Disciplined QQQ Trading

Testimonial: As a newbie to trading, I was overwhelmed by the number of stock trading strategies available for subscription. I have tried temporary subscriptions to over 10 of them now. The one that has worked best for me in the first 6 months is Disciplined QQQ Trading. The picks are easy to follow and can be executed after hours. The staff is very helpful with any questions I have had. The return has been consistently positive to this point. Highly recommended!

Charles, PA

FAQ

Welcome to the Frequently Asked Questions (FAQ page). Below, we have tried to answer the most common questions visitors to our Web site may have. If you find that your question is not answered on this page, please e-mail us.

What, in general is the Disciplined QQQ Trading Model?

Disciplined QQQ Trading uses a mathematical model to analyze every stock on all US Stock markets. A more detailed description is available in Model Details. The calculations run continuously from the market open until the alerts are sent out at 3:20 PM EST. Our history and the model have shown that strength in individual stocks that make up the entire market can lead to an increase in the major averages. The converse is also true. The model is strictly mechanical and emotions play no role. The model has worked well in advancing and declining markets.

Why should I choose Disciplined QQQ Trading?

You should choose Disciplined QQQ Trading because it has generated superior investment returns in both up or down markets. You won’t have to worry about a market crash. You won’t have to constantly keep up with individual stocks or the market in general. You will no longer be uncertain of what to do. The alerts are clear and any questions you may have will be promptly answered. You should choose Disciplined QQQ Trading if you want a good chance at a better financial standing for you and your family.

Why should I not choose Disciplined QQQ Trading?

If you are completely new to buying and selling stocks and are unwilling to educate yourself and to start off slowly, then this is not for you. If you cannot spend 5 minutes, 5 times a week on your investment, then this is also not for you. If you are strictly a buy-and-hold investor in both up and down markets, then Disciplined QQQ Trading is not for you.

Do you offer Autotrading?

Yes we do. Currently, Disciplined QQQ Trading has three brokerages that autotrade our alerts: OptionsXpress, SpeedTrader.com, Thinkorswim or TradeKing. Our subscribers who prefer a near completely hands off approach have been very happy with it. Please let us know if there is a brokerage that you would like us to add.

Are there any special brokerage requirements that I must have?

You will need a margin account to be able to short QQQQ directly. This requirement is not necessary if you use PSQ or QID to mimic the shorting of QQQQ. In addition, your brokerage should be a discount brokerage so that commissions play a small role in your returns. An excellent brokerage that has good service and low commissions is MB Trading http://www.mbtrading.com. For Autotrading brokerages, ThinkorSwim.com and Speedtrader.com have good commission schedules.

For those who prefer mutual funds, Rydex Investment funds can be used. Specifically, the Dynamic OTC and Inverse Dynamic OTC funds mimic a long and a short exposure with margin to QQQQ, respectively.

How much money do I need to commit in order to be successful?

This depends solely on the cost of commissions relative to the amount that you are trading. Commission cost can be zero if trading mutual funds or trading QQQQ at the zero commission brokerage Zecco. Etrade allows a minimum of $2500 to trade Rydex funds with zero transaction costs in a traditional account and $1000 in an IRA account. The minimum amount to open an account at Zecco is $2500. Using a deep discount brokerage such as MB Trading as another benchmark, Disciplined QQQ Trading will work well with as little as $5000. Other brokerages with higher commission rates will require larger amounts of capital.

Can the model results be achieved?

Yes, real returns can be very close to the model returns. Brokerage fees and margin interest (small, but definitely negative) have not been factored into the model (note: shorting on margin does not cost anything). Neither have money market dividends been factored into the results (positive, but very small). Brokerage fee rates are the primary factor that could cause underperformance. Please consider the percentage of each trade that is taken up by commissions for your particular brokerage.

Our listed returns use the price of QQQQ when the email is sent out as the basis for our returns. Your execution price may be better or worse depending on the timing of your trades. Any difference should average out over the long term.

What time of day do I have to place the trades?

The alerts are issued daily at approximately 3:20 PM. If the alert calls for a trade, the trade can be made at the time of the trade or at at the close of trading. We track the results for two different timings, 3:20 PM and the close of trading. The returns are very close for both over time. Trades can also be made at the open of trading the next day if necessary.

Why do the model returns include margin?

