Here are various important details and technicalities about that
"97 WINNERS Challenge":
- There were days were Pascal made several trades and others where he did not
do any for days, weeks or months at a time (whether it was because he was on
vacation for several weeks or because he decided to hold on to some
- All profits made on each trade were added to the previous balance and the new
total was available for
the next trade.
- That challenge accounts for all the "complete" trades
(meaning trades which were opened
and closed during that period) made from December 7, 1998 up to
December 7, 1999.
- Pascal's goal was to do that challenge for a full year so, as of
December 7, 1999, he ended it and started to trade again based on different
- To make that Challenge as "conservative" and as difficult as
possible, Pascal decided to use an IRA account (retirement account) for that
In an IRA account, your trading opportunities are REDUCED IN HALF
as you can only go "LONG" (buy first and sell later). Even if the
market is falling, you can not go "SHORT" (selling first and buying
back later, hopefully at a lower price) because of legal
restrictions. That limitation reduces of course tremendously your trading
Also, IRA accounts do not allow you to trade on
"margin" (meaning that you could use twice as much money as your
actual capital) and that restriction also reduces your profits in 1/2 (if you
make a 2% profit on a trade using only your own capital, your total profit is
... 2%; but if you make the same 2% profit on a trade where you used a fully
margined account, you total profit on YOUR OWN CAPITAL will actually be 4%!).
So, in other words, had all those trades be made on a regular margin account
(like most of Pascal's other accounts), the net % return would have been
almost TWICE as much (after deducting the margin interest costs for trades
All % returns are measured on the price difference between the selling price
and the buying price.
As an average, Pascal used approximately
90% of his available capital
to make each
All trades and results are presented in "% RETURN" so that
anyone can relate to them whether you are trading $10,000 or $1,000,000.
- Obviously, in order to reach that kind of performance,
Pascal used absolutely
EVERYTHING that he knew at that time (all of his trading knowledge and
experience) and did not limit himself to only one or two techniques or concepts.
His "homework" in selecting all
those trades was very extensive and many trading criteria had to be met in
order for him to enter each trade.
It is also obvious that Pascal used a combination of Day Trading,
Overnight Trading and traditional Investing techniques to achieve that
- The slight difference in % return between the
two examples on $20,000 and $100,000 of starting capital is simply due to
the lower incidence of the commission costs on each trade in the example
with the greater starting capital.
- Only one decimal is displayed for most
numbers on that listing but several decimals were used for all actual
calculations; this explains why you could find some differences in the
results being listed if you were to redo those calculations solely based on
the one decimal numbers being displayed.
In the interest of being as realistic and
as accurate as possible, the trades
reported in that listing do NOT include the following:
- The proceeds of 2 long term positions on AAPL and NKE which had been opened
prior to that challenge and which are therefore irrelevant to it.
- All deposits made on this account and which
are regular SEP IRA deposits (based on Pascal MONMOINE's paychecks)
. One such example would be the deposit of $5,787.15 made on 11/10/99.
- The interest and dividends received on this account during the time of that
challenge which we decided not to include.
- A few trades which were made on "margin" due to an electronic error of
Pascal's on-line broker (margin is not allowed on an IRA account) and which we
decided not to include to be as conservative as possible.
- A few trades whose buying or selling price was split in 2 or 3 different
prices (in such situation, the least favorable price was used and only one
trade was reported making the 97 count lower than the actual count).
- One trade on 2 shares of the stock MKTW which was entered by
mistake (but which still
resulted in a % profit before commissions); Pascal would never intentionally
trade just 2 shares of a $67 stock.
- As you will understand from reading the details
mentioned here above, it could not have been accurate to represent the
"total net % return" on that account by simply taking the beginning
and the ending balances of that account. So in order to be able to present
a realistic approximation of the "TOTAL
NET % RETURN" which those trades would have produced if they had been
applied to a pre defined starting capital, we calculated for you on the
enclosed spreadsheet two separate examples.
The first one shows the
progression of those trades if they had been applied to a $20,000 starting
capital and the second one if they had been applied to a starting capital of
$100,000 so that traders and investors with various amounts of capital will
be able to better relate to that performance.
% Return" column represents the NET % RETURN generated AFTER COMMISSIONS
by each trade, considering that each new trade would have used only 90%
(which is very realistic for this kind of trading) of the available capital from the previous trade.
commission rate of $9.99 per trade ($19.98 for each BUY/SELL) was deducted
from those calculations as it is the actual commission rate which Pascal was