CTM Trade Types: 3-Dimensional Percent Return Charts

This article highlights the Complete Trading Model (CTM) trading results for the three CTM trade types as shown on a CTM 3-dimensional percent returns chart for a price cycle.

The following example is for Kulicke & Soffa (KLIC), a cyclical semiconductor equipment stock. The price chart shows the weekly closing prices for KLIC from September 9, 1996 to October 5, 1998, which is one complete price cycle.

The cycle included 109 weekly closes for 5,886 (109*108/2) buy and sell combinations of which 2,501 (42.49%) were winners and 3,385 (57.51%) were losers.

CTM Summary
	All Trades	Buy Upside Sell Upside	Buy Upside Sell Downside	Buy Downside Sell Downside
Number Prices	109	52	109	57
# Trades	5,886	1,326	2,964	1,596
# Winners	2,501	1,213	1,068	220
# Losers	3,385	113	1,896	1,376
% Winners	42.49%	91.48%	36.03%	13.78%
% Losers	57.51%	8.52%	63.97%	86.22%
Average Return	10.73%	73.96%	2.06%	-25.70%
Lowest Return	-78.84%	-25.11%	-78.84%	-78.59%
Highest Return	515.09%	515.09%	508.11%	67.03%

3-Dimensional CTM Percent Returns Chart

The following 3-dimensional chart displays the pattern of percent returns for the 5,886 buy and sell combinations for the KLIC price series. Each profitable trade appears in green and each unprofitable trade appears in red.

The chart shows the returns of each of the 2,501 (42.49%) winning trades (green) and the 3,385 (57.51%) losing trades (red) as they are related to their buy and sell dates. Most of the winning trades in green occur for the buy upside and sell upside trades. Most of the losing trades in red are buy downside and sell downside trades and some losers are buy upside and sell downside trades.

3-Dimensional Chart of the Buy Upside and Sell Upside Trade Type

The 3-dimensional chart of the 1,326 buy upside and sell downside trades shows the 1,213 (91.48%) winners in green and the 113 (8.52%) losers in red. Most of the losing trades were short-term trades clustered near the diagonal axis. The highest returns occur for the earliest buy dates (lowest prices) and the dates (highest prices) near the peak of the upside. As the buy prices increase on the upside, the returns decrease.

3-Dimensional Chart of the Buy Upside and Sell Downside Trade Type

The green areas show the 1,068 (36.03%) winning trades and the large red area shows the 1,896 (63.97%) losing trades. The largest percent returns occur for the lowest buy prices early in the upside that are sold as the highest prices just after the peak. And all of the early upside buys are winners as shown by the continuous green area at the back of the chart. As the upside buy prices become higher, fewer and fewer of the downside trades make money.

3-Dimensional Chart of the Buy Downside and Sell Downside Trade Type

The large area of red shows the 1,376 (86.22%) losing trades for the buy downside and sell downside trade type. Only 220 (13.78%) trades were winners. Most of the winners appear in the large cluster of buys and sells that occurred during the price rebound in early 1998. The other green clusters represent short-term trades associated with brief price rises on the downside.