I would like to take a moment and welcome aboard our new members. I am grateful to everybody who signs up for the signal. It is nice for me to have an opportunity to help people attain wealth. When you are successful I am successful.
Today we are going to get a signal for both of our positions. Our long IWM will go short and our short QQQQ will go long. On the surface that does not make any sense. I will try my best to explain.
When you look at Wave Rider it is a combination of 2 signals. IWM is using a breadth or volatility index. Not VIX. QQQQ is using a different internal measurement focused on the Nasdaq 100 index.
Looking at both of the signals since the end of January 2006. IWM has traded 80 times and made money on 51 of those trades or 63.75%. QQQQ has traded 89 times and made money on 67 of those trades for a 75.28% win ratio. Combined it would be 169 trades winning 118 or 69.82%. Thankfully that is also what C2 is showing indicating this signal has not yet fallen apart.
So what I am trying to point out here is. We have to separate each signal and trade them as they come. Often we will be on the opposite side of the market with our individual issues. And sometimes we will switch both issues keeping us on the opposite side of the market.
This is mechanical trading. I have been a trader for many years now. A smart man knows his limits. I know for a fact if I go guessing at where the market will be tomorrow my returns will quickly go down hill. I cannot beat the 60+% C2 and my research has indicated Wave Rider is doing.
In summary for our new members. I encourage you to just take the signals as they come. I cannot second guess these signals and do better.
Thanks Good Luck Rick Haines

Tough week on Wall Street. Not that bad if you are following our signals exactly. We held our own and tweaked out a very small gain. I recently noticed our correlation to the S+P-500 to be almost neutral. I like that since all of my other investments follow the market it is nice to have Wave Rider money stay neutral.
If I can I would like to take a look at our chart and hopefully give some insight on how to read a chart on Collective2. I believe it can be a lot like reading a chart of a stock or index but with some differences. Possibly the easiest thing to spot on Collective2 charts are trends. When a signal makes higher highs and higher lows that is a very good sign. You can go to system finder click on profitable stock systems most popular. Scroll down and you can find many examples of signals that have failed making higher highs.
Looking at Waver Rider. The chart was flat from 6-11 to 8-10. It has had a strong upward trend channel from 8-27 to 10-3. It has been flat since 10-3. If our chart were to go flat for longer than a 60 day period that would be a big consideration and a time to watch very close.
Knowing when to pull the plug on any signal is the hardest and most important thing to know. Using Wave Rider as an example. Collective2 has some very good statistics. The maximum draw down is the first thing to watch. Right now ours is 9.63% in 12 days. I would recommend everybody to watch these statistics with a vengeance. If the draw down were to increase in size or time and at the same time the chart breaching new current lows. Than it would be time to carefully consider what to do.
Hope that helps. Good Luck. Rick Haines

I would like to take a moment here and try to explain a little about how Wave Rider works. This week as you know the market made a sizable move to the down side. We made a small move to the up side. On the surface not a bad idea.

I will break it down to each individual signal. First the IWM signal. This signal is an over bought over sold measurement of a market internal that actually indicates volatility. So when the market is falling down for several days this index spikes up giving an over bought indication. We therefore go short IWM and hopefully the timing is right and we make some money on the down side.

With the QQQQ signal we use the same technical indicator on a Nasdaq 100 market internal that works differently. This internal is just a measurement of market direction. So in a sustained down move it would indicate over sold and we would therefore get a buy signal.

As you can see in a sustained down market we are normally going to be Short IWM and long QQQQ. Friday is the best day to use to show what that can do for us. The S+P was down 2.56%, IWM was down 3.69% and QQQQ was down 2.49%. So using account value + 75% margin ( what C2 uses). It looks like this. +3.69 – 2.49 = +1.2 + 75% margin = + 2.1% for the day. So in a day where the market as measured by the S+P 500 is down 2.56% we were up 2.1%. Not bad.

