Welcome to the Large Cap Leaders Trading System

This page is the best place to begin. Here you’ll find:

• A brief overview of what this trading system is all about
• Precise instructions on how to trade the model
• And more!

Introduction to the Large Cap Leaders Trading System

The Large Cap Leaders system uses trading signals generated by a quantitative strategy that MarketGauge developed that combines the concept of trend strength and ranking. The model takes the S&P 500 Components (large market capitalization stocks) and applies several layers of filters and rankings based on our proprietary Trend Strength Indicator (TSI) score and several other ranking components. 

Large Cap Leaders takes advantage of calendar effects, moving its ranking and rotation day from the last day of the month, up a few days to take better advantage of some of the natural monthly money flow cycles in the market. On those days (around the 25th of each month), the stocks are updated and  ranked by TSI and other filters to determine which stocks should be in the portfolio for the next month.

Each position is managed with stops and targets. At the first target, 25% of the original position is sold. At the 2nd and third targets, another 25% is sold respectively. If the stock reaches a fourth target, 12.5% is sold (half remaining). If at any time, a stop is hit (initial or trailing stops), the model will exit half of whatever position is on. The remaining position will be left on until the next calendar effect rotation date without any active stops but the next target will still be considered if hit.

Quick Start: Starting A Portfolio

You can start at any time. The actual model only enters new trades on the calendar effects rotation day (around the 25th of each month). We never know how long a trade will last or how far it will go, however we have stops and targets and re-rank and re-evaluate holdings monthly.

The best way to start following the model is to use the share calculator (found in the “Open Positions” and instructions found below in the “Starting a Portfolio” section below. The calculator will show you the real-time percentage allocation of the model portfolio. You can use this to create your own portfolio that mirrors the model portfolio.

The website page “Model Portfolio” will show you the current seven positions and their stops and next targets. 

When you initially put on the position, you can enter hard stops at the initial stop loss. You can also place orders to exit the appropriate amount at the first target (25% of position). Any position stopped out will remain in cash until the following month.

Each portfolio spot is treated seperately. New positions use the available capital from that portfolio spot. A portfolio spot may start at 1/7th of the portfolio but will grow or shrink with each new position until all the portfolio spots are all rebalanced twice annually (end of June and end of December).

Maintaining A Portfolio

Shortly after the close of every trading day, the website will be updated with the most recent trade data (closing price, return, etc…). Anytime a trading event occurs (hitting a stop or a target or rotating out of stock into another), you can expect an email or text alert updating the change. 

On the calendar effects date (around the 25th),  the model will calculate and issue any position changes if necessary. There might be months where all seven of our positions could change and, likewise, there could be months where none of our five positions change.

Trading Alerts & Position Updates

There are two types of potential updates. At the calendar effects trade date (around the 25th of the month), the model will evaluate the S&P 500 components and rank and sort them on our proprietary trend and momentum filters and determine a list of the top stocks. From that list, the model compiles the top 7 stocks and ensures that there is not too much concentration in any one market sector.

The other type of update occurs when one of our positions either reaches a target or gets stopped out during the month. When this happens a special notification email and text will be sent out. The prices are published ahead of time. For stops, the model will exit half of the remaining position and leave the remainder on to play out until the next month’s rotation date.

For both of these types of updates, the actual update can be found on the “Position Updates” page. 

Managing Your Text Alerts

If you would like text alerts in addition to email alerts, simply go to the “Manage Mobile Alerts” link in the top navigation panel on this page and register your phone number.

Monitoring the Strategy Portfolio

You can easily see any recent trade alerts in the “Position Updates” section of the website. This page is updated anytime a trade alert is issued.

The “Model Portfolio” area of the website tracks the current open positions, position calculator, recently closed positions, and historical performance metrics. Some data, like prices are updated on the site throughout the day, while other data, like model performance, is updated shortly after the close of the market each day.

We have a share calculator found in the “Open Positions” / model portfolio page. This shows you the percentage of the total portfolio for each position and remaining cash. You can use this tool to figure out how many shares to buy to start a portfolio mid-month or rotate into new positions. Instructions on how to use the share calculator can be found below.

We will also have monthly webinars where we will discuss our current holdