Return on Investment - (ROI)
Unfortunately, there are many stories of traders who purchase trading methods, systems, courses, etc. that grossly fail to live up to expectations. Such purchases produce very little "real" return on investment (ROI) and in worst cases; produce negative returns on investment.
Trading Creations knows that purchasing the E=MC2 Method will be one the smartest investments you will ever make if you plan to trade S&P E-Mini futures! E=MC2 is designed to produce a ROI that will repay you many times over, both in tangible terms (payback period, annualized returns, etc.) and in intangible terms (education). Both are very important investment returns to consider!
ANNUALIZED RETURN PROJECTIONS
TANGIBLE ROI - Here is a bottom-line look at ROI analysis that realistically views E=MC2 as a "Business Venture," complete with a plan for calculating real-time performance expectations.
The premise is as follows: Apply a filter to the E=MC2 track record that conservatively takes into account the fact you cannot execute every E=MC2 trade in perfect fashion. Maybe you will miss a trade, maybe you will make trading mistakes, maybe you just are not available to trade all day long, etc. If such scrutiny continues to produce a positive ROI, than you can feel very comfortable about your chances for trading success.
THE E=MC2 TRACK RECORD SHOULD BE VIEWED AS YOUR "BLUEPRINT" FOR TRADING SUCCESS!!
ROI Filter Example - Reduce average Track Record results by 66% to adjust for inefficiencies such as trading errors, missed trades, days off, and trade executions that are less than ideal, and costs such as commission costs, slippage, monthly chart and price data costs, etc.
I recognize a 2/3 reduction sounds extreme, and in no way am I saying you can only expect to benefit from 1/3 of the listed track record results for this method. The point is, if you can indeed benefit from only 1/3 of the listed track record performance, then imagine the potential that exists as you work your way towards 100%!
(Note - All calculations presented are for a small trading account, involving a minimum contract set and a recommended minimum account size of $5,000. You can always increase account and trading size in accordance with your individual risk/reward preferences. For instance, if you prefer to trade an equivalent to the full S&P contract (vs. the E-Mini), you can multiply all results by 5!
Assume track record results shows an average daily gain of 10-pts (all trades)
ROI Filter - 10 X .333 (66 percent reduction!)= 3
If you can average 3- pts a day for 20 trading days a month:
50 x 3 x 20 = $3,000/month gross.
$3,000/mo - $1,000/commissions (10 trades/day) = $2,000/mo net, or $24,000/yr on $5,000 margin
$24,000/$5,000 = 480% return!
Now, take the inefficiency factor one step further. Assume you cannot trade all day long, and some days you will take trades that end up losing money. Assume that you win 15 days of the month, and lose 5 days of the month.
15(3) - 5(3) = 45 - 15 = 30 pts/month
30 x 50 = $1500/month gross
$1,500/mo - $600/commissions (6 trades/day) = $900/mo net, or $10,800/yr on $5,000 margin
$10,800/$5,000 = 216% return!
Finally, as you gain experience with the method. lets say you can work your way up to 50% of the track record as a "maximum" goal:
50 x 5 x 20 = $5,000/mo gross
$5,000/mo -$1,400/commissions (14 trades/day) = $3,600 net, or $43,200/yr on $5,000 margin
$43,200/$5,000 = 864% return!
So, I think you can see, from maximum, to the most conservative estimates, E=MC2
offers tremedous potential from a "real rate of return" standpoint, if you stay the course!
Below is an actual account statement for March 28, 2008 that highlights a real-time example of the difference between hypothetical and real trade results. This example is not intended to imply that every day is a winning day with E=MC2. You can certainly check the daily track record and see that there are plenty of winning and losing trades alike.
The point is, depending upon your circumstances, trading style, etc., you may or may not be able to execute all E=MC2 trades.
On this particular day, I was only able to trade for an hour and a half in the morning because I had an appointment. When I came back I traded for another half hour before attending to other errands. I placed 11 total trades, all in and all out, with just a minimum contract set for the sake of highlighting what a minimum account can accomplish on a shortened trading day.
I ended up with 7wins and 4 losses, for a total of 6 points.
