CTM Buy Curves

The Complete Trading Model (CTM) computes the percent return for each buy and sell combination of a price series. Using these returns you can study the the effect of buy prices and buy dates on percent returns. For example, you would expect the highest returns to result from purchases at the lowest upside prices and earliest upside dates. The lowest returns would result from purchases at the highest prices and dates near the middle of the cycle.

The following analysis is for all buy and sell combinations for Kulicke & Soffa (KLIC) for the price cycle from September 9, 1996 to October 8, 1998.

The following charts show the percent returns for all buy and sell combinations for Kulicke & Soffa (KLIC) for the price cycle.

The first chart shows the percent returns for each buy date of a price series. The vertical axis of the chart is the percent return and the horizontal axis is the buy date.
The second chart shows the percent returns for each buy price of a price series. The vertical axis of the chart is the percent return and the horizontal axis is the buy price.

Buy Date Curve

For the price series there are 5,886 buy and sell combinations and each data point on the chart represents the percent return of one buy and sell combination. So there are 5,885 data points on the chart.

The overall pattern is declining returns as the buy date moves from September 9, 1996 to the last buy date on September 28, 1998. For each buy date each data point in the column of returns is for a different sell date and corresponding sell price. For example, the left-most column of data points shows the returns for each sell date associated with the September 9, 1996 buy date. The largest gain, 509 percent, occurs for the first and lowest buy price of $4.53, which was sold at the peak price. The smallest gain for the September 9, 1996 buy date was 22.5 percent for the October 8, 1998 sell date at $5.55. Therefore, all the returns for the September 9, 1996 buy date fall between 509 percent and 22.5 percent.

This example demonstrates that CTM returns vary widely for a fixed buy date. So investors, who buy at a given date, will not make the same amount of money. Obviously the profit or loss depends on the buy and sell price.

The wavy pattern of percent returns result from the up and down moves of price. When a buy prices dips below the general price trend, the percent return increases for all trades for that buy price. When a price moves above the general price trend, returns decrease for all trades for that buy price.

Buy Price Curve

The next chart displays the percent return for each of the 5,886 buy and sell combinations grouped for each buy price. You can see the general trend of decreasing amount of profit as the buy price increases. So the chart visually confirms the obvious fact that as you pay more for the stock your profits decrease.

The chart shows the percent return of each trade for each buy price. For example, the returns for all trades with a $4.53 buy price, the lowest price of the cycle, are shown in the first column of data points on the left side of the chart. The next vertical column of data points shows the gains and losses for the buy price of $5, the second lowest price in the cycle. The third column of returns is for the third lowest buy price. The last column of data points on the extreme right side of the chart show the returns for the buy price of $27.59, the highest price for the cycle.

For example, the highest gain column occurs for the $4.53 buy price. So the largest gain for the entire cycle is 509% for the $4.53 buy price. The largest loss is 79.88% for the $27.59 buy price.

Also, you can see from the chart the general trend of decreasing amount of profit as the buy price increases. So the chart visually confirms the obvious fact that as you pay more for the stock your profits decrease.