The flip side to that equation is a very strong market move to the up side. Our IWM signal would indicate over sold and go long. Our QQQQ signal would indicate over bought and go short. So after a sustained up move in the market if the S + P would have moved up 2.56% there is a good chance we would not have followed the up move.

As you can see Wave Rider does well in a sustained down market and not as well in a sustained up market. What this shows us is the fact the Wave Rider makes its bread and butter in a sideways market. Right now we are showing on C2 a 68% annual return. That is very good. Our last week has been good. Our chart made a new high Friday.

I am explaining this to you for good reason. The more we understand this signal the easier it is for us to follow it. It is wonderful for us to make money in an unfortunate down market like this week. It is very hard not to make money in a strong up market. Armed with this understanding that it could happen as a natural occurrence makes it easier. Also knowing the fact we make most of our money in a sideway market arms us with a important understanding of how and why we are making 68% yearly and gives us the power to go foreword when our results are not what we are wanting.

Thank You Rick Haines

We have had a good run lately I am gratefull. Our coralation to the S+P 500 is now 0.0000. I think that is good. Good Luck

GREAT work Richard.
Gilbert

Not a bad week on Wall Street for us. My other system Consdevative Growth is now in the market. Since it does use a confirming indicator it can be in cash. Good Luck this week. Conservative Growth

Just a quick note to discuss our returns lately. Not good as all of you are aware. I want to make it clear I have not changed the signal. This 100% mechanical signal is the same signal that C2 has tracked from the beginning. Most of you have the spread sheets I use to track our trades. If you don’t PM me and I will be glad to send them to you. I have not changed anything. Our trades are based on the same timing model that is reflected in both of these spread sheets.
As you know our QQQQ signal reached a closing high on 9-27-07. Our IWM signal had it’s high on 10-26-07. Because of the small QQQQ draw down combined with our last fairly bad IWM trade our chart for the last week is not looking all that good. If you are tracking the signal on the spread sheets I have sent you, you can see it does not look as bad as our chart on C2 makes it seem.
I have been mechanically trading for a several years now. The reason I am sending this message is to try to assure you. The performance of the last 30 days in no way is a indication of any kind of a failure in our signal. Looking at the QQQQ spread sheet you will see it was flat from 7-3-07 to 9-4-07 a 60 day flat period. It had another flat period from 5-11-06 to 7-7-06. Our IWM signal had a flat period from 11-13-06 to 2-2-07 about a 80 day flat period. Also from 5-24-07 to 8-3-07 a period of about 70 days.
Part of the reason I choose these two particular signals is the fact they are both very different in nature. As you can see neither one of them had a flat period at the same time as the other. Somewhat of a safety net. When one signal is flat or down the other so far has been making new highs. Since they will both have flat periods there will be times when our chart on C2 does not look so hot. The beauty of this trading system is when they are both doing their jobs our chart and bank account both look great! Looking at our C2 chart from the 4th week of August to about the 4th week of October the equity build up was very nice.
In summary. This signal is going to breath. It will make moves up followed by moves down. It is a natural ebb and flow that prevails in all of nature.
Thanks to all of you for your support. I will do my best to assure your success along with mine.

Tomorrow we will be long both issues. I have been chomping at the bit for this day. I am hoping the open will be non eventful with a strong up move after that. It looks like we may take a very small loss on our current IWM short. I have been a little worried this week thinking this down draft could take us to a new maximum draw down as measured by C2. So far it has not. Although C2 charts are a little vague I have been zooming it trying to figure out how long we have been flat. It appears to be about 55 days. Not exactly the best of scenarios. The new feature on C2 showing the monthly returns is very nice. It gives a little better perspective. Right now we have 5 winning months and 2 loosing months. Our average winning month is 5.9% and our average loosing month is 4.3%. With an average of 2.97% monthly. Our biggest loosing month is not as large as our average winning month. Since we are not at the half way point of this month there is a very good chance November will show a positive gain. If Wave Rider continues this well we will make a handsome profit in time. It will show better statistics after we are out of this slump. Thanks and Good Luck. Rick Haines

Richard,

I read a bit of your system description a couple days ago and well, you sound like you have a real good understanding of what are your exact (mechanical) trading parameters and selection criteria.

I for one am looking forward to seeing "Wave Rider" progress successfully by sticking to said parameters/criteria. Currently your equity curve reflects this and if your system has merits further drawdown could be avoided. I certainly hope so.

I'm sure you know that what is really key is to hang tough with your said parameters and let them prove themselves out, which I'm sure you will do!

Therefore, in the face of trying market conditions it's counting on you appropriating selections at appropriate times, to get the appropriate unwind from the lows to the new highs. I can see this in your equity curve - so to have the chance to hold true, your strict adherence is an absolute necessity, no?

Just bantering and good luck,Gilbert

Wave Rider stopped trading on 4/25/08

Gilbert I will not change the paramiters unless I tell my subscribers. Part of the reason I discussed the 55 day flat period is because it can happen and might happen again. Even though this signal had a 55 day flat period it is showing better than 40% returns. If a signal could do that year end and year out it would make a lot of people rich. Thanks Rick Haines

Our maximum draw down is now more than 25% of annual returns. A area of concern. I am not changing the trading parameters of Wave Rider. I believe this signal to be sound. When we get another good run like we had from the end of August to the first week of October the statistics will improve. Our return will likely be well over the 45.8% I would like to see. I am continuing to trade Wave Rider with my own real money account. Right now is the time for all of my subscribers to access conditions and make your own decision. Thank You Rick Haines

Richard,

All systems will get REALLY tested at some junctures. This of course is when true colors show forth and getting through the tough periods is what will make or break you.

Looking at your equity curve in looks entirely possible for it to progress positively despite a declining market. At this point it seems to be just a matter of letting your trading principles to prove out by you sticking to them. Pulling for you buddy.

Gilbert

KC Legacy (closed)

Thanks Gilbert. I am totally optimistic about this signal. I am so sure I am trading my own money. That being said the most important thing to me is my subscribers. I would not feel right if I were their advisor and they lost money on my signal. I know from experience the hardest part of trading is to keep going when the going gets rough. If I have any inexperienced subscribers right now it has to be difficult for them. When trading a stock signal a very good rule of thumb is to look at the maximum draw down. If it is more than 25% of annual gains it is right at the cusp of not doing its job. At the end of the year when I make 40% or more I feel like I have had a good year. Wave Rider is doing that for me and will continue to do so. I appreciate your words of optimisum. Rick Haines

This market seems to be a little bit out of whack. Just an interesting note. If you look at my other system Conservative Growth. I have back test data going back to Feb 06. Only 2 times since then has it been in cash longer than now. The formula for that is half of our IWM formula. I think that would be an indication of an unusual market. Rick Haines Conservative Growth

I am not particularly happy with our performance this last 2 weeks. The difficulty is this. Wave Rider makes good money in a sideways market. In a strait up market it will normally make money but not as much as the strait up market is making. In a strait down market it will go down a little faster than the strait down market as we are experiencing. This is due to the margin I am using on C2. Also you have to take into account markets normally move down faster than they move up. A down market is fast and abrupt. A up market is often meandering in a up direction.
As you can see by our chart we are earning a much better return than the S+P500 since inception on C2. Since the start of 2006 Wave Rider is beating the S+P500 by about 7 times. This is back test and cannot be relied on for future results. Since the close on 4-30-07 the S+P is down -4.43%. As you can see Wave Rider after typical commission is up 10.9%.
In summary. Wave Rider is beating the S+P 500 by a considerable amount. When the abrupt down ward spiral that started on the first of November is over we should continue making a better return than the market in general. I continue to have faith in this timing model and would like to thank my subscribers for their support and belief in this signal. I continue to research. Should I find a timing model I have more trust in, my current subscribers will be the first to see the research.
Thank You Rick Haines

We had a signal today until everything tanked. A down day we tweaked out a small gain in. With the emailing I sent a interesting picture of the S+P500 for the last several years. It gives a vague idea of where we may find support.

