The Caprock Analytics Trading System analysis requires some explanation in terms of philosophy of operation.  The system is designed to provide low risk trades with high gain potential.  Therefore, there are trading opportunities that it does not capitalize on because of the position risk assessed.  This system is designed to work on a number of securities such that a portfolio is kept busy making low risk gains.  Caprock Analytics evaluates over 3000 stocks daily and applies the trading system to the top rated stocks to provide the maximum gain potential to the user.

For the examples below, the top graph line is the stock’s price data, and it shows green when in a position and red when out.  The bottom graph line is the trading signal.  A green line represents a BUY signal, a blue line represents a HOLD signal, and a red line represents a SELL signal.  There are a number of ways one can read and interpret the trading signal, but for the examples below a position is bought on a BUY signal and sold on SELL signal.  The graphs below represent a 3 year time span, and the performance data is broken down into 3 time spans.  The system gain performance is shown against a buy and hold gain to give some relevance to the trading strength of the system.

This example is for APPLE INC., representing an example of a high growth potential stock.  The trading signals do not take advantage of full amount that could be realized, but in fact take advantage of the low risk trades associated with this stock.  It is true that if a stock went up with no cycles in it, a buy and hold approach would yield a higher gain, but the market and stocks do not perform that way in general.  You can see from the performance data that the realized gains are considerable when compared to the buy and hold.

Analyzing the caprock trading system against a different stock,  you begin to see the advantage of focusing only on low-risk trades. In this case, the trading signals do not take advantage of the full amount that could be realized, but in fact take advantage of low risk trading  opportunities associated with this stock.  The Caprock trading system is effective in pulling out some considerable gains even when trading this volatile,  difficult-to-trade stock.

When using the Caprock trading system against a declining stock, you can truly see the advantages of identifying low-risk trading opportunities.  The Caprock system finds some advantageous trades in the periods of volatility, but the strength diminishes and not all trades are positive gains.  Although there are some losing trades, it should be noted that the losses are minimal and the percent of winning trades is still extremely high.  It is difficult to go long on a losing stock and make positive gains.  While the buy and hold for all time periods are at a loss, this system pulls out considerable gains where the opportunities exist.