System Spotlight: RC Success www.RC3200.com
August 9, 2004
After running our semi-annual "What's your best system?" article last week, many investors were left with a few questions 1. What is RC Success? and 2. How did it get in third place on that list? The answers: RC Success is one of several trading systems by Hong Kong developer Rickey Cheung, and it placed third on our rankings with through achieving a low drawdown and admirable YTD performance. This month's System Spotlight highlights RC Success:
Who is the Developer?
Rickey Cheung is the developer of RC Success and CEO of RC Trading Education, LTD. Mr. Cheung has been studying the futures markets since 1985, and believes first and foremost that trading should be both enjoyable and profitable - or else why undertake it in the first place. He began focusing his attention specifically on S&P systems over the past 10 years, and came up with the basic building blocks for his systems, the "RC Models" in June of 2002.
In September of last year, Rickey started RC Trading Education, LTD in an effort to teach his methods and strategies to others in a one on one seminar type environment. He views his trading systems as a vehicle to prove the viability of the logic he teaches in his tuition based seminar products. Mr. Cheung graduated from the University of Houston in the United States with BS and MBA degrees, and has worked as president of Asian operations for a multinational corporation in Hong Kong.
How does it Work?
This section of the spotlight promises to be rather short as RC Success is a definitive "black-box" system, with the developer rather clear on the fact that the indicator(s) used are proprietary in nature and not disclosed. The developer is quite willing to tell you how it doesn't work, however, stating that it doesn't use any of the so called "popular" indicators such as moving averages, range breakouts, oscillators, support and resistance levels, and more. According to Future Truth's John Hill as quoted on the RC website, the system uses a "very unusual" indicator in its logic, and he has "not seen any systems that use similar indicators."
We do know that the system attempts to catch daily trends early in the move, and likewise identify and catch trend reversals early on. This type of action should result in some home run trades as the system enters near the low or highs of different moves, but the danger can be getting in to early and suffering losses if the market doesn't confirm right away.
Another attribute is that RC Success trades relatively infrequently, with no more than one trade per day. This is designed to reduce market exposure by limiting the time in the market and appears to have resulted in manageable drawdowns (11.5% in actual trading; ~20% in hypothetical backtesting). We have also learned that RC Success uses over 20 different strategies to enter trades, depending on what type of market environment is prevalent that day.
On the exit side, the system uses three different exits: a stop loss, breakeven stop, and MOC exit. The breakeven stop attempts to lock in profits by moving the stop to the point of entry once the trade has made five points in open trade profit. If the break-even stop is not hit, the system will attempt to ride the profitable trade to the market's close.
The system was designed specifically for the S&P futures and/or e-mini S&P futures market, and tested with TradeStation data back to just 2001 before out of sample testing back to 1998. While Rickey states it was not his goal when setting out to develop RC Success - the backtesting shows a system with a relatively high profit per trade, high winning percentage, and low drawdowns. RC's newest system, RC Miracles, actually tests better than RC Success, and is claimed by Mr. Cheung to be his best system.
Attain Comments:
Despite record low volatility in S&P futures so far this year which has proven to be a less than ideal market environment for several day trading systems, RC Success has held its own so far this year. Investors may be turned off by some rather exorbitant claims on the website - such as "Probably the #1 S&P DayTrading system in the World" - but the tone may be a case of some nuances being lost in translation. We'll give Rickey the benefit of the doubt, but either way, his passion for his craft shows through.
At the end of the day, the system looks good in its hypothetical backtesting and has performed admirably in actual trading since Attain began tracking it in March of this year. Whether the relatively short track record can be replicated over the long term remains to be seen, but its its infrequent trading style and goal of high winning percentages should keep away any big surprises to the downside.
IMPORTANT RISK DISCLOSURE
Futures based investments are often complex and can
carry the risk of substantial losses. They are intended for sophisticated investors and are not suitable for
everyone. The ability to withstand losses and to adhere to a particular trading program in spite of trading
losses are material points which can adversely affect investor returns.
Feature | Week In Review | Chart of the Week |
Feature | Week In Review | Chart of the Week |
Except where noted, the below Profits/Losses based on closed out trades. $50 per R/T commission included ($30 per emini) Percentage gains based on developer recommended initial balances as listed at www.attainaccess.com.
As the saying goes: "one man's trash is another man's treasure." Nowhere was that more evident than last week, where a spate of bad news and poor economic numbers combined to send US equities much lower, while piling on profits for several trading systems. The bad news started with a heightened terror alert in the United States, and continued with poor economic data in the form of a weak jobs report as S&P 500 futures shed -3.0% while Nasdaq futures lost -5.5% for the week to end at their lowest levels of the year.
The surprisingly weak employment report Friday morning further accelerated selling in the market. The non-farm payroll report was expected to show that between 240,000 and 280,000 new jobs were added during the month of July. Instead the figure came in at just over 30,000. The bond market spiked nearly three basis points on the announcement and equities spiraled downward to end the week. All this was music to most system's ears.
**Day Trading**
All of the downside volatility presented long awaited opportunities for day trading systems to profit on the short side. The results were mixed, but generally positive as some of the systems took advantage of the opportunities while others failed to do so. It seemed as though each day last week presented day trading systems with the type of volume and volatility that they are looking for.
The week’s big winners belonged to Founder Trading, as Helix SP posted $6,437.50 ($1157.50 per emini) over 6 trades and Magnitude SP returned $4,575 ($915 per emini).
Compass SP was next in line. The system has admittedly been experiencing some rough times as of late, but it started the month of August off right last week. Compass traded three times and was able to make +$2092.50 per contract and +$410 per e-mini.
Finishing just behind Compass in the weekly standings was the new version of Blue Wave Zones. BWT Zones 3.0 began trading at Attain Capital back in the middle of July and the system has been making money ever since as it is up +32.55 points in just under a month of real-time trading. Last week BWT Zones 3.0 locked in profits of +$1912.50 per contract.
R-Mesa 5 SP traded three times last week and finished up +$1275 per contract and +$197.50 per e-mini. The system took a losing trade on Monday but was able to fight back with two winners and finish the week in the black.
Daybreaker SP was not as fortunate as the aforementioned systems. Day Breaker missed out on a few of the more active trading sessions. It only traded once, and it lost -$775 per contract and -$217.50 per e-mini. AG-Xtreme SP traded twice last week and ended up down -$225 per contract.
After experiencing a wonderful month of July, when it finished as Attain Capital’s #1 ranked system, RC Success was bound to come back to Earth. The system suffered through a rough week and lost -$1925 per contract (-$405 per e-mini).
Trading Visions Inc.'s two systems, Cobalt and Impetus, were both able to trade profitably last week.Impetus e-RL made +$310 per e-mini Russell on two trades while Cobalt NQ traded once and locked in +$260 per e-mini Nasdaq.
**Swing Trading**
Swing traders were able to capitalize on this week’s favorable trading conditions with high volatility to the downside and many large overnight moves. Leading the way was Tzar SP which has been holding a short position since mid-July making +$12,375 in open trade equity as of Friday’s close. Tzar eRL timed the market perfectly as it made +$3340 on two trades. In two similar trades, Tzar NQ made profits of +$1740 for the week. The I-Master 4 Market portfolio had a strong performance in 3 of 4 markets. Individually, I-Master NQ made +$680, I-Master ES made +$565, I-Master MD made +$80, and I-Master eRL lost -$580.
Axiom SP reversed its position three times last week for losses of -$4250 but currently holds short since midweek making +$7825 in open trade equity. Mesa Notes suffered from Friday’s unemployment report and was stopped out of its short position for a loss of -$2737.50 per contract.
**Long Term**
As financial futures trended higher this week, many long-term systems entered both US and Global Bond markets. For systems holding long positions in these markets, Friday’s unemployment report sent open trade profits soaring as bonds rallied over three basis points. Another market of continued interest is Crude Oil and its rise to new highs surfacing from uncertainty over the supply of oil from Russian oil company Yukos.
In the US 30-Year Bonds, Brix is holding long for open trade profits of +$4825. In the Ten-Year Note, systems holding long positions include Brix (+$3715), Synergy (+$3653), Checkmate (+$2106), and Trend Channel (+$1934). In Global markets, the EuroBund as well as other foreign bonds rallied alongside the US financials. Systems holding the Bund long include Aberration Plus and Andromeda II for open trade profits of (+$990) and (+$940) respectively. Systems holding Crude Oil long include Brix, Checkmate, and Trendchannel .
Please Login to: http://www.attainaccess.com for the latest updated statistics.
IMPORTANT RISK DISCLOSURE
Futures based investments are often complex and can
carry the risk of substantial losses. They are intended for sophisticated investors and are not suitable for
everyone. The ability to withstand losses and to adhere to a particular trading program in spite of trading
losses are material points which can adversely affect investor returns.