RC Success is one of several trading systems by Hong Kong developer Rickey Cheung, with through achieving a low drawdown and admirable YTD performance.
After running our semi-annual "What's your best system?" article last week, many investors were left with a few questions 1. What is RC Success? and 2. How did it get in third place on that list? The answers: RC Success is one of several trading systems by Hong Kong developer Rickey Cheung, and it placed third on our rankings with through achieving a low drawdown and admirable YTD performance. This month's System Spotlight highlights RC Success:
Who is the Developer?
Rickey Cheung is the developer of RC Success. Mr. Cheung has been studying the futures markets since 1985, and believes first and foremost that trading should be both enjoyable and profitable - or else why undertake it in the first place. He began focusing his attention specifically on S&P systems over the past 10 years, and came up with the basic building blocks for his systems, the "RC Models" in June of 2002.
In September of last year, Rickey started RC Trading Education, LTD in an effort to teach his methods and strategies to others in a one on one seminar type environment. He views his trading systems as a vehicle to prove the viability of the logic he teaches in his tuition based seminar products. Mr. Cheung graduated from the University of Houston in the United States with BS and MBA degrees, and has worked as president of Asian operations for a multinational corporation in Hong Kong.
How does it Work?
This section of the spotlight promises to be rather short as RC Success is a definitive "black-box" system, with the developer rather clear on the fact that the indicator(s) used are proprietary in nature and not disclosed. The developer is quite willing to tell you how it doesn't work, however, stating that it doesn't use any of the so called "popular" indicators such as moving averages, range breakouts, oscillators, support and resistance levels, and more. According to Future Truth's John Hill as quoted on the RC website, the system uses a "very unusual" indicator in its logic, and he has "not seen any systems that use similar indicators."
We do know that the system attempts to catch daily trends early in the move, and likewise identify and catch trend reversals early on. This type of action should result in some home run trades as the system enters near the low or highs of different moves, but the danger can be getting in to early and suffering losses if the market doesn't confirm right away.
Another attribute is that RC Success trades relatively infrequently, with no more than one trade per day. This is designed to reduce market exposure by limiting the time in the market and appears to have resulted in manageable drawdowns (11.5% in actual trading; ~20% in hypothetical backtesting). We have also learned that RC Success uses over 20 different strategies to enter trades, depending on what type of market environment is prevalent that day.
On the exit side, the system uses three different exits: a stop loss, breakeven stop, and MOC exit. The breakeven stop attempts to lock in profits by moving the stop to the point of entry once the trade has made five points in open trade profit. If the break-even stop is not hit, the system will attempt to ride the profitable trade to the market's close.
The system was designed specifically for the S&P futures and/or e-mini S&P futures market, and tested with TradeStation data back to just 2001 before out of sample testing back to 1998. While Rickey states it was not his goal when setting out to develop RC Success - the backtesting shows a system with a relatively high profit per trade, high winning percentage, and low drawdowns. RC's newest system, RC Miracles, actually tests better than RC Success, and is claimed by Mr. Cheung to be his best system.
Despite record low volatility in S&P futures so far this year which has proven to be a less than ideal market environment for several day trading systems, RC Success has held its own so far this year. Investors may be turned off by some rather exorbitant claims on the website - such as "Probably the #1 S&P DayTrading system in the World" - but the tone may be a case of some nuances being lost in translation. We'll give Rickey the benefit of the doubt, but either way, his passion for his craft shows through.
At the end of the day, the system looks good in its hypothetical backtesting and has performed admirably since Attain began tracking it in March of this year. Whether the relatively short track record can be replicated over the long term remains to be seen, but its its infrequent trading style and goal of high winning percentages should keep away any big surprises to the downside.
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