I tried sending a picture of the S+P 500 with the last emailing. It did not work. Looking at a daily chart going back to the middle of 03 you can see a significant trend line. There seems to be support around 1380. I don’t put much faith in technical analysis however I suspect if 1380 were breached under heavy volume a significant down move would be in the making. This is just an observation not a indication of our trading style. The formula for Wave Rider remains unchanged. Good Luck Rick Haines

Today I learned something about my C2 rating. I don’t think I have read anywhere where it has been explained how they are calculated. Come to find out they are just the % of C2 vendors I am beating or getting beat by. My rating right now is 985. So I am earning a better return than 98.5% of the vendors on C2. Not bad. Actually I was fairly amazed. Although I don’t look at the rating daily I do keep an eye on it. I know right before this market down turn around the middle of Oct. My rating was hovering around the 910 area. When Wave Rider started its slide it went down to about 889. I have not looked at it since and now it is 985. When you look at our Wave Rider chart it has not gone up like it is suppose to. It makes me wonder how many signals are actually profiting from this market down turn. There is a vendor here Futures-System.com that has 2 signals that are both flat. The same as holding cash. His rating right now is 773. The reason I mention this is I think it would be a good reflection on trading to watch his rating (provided he doesn’t start trading). It will be interesting going forward to watch and see how much his rating fluctuates. I have had 16 subscribers use my signal for the 30 free trial period and then quit before being charged. I am not complaining about this because I expected it. My big question is where did they go? And are they making any money? If Wave Rider going down like it has the last 45 days has moved me up to the top of the ratings, what in the world has the last 6 weeks done to the other vendors ratings?
This to me is a reflection on trading itself. I have often thought of trading as a way for the real power in America to fleece the members of society that are trying to make a buck trading. Indeed the majority of money trading is made selling product and not actually trading. I would be willing to bet Mathew Klein is making more money with this web site than any trader or vendor using it. Not any disrespect to Mathew I am impressed with his methodology.
I believe with conviction the smartest traders are traders that make it their priority to not lose money. After watching Collective2 now more than 20 months it is clear to me not losing money should be a trader’s biggest concern. Swinging for the fences rarely makes money. It is the repeated use of wise money management in the form of winning trades that makes a signal profitable. I use some of the features on my Advance Get charting software to calculate my signal. I remember the day I went to their seminar to see the software. The very first thing (the very first sentence) we were told is to lower our expectations. We were told the good trader makes around 7% yearly. That was a statement I clearly rejected and went on to prove them wrong. It is still a statement I remember when it is time to do a reality check. Time and time again I see accounts get whacked and wiped out because of the trader’s expectations of instant wealth. Wealth can come trading however it takes time and compounded returns.
Good Luck. I will publish a signal in just a few minutes.

This is a tough trade for us. Tomorrow is a big day for anybody that is in the market. I am not sure what the average subjective trader is reading in the tea leaves right now.

The interesting thing about mechanically trading is how easy it is on paper and how hard it can be in real life. I believe all of my subscribers have the spreadsheet I use to track this signal. If you don’t, PM me, and I will send it to you. The thing about the spreadsheet is how easy it looks to just take the trades as prescribed. What you don’t see is you are looking at days just like tomorrow. A day where we make a switch and are on the same side of the market with both issues. If the Fed lowers by 50 basis points that could be a real boost to the market. If only 25 will the Street see that as not enough and start a selling frenzy? I don’t know the answer.

