I'm curious about the americanbulls.com site, which provides buy and sell recommendations based on candlestick analysis.
It shows ridiculous returns, like 500%, but I understand the catch is that their buy/sell recommendations are generated at the end of the day, so it's essentially a prediction in hindsight--you would only get that return if you bought during the day, before their recommendation was made.
Nonetheless, I was curious what would happen if I bought and sold according to their recommendations, but at the opening price on the next trading day.
I picked a stock (CAP) whose price is roughly the same as it was two years ago. Plugged AB's buy/sell dates for the past two years into a spreadsheet, looked up the prices, and subtracted out $6 commissions for each of the 82 trades.
To my surprise, I found that if I had traded 100 shares each time, I would have made $2291 over two years, an annual return of more than 50% on the average of $939 I had invested in the stock at any time.
My question is, what's the catch, what am I missing? Even 50% annual return is too good to be true, especially since their analysis is online for free, and the trading process could be readily automated. If this really works, why doesn't everyone get 50% returns?
It shows ridiculous returns, like 500%, but I understand the catch is that their buy/sell recommendations are generated at the end of the day, so it's essentially a prediction in hindsight--you would only get that return if you bought during the day, before their recommendation was made.
Nonetheless, I was curious what would happen if I bought and sold according to their recommendations, but at the opening price on the next trading day.
I picked a stock (CAP) whose price is roughly the same as it was two years ago. Plugged AB's buy/sell dates for the past two years into a spreadsheet, looked up the prices, and subtracted out $6 commissions for each of the 82 trades.
To my surprise, I found that if I had traded 100 shares each time, I would have made $2291 over two years, an annual return of more than 50% on the average of $939 I had invested in the stock at any time.
My question is, what's the catch, what am I missing? Even 50% annual return is too good to be true, especially since their analysis is online for free, and the trading process could be readily automated. If this really works, why doesn't everyone get 50% returns?