £22k up.
The fact I have to explain that to some people is testament to just how deep down the rabbit hole some traders can go. Getting lost in their pursuit of building the perfect system.
If your system doesn’t beat a 13.8% return over 11 years, STOP! Put your money on the FTSE 100. You’ll make more money that way.
Now, am I really recommending you invest your money in the FTSE 100? No, i’m just making a point that perhaps it’s time to stop thinking “I must build my own system to gain credibility with myself and others”. You’re here for profits. Not recognition (I hope).
What is the CLEAN Watchlist?
A basket of selected FTSE stocks whose financial statement results meet a certain high level criteria. Most stocks fail this test. Only a very select number of companies performing especially well financially make it through.
As a mechanical systematic trader, my system tells me when to get into a trade, and when to get out. I’ve been teaching this strategy to over +1600 people since 2013 and I still teach it today.
However, once the signals are known, the trader will usually runs scans daily to find opportunities in the markets. This often generates an abundance of opportunities. Too many to trade for risk of over-extending your risk.
The CLEAN Watchlist filters these opportunities down into only a select few companies. Companies being run so well financially that they have the best possible chance of share price growth over the next few years.
A Cherry Picking Exercise
Using the financial analysis tests we use, we identify the UK’s best and brightest stocks to be added to the watchlist. This watchlist is then used by our members as they apply their mechanical systematic trading systems to identify when to get in and when to get out of these companies.
Instead of just trading any old signal that appears, our members are only looking for signals within this “best of the best” watchlist. Dramatically improving win rates and reducing losses.
Losing trades still occur, but by identifying the companies with the most likely chance of rising in share price value, we are dramatically reducing their frequency. On top of this, our members execute strong risk management rules to ensure they never lose more than they are willing to on any one trade.
Which stocks are in the Watchlist?
This constituents of the CLEAN Watchlist are only accessible by those in the Inner Circle. This list is constantly evolving every year as companies are added or removed based on their latest financial data. A dynamic basket of stocks only exclusive members can gain access to.
However, the watchlist is made up of FTSE 100, 250, 350, Small Cap and AIM stocks. Only those which have made the grade and passed all our financial analysis tests.
So how has the CLEAN Watchlist performed?
It would be apt to compare it’s performance against the benchmark. That being the performance of the FTSE 100.
As the above chart shows. A £10,009 investment in the FTSE 100 over the last 11 years would have generated a return of £1,389 (13.8%) or an annualised return of 1.26% (£126).
However, a £10,009 investment, equally split across the different constituents within the watchlist would have achieved a return of £33,778 (337%) or an annualised return of 30.6% (£3070) over the 11 years.
You will note from the chart that even in 2009, when the FTSE fell -31.09% lower than 2018, the CLEAN Watchlist saw only a -24.90% drop. And again, in 2012, when the FTSE fell -13.61% from its 2011 price, the watchlist achieved a +31.09% increase!
Again and again, the results from the CLEAN Watchlist surpass those achieved on the FTSE 100.
All watchlist stocks are UK companies and are accessible to be purchased or spreadbet across most UK brokers. As there is no “Clean Watchlist index” as such, members who wanted to spread their capital across the different watchlist constituents would need to do so manually via their broker.
Members have full control of their portfolio so they can do whatever they like with the data we provide. They can opt out of a certain company, or add in an extra non-watchlist company if they wish.
We simply provide access to the watchlist, as well as full reports on those that did and did not make the grade. Want to know if [ULVR] Unilever are in the watchlist? Easy, once you have access you can head on to the website and type in ‘ULVR’ in the search category. Inner Circle members can then view the report on that company. This report details whether or not they made the watchlist, and sometimes more importantly, WHY.
Access to the watchlist is by membership only. Details for applying for membership can be found here. Seats are limited.
INNER CIRCLE MENTOR PROGRAM