I just counted our IWM trades since starting WR on C2. It has traded 37 times and earned money on 22 of those trades for a 59% win ratio. For me what I believe that means is a 59% probability of a winning trade tomorrow. Good Luck. Rick Haines

It took nerves of steel this morning to take our trade. Momentarily it appears to have paid off. Congratulations to those of you that followed the signal. Rick Haines

Clearly I am not happy with Wave Rider’s performance. I was not expecting it to be so volatile. Since long before I started trading Conservative Growth I have been looking for a better answer. When I started Wave Rider I was of the mindset only one indicator on a market internal is the best way to go. Although Wave Rider is very profitable I find it hard to like in its present form. I was hoping by trading 2 issues it would smooth the chart out. If you look at my old target 50 signal you will see, the last couple of months I traded it with only IWM. As you can see the chart turned very erratic. The fact is I am still trading that signal but with a small part of my portfolio. The other signals I trade do a good job of smoothing the equity flow.

I started Conservative Growth as a learning experience for me. It is run with a account balance + 90% margin. I was wanting to learn what the margin would do as far as margin calls are concerned. Also I wanted to see what a signal with a confirmation indicator would look like on the chart. It back test much stronger then Wave Rider and as you can see it is performing much stronger going forward. I am liking Conservative Growth because it is making more money (obviously) and also it is not in the market 100% of the time. I find the days off are refreshing. If I have any current Wave Rider subscribers that would like to subscribe to Conservative Growth now let me know. I will extend the free trial period temporarily to 60 days.

Since the start of Wave Riders slide I have been working full time on a better signal. What I have come up with is a signal using 4 ETF’s. IWM, QQQQ, MDY and QLD QID. All four signals are using confirmation indicators therefore not in the market full time. There are times it has 0-4 issues in the market. I am planning on balancing it with IWM 40% and the other 3, 20% each. The IWM MDY and QQQQ signals have common dominators and will not be on different sides of the market. The QLD and QID signal has a common dominator with the QQQQ signal and will not be on opposite sides at any time. I plan on using the account balance +90% on the new signal also.

I will start the new signal the next time it does signal. If anybody currently using Wave Rider or Conservative Growth would like to subscribe to the new signal, I will make a 60 day free period for you. Let me know because if nobody is interested I will start it with the typical 30 day free period. After a short time I will change the 60 day period to 30. I am trying to offer the 60 day period to my current subscribers.

About Wave Rider. If it does not start performing better by April 30th I will not extend it. I have created a way for current subscribers to get a better return. It takes subscribing to Conservative Growth. Here is how. Right now we are trading Wave Rider using 2 issues and an account balance +75%. The neat thing about the signal is every time we do make a switch we readjust our position sizing. With every signal we adjust so each issue is 50% of the portfolio. A good way to get a better return would be to commit 33% (+75% margin) of the portfolio to QQQQ on its signal. On the IWM signal you could also allow for 33% (+75% margin) of the portfolio’s value. Now when Conservative Growth is in the market you could use the remaining 33% (+75% margin) to purchase more IWM. Using a 75% margin you would only be 115% of portfolio value in the market at all times. You would only be on full margin (+another 50%) of portfolio value when the confirming indicator (Conservative Growth) indicates. Days like today would not hurt us so bad. Also I believe you could use a higher margin rate safely. Another option would be to trade QQQQ when Wave Riders 2 signals are on the same side of the market. I sent all of you that spread sheet about a week ago. It performs very well. Also it gives you some time in cash for a break.

Anyway those are my thoughts on how we are doing. When I started mechanically trading I was sure I could find a mechanical signal that would work for years to come and I would soon be very rich building my assets by compounding my returns. That is happening however in a different way than originally planned. I have not quit my research and work on this thing much harder and many more hours than I work at my full time job. I find myself fine tuning and improving my signals as I go. Being careful not to switch trading plans too soon but also being vigilant about not using signals that don’t work well enough thus giving back too much. In this emailing I have offered 2 different ways to improve our returns either subscribing to Conservative Growth and combining signals for diversity or using both Wave Riders signals to trade QQQQ exclusively.

I remain confident and thank all of you for your trust. I will always work hard to insure our success.



Rick Haines