MARCH 28, 2008 (ACTUAL RESULTS)
B/S C1 C2 C3 Time Entry Int Stop Adj Stop BE+1 Vol Div Mom +/- Cum
Sell x 833 1333.50 1333.25 + .25 +.25
x 839 1331.75 1331.25 +.50 +.75
x 848 1330.25 1332.00 -1.75 -1.00
Buy x 900 1333.25 1336.00 +2.75 +1.75
Sell x 930 1333.25 1334.75 -1.50 +.25
x 934 1333.50 1328.50 +5.00 +5.25
x 953 1329.50 1331.50 -2.00 +3.25
x 955 1330.00 1328.50 +1.50 +4.75
x 1306 1325.00 1324.75 +.25 +5.00
x 1324 1324.25 1322.75 +1.50 +6.50
x 1334 1322.75 1323.25 -.50 +6.00
MARCH 28, 2008 (TRACK RECORD RESULTS)
B/S C1 C2 C3 Time Entry Int Stop Adj Stop BE+1 Vol Div Mom +/- Cum
Sell x 833 1333.50 1333.25 +.25 +.25
x 839 1331.50 1331.25 +.25 +.50
x 848 1330.25 1332.00 -1.75 -1.25
Buy x 900 1333.25 1336.25 + 3.00 +1.75
x 909 1336.00 1333.75 -2.25 -.50
Sell x 930 1333.00 1334.50 -1.50 -2.00
x 934 1333.50 1328.75 + 4.75 +2.75
x 953 1329.50 1331.50 -2.00 +.75
x 955 1330.25 1328.50 +1.75 +2.50
x 1009 1329.50 1330.75 -1.25 +1.25
x 1101 1332.25 1328.50 +3.75 +5.00
x 1131 1329.75 1327.00 +2.75 +5.75
x 1206 1328.25 1325.00 +3.25 +9.00
x 1259 1324.00 1325.50 -1.50 +7.50
x 1306 1325.00 1324.75 +.25 +7.75
x 1321 1324.25 1322.75 +1.50 +9.25
x 1334 1323.00 1321.50 +1.50 +10.75
x 1351 1322.00 1323.75 -1.75 +9.00
x 1404 1322.25 1317.00 +5.25 +14.25
x 1421 1318.50 1319.25 -1.25 +13.00
x 1430 1319.50 1315.00 +4.50 +17.50
On this day I was able to capture 34.28% of track record performance. I also see I missed many of the best trades of the day while away.
CONCLUSION - The main point is that hypothetical results often sound very nice, but in actual trading you cannot, and should not expect to match hypothetical performance exactly! Be careful of this fact as you explore any method to trade.
Different reasons can account for trading performance that is less than ideal. In the example above, I was only able to trade for part of the trading day. Sometimes you will fail to execute trades for other reasons.
Also, you must always take into account commission costs, slippage, and trading errors. Sometimes trading errors, slippage, can even work in your favor, but in general, you should factor a trading "inefficiency" multiplier into your trading plan. Start with something extreme (ie - 2/3) and see if you can still come out ahead. If not, understand you will have to be virutally perfect in all your trading efforts, and this is very hard to do!
You must have a trading plan, and a trading method, that accounts for trading inefficiencies and still provides a good chance to come out ahead from a return on investment standpoint based upon an overall trading philosophy that takes into account the actual costs and obstacles you will always face in a real time environment.
The philosophy of trying to capture "big" price moves with high probabaility setups in the S&P E-Mini market, allows E=MC2 to overcome many of the trading inefficiencies you will always face when you trade for real.
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As you consider the potential for the E=MC2 Method, always keep in mind that the listed Track Record represents the maximum return, trading a minimum contract set, for the smallest recommended account, $5000. A $20,000 account can result in 4X the listed return in the Track Record, etc.
You must also always keep in mind the "Real Rate of Return" for E=MC2, or for any other method.
A real rate of return must apply an "inefficiecny multiplier" to "hypothetical" results.
Start with a very conservative multiplier so you know you can only move up in terms of performance, and not down.
We started with a 66% inefficiency multiplier for the sake of example.
THIS CONSERVATIVE MULTIPLIER CALCULATION STILL RESULTS IN A POTENTIAL 216% RETURN ON INVESTMENT FOR WHATEVER INVESTMENT SIZE YOU CHOOSE TO MAKE!
The potential of E=MC2 is enormous if you are simply willing to put in the time and effort, day after day, and apply the E=MC2 Method to the S&P EMini Market!
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