The model assumes that 100% margin is being used (borrowing 50% of the amount invested). For example, if your account has $25,000 in it, your purchase values would be near $50,000. Disciplined QQQ Trading method is an excellent use of margin. Margin trading can increase returns, but also increases risk. Disciplined QQQ Trading was designed to minimize risk through the use of stop losses and by trading in a diversified instrument. Disciplined QQQ Trading can also be employed without the use of margin. The results are also excellent. The yearly returns are 60% for 1998, 50% for 1999, 144% for 2000, 78% for 2001, 53% for 2002 and 67% for 2003 when no margin is employed.

I have been trading with Disciplined QQQ Trading for almost a month and I have yet to turn a profit.

The shortest period over which we judge performance is 40 trading days (approximately 2 months). Each year since 1998 has seen one 2 month period for which the returns are negative (usually between negative 0 and 10%). Stick with it and your returns should turn positive. The median return over the 2 month periods is 13.65% and the average return is 21.1% (skewed by the large 2000 returns). Two month returns of 13.65% would result in a yearly return of 115%.

How long has this model been live?

Our historical end of day model dates back to 1998. We traded the end of day model from the beginning of 2002. Prior to 2002 we used a similar methodology to trade individual stocks back to 1995. We back tested the model on stock market data back into 1994 and it performs well there also. We began sending out e-mails and taking on subscribers in 2003. We do make adjustments to the model as the markets change characteristics. The tools for each model are similar and unique to Disciplined QQQ Trading. The current model was developed and frozen in early Fall of 2006 and implemented in the late Spring of 2007.

Why are the returns for the year 2000 so much larger than the other years?

The volatility was extreme in 2000 and since Disciplined QQQ Trading can go either long or short QQQ, the returns were extremely high (443%). This is not typical and we are not expecting returns that high very often, if ever again.

Do you expect that the high returns will continue in the future?

Yes, we expect to continue to beat the market returns, though our returns will be less in this lower volatility environment than the very large returns in 2000 and 2001. Our past performance is not a predictor nor guarantee of future performance. Our goal is 50% a year. Anything over that is fantastic.

What happens if I am not available to trade on some days?

If you are going on vacation, close out your positions, enjoy your vacation and reenter the market when you return. If you know ahead of time that you are not going to be available to receive our e-mail after the market closes, then don’t worry about it and execute any necessary change in the pre-market hours the next morning or at the market opening. Or consider our autotrading brokerages.

Can I use Disciplined QQQ Trading with an IRA account?

Yes. The easiest way is through Rydex Investment funds or other funds such as Profunds which have funds that mimic shorting. Normal IRA brokerage accounts can not directly short QQQQ. Shorting is necessary in bear markets and since we cannot know when bear markets will occur in advance, we always need the ability to short. The Rydex fund “OTC 2X” (RYVYX) mimics the performance of twice QQQQ and the fund “Inverse OTC 2X” (RYVNX) mimics the inverse performance of twice QQQQ (used for shorting). There are no transaction fees when switching between positions. As of June 2006, there are two ETF’s that mimic the shorting of QQQQ. PSQ mimics being short QQQQ and QID mimics being short QQQQ with margin. These can be traded from traditional IRA accounts. Our autotraders offer QLD/QID autotrading in addition to QQQQ autotrading.

How often do you change positions?

That will vary depending on the market conditions. On average we hold a position for approximately 3 trading days. When the market is having a sustained move our holding period can be as long as a week or two. However, when the market is choppy, our holding periods will be short and this allows us to make profits even when QQQQ isn’t moving from week to week.

Can I see a trade history

Right click here to download a pdf file that contains the signals and model returns since we switched to intraday alerts. This file contains the prices at the time the alerts are issued and also the closing QQQQ price. Real returns may differ depending on the actual trade price. Please e-mail us if you would like our end of day service historical returns from the beginning of QQQ on March 10, 1999.

If Disciplined QQQ Trading is so good, why bother setting this up as a business if you are getting such excellent returns?

There are a few reasons. The first is that my returns are better when I have the extra responsibility of creating good returns for subscribers. The added motivation to achieve good returns for subscribers is helpful in model development and implementation (automation). Secondly, I also wanted to run my own business because it would be a new challenge and it offers me some tax advantages. Friends to whom I had been giving QQQQ buy and sell signals had encouraged me to set up a business. Thirdly, I honestly enjoy helping people out. If I can help some other “little” guy make ends meet or let him/her work less and spend more time with family, then it is well worth the effort in setting this up.

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Disciplined QQQ Trading is a service provided by Zarsby LLC