I will start by saying that my poker expectancy may not be an exact science but it does give me a great idea of how I will perform next year when I play a similar number of games online (if the government allows ISP’s to allow players access to these sites). I personally play on PokerStars and only do it for fun as I enjoy the strategies and challenges each game presents. I’m primarily a low limit poker player because I don’t have the stomach of a gambler even with excellent odds on my side (sometimes luck does play a part). I play sit-and-go games online because they are short and sweet and the best players can typically make the money three out of every four games. In my case, I made the money 71% of the time in 2006 as I will explain in a second.

When I travel to Atlantic City or Las Vegas, I play $1-$2 no limit cash games because they offer low entry fees for potentially unlimited reward. I occasionally play cash games online but I have a better record playing sit-and-go tournaments with 9 players at a table.

I decided to keep statistics of every sit-and-go game in 2006 so I could develop expectancy similar to the one I have been keeping for my trading account.

I have played 174 games with a $10 + $1 entry fee to date.
Of those 174 games:

In total, I placed in the money 71% of the time.

Each game costs me $10 plus a $1 entry fee paid to the casino for a total of $11.
First place awards $45 (50%) minus the entry fee of $11 for a profit of $34.
Second place awards $27 (30%) minus the entry fee of $11 for a profit of $16.
Third place awards $18 (20%) minus the entry fee of $11 for a profit of $7.

My total account position varies because of the cash games but according to these notes, I made $1,155.00 in 2006 by playing $10 sit and go games. The breakout occurred like this (all fees have been subtracted from winnings):

PW is71%
AW is $13.75
PL is 29%
AL is $11.00

PW: Probability of Win
AW: Average Gain
PL: Probability of Losing
AL: Average Loss

If I play 15 games per month for each of the twelve months next year, I can expect to make approximately $1,182.60 with $10 sit and go games. My actual expectancy per game is $6.57.

So, for every game I play, I can expect to make $6.57 regardless of a win or loss and the size of the win. My goal is to increase the number of first and second place finishes by becoming more aggressive in the late stages of the game.

Interesting stuff if you ask me and I will keep you updated as I continue to play in 2007. I am looking to step up a level and play $20 + $2 games but the level of skill rises with each level so my expectancy is sure to change.

As long as you have data and a consistent way of playing the game (in this case with the odds of each hand), you can calculate an approximate expectancy that is sure to be accurate.

I wrote about the exchange stocks exactly two months ago, Exchange Stocks: ISE w/ ICE & BOT, and highlighted the case study with ISE which was building a cup shaped based. I noted that ISE was mostly likely the laggard among the group (which includes ICE and BOT) and I liked what I saw among these sister stocks. I actually closed the article with:

“Both ICE and BOT have moved on to new 52-weeks highs so ISE may be seen as the laggard but the base is great. As long as a handle forms and a pivot point is established, I will enter at the ideal time only if the “M” in CANSLIM is cooperating. The major indexes are extended so I am not sure if this will all come together at the proper time but it is a very interesting development to watch. The stock is already up over 15% in six weeks on the MSW Index so we can always take profits if things turn badly!”

All three stocks have made gains over the past two months but ISE has remained the laggard with a failed breakout above the established pivot point. Both ICE and BOT have made gains of 20% or more with ICE coming in at 27.30% as of Monday’s pre-opening price.

The group remains strong and the trend is still pointing higher for all three stocks but ideal entry areas have been passed. ICE is up about 50% on the MSW index while ISE is up only 10% but neither stock has given a major sell signal. With ISE currently trading around the 50-day moving average, I would suspect that some shorter term traders may be taking on speculative positions.

In any event, this is just another classic example of how stocks travel in groups, hence the term “sister-stocks”.

* NOTE – this is not a buy recommendation of any kind!

Many of you may have heard of Calpine and how they went into bankruptcy and how they are selling various parts of their business. I was recently having a conversation with someone in the industry (hedge fund) and they mentioned how several traders are going long Calpine (CPNLQ) on pure speculation based on rumors that the company may restructure and move forward. I don’t know if it is true but I took a look at the chart after his request and see that the stock is up several hundred percent on very heavy volume since late October but is extremely extended above the major moving averages for the first time in years. It closed at $0.91 on Tuesday (down from the $1.23 peak) as some people believe it is worth $6 per share.

I have no idea if this is true and I have always been taught that TIPS ARE FOR SUCKERS so please beware if you decide to speculate with extreme risk. I take this information as a tip even though my friend is a childhood buddy but I am curious to watch what will happen.

Again – this is by no means a recommendation to buy and major losses could occur if you were to speculate in this stock (I must make these statements to protect the legal aspect of my words). None of the stocks on this blog are buy or sell recommendations; just equity research based on specific criteria as noted in my disclaimers!

I prefer to buy stocks making new highs and I am not a bottom fisher. The only reason I even present this stock is because a very good friend of mine asked me to look at the chart and I thought I would share since I did the analysis.

Disclosure: I do not own any shares in Calpine (CPNLQ)!

-Chris

The change is finally under-way from Blogger to WordPress - It’s about time!  Now I just need to figure out the differences between firefox and explorer views and how to get my images into the new blog.

My name is Chris Perruna and I am 29 years old. I am an individual investor that currently resides in New Jersey with my beautiful wife and great dog but was born and raised in NY (still my favorite place). I graduated college with a degree in Architectural Engineering and went to work for a historic preservation firm in Manhattan. I started as an intern with the firm while still in college and worked on several high end projects around the corner from Wall Street. It wasn’t until I was about to graduate that I knew I wanted to work on Wall Street and trade the markets professionally (rather than personally). I currently consult for a fortune 500 big builder as an architect (listed on the NYSE), run an independent equity research firm MarketStockWatch.com and trade my own accounts for capital appreciation.

I am a trend trader looking for gains of 25% or more and losses no larger than 10% (preferably smaller). You must understand that this 10% loss is calculated into a position sizing spreadsheet that only risks a maximum of 1% of total capital. My foundation is rooted in CANSLIM philosophies but I developed my system with detailed position sizing calculations and money management rules from Dr. Van Tharp. I was inspired to enter this field after I started to read the books by the greatest speculators on Wall Street throughout American history. This blog is not affiliated with Wall Street brokerage firms, companies, newspapers, publications or any other financial institution. This ensures that all information and analysis will be unbiased as I answer to no one. However, all views and analysis are based on my beliefs and opinions and are not fact of what can and will happen in the market.

I have decided to start this blog to expand on my original website where I am the founder and president of equity research (MarketStockWatch.com). I have been a student of the market for 10 years with my passion in life torn between architecture and the stock market. The stock market will win in the end.

I open my first brokerage account as a sophomore in college and have not stopped trading since. I first gained an interest in trading from my father who owned restaurants and traded heavily in the 1970’s and 1980’s. I still trend trade heavily based on his 200-day moving average plays. I started tracking stocks when I was a teenager but didn’t become “obsessed” until college. I started college when the 1990’s market was starting to really boom and I benefited greatly over the first couple of years – it was all luck, pure luck.

As I explained in a recent interview, my worst horror story was trading Extreme Networks. It moved from $50 to $100 on several occasions and I thought I was invincible. I placed an enormous amount of money into the stock in my senior year (about 80% of my account at the time) around $55. The stock quickly ran towards $70 and I loved every minute of it of the so-called “easy money”. Without getting into details, I learned the biggest lesson of my life and sold just above $15 per share. To make matters worse, I had money from both my mother and sister in the account.

After the crushing blow to my portfolio, I wondered how some people made consistent profits in the market. Why were the analysts always wrong? Aren’t they the professionals that know the secrets of Wall Street?

I set out on a venture to learn how some people make consistent profits in the market without losing their shirt. While surfing the internet, I came across an advertisement about Investor’s Business Daily, the newspaper owned by William O’Neil. They were offering a free two week trial, so I decided to give it a try.

This was the turning point in my investing life. After reading the books written by William O’Neil, I started to realize that a personalized system was an intelligent way to invest in the market. A system with both fundamental and technical analysis was the answer, not tips on the early AOL chat boards. Understanding basic company fundamentals and studying chart patterns is the proper way to buying and selling stocks. This was only the first piece of my system as I later found (the hard way) that I needed a strong money management plan that employed position sizing and expectancy calculations.

From the O’Neil books, I was pointed in the direction of Jesse Livermore, Gerald Loeb, Nicholas Darvas, Victor Sperandeo, Martin Schwartz, Stan Weinstein, The Market Wizards, Van Tharp and many others. The story about Jesse Livermore has inspired my investing life more than any other Wall Street figure to date but in a way you may not expect. Livermore didn’t use basic money management to prevent his blow-ups. Simple risk calculations could have prevented his demise. He could have been the greatest ever but fell short because of one simple tactic.

Using O’Neil’s CANLSIM style of investing, I developed my own similar method of investing that tied directly into my personality and emotional state. As the bear market wore on, I started to test my new trend trading style of investing with some decent results. The profits weren’t as quick as ones from pre-bust days but respectable compared to the major indexes. I decided to devote more and more time into the study of my own philosophy with detailed money management rules. I spend many hours a week studying the technical side of stocks and use computerized fundamental screeners while compiling a huge database of my own. I joined several discussion boards looking for a way to teach and learn at the same time and used an old college nickname “Piranha” and started to post. Blogs came along and I started my original blog on the blogger platform but have now decided to switch to WordPress.

Here, I primarily talk about the market but have other interests in life such as poker on a competitive level, a men’s flag football league in the fall and a softball league in the spring. It drives my wife nuts but I like to compete in most things I do so sports, poker and the market feed that craving. I also enjoy traveling, attending professional baseball and football games and dining at great restaurants. Del Frisco’s (NYC) gets the nod here!

Overall, I see myself as a husband (one day a father), a trader, an entrepreneur, a great friend and someone that loves to talk “stock” – pun intended!

Enjoy the Blog!
“As you make your rise to the top, never forget about the important things, especially your most important ‘true love.’” – Christopher Perruna

Dedicated to my wife, the most beautiful woman in the world.

And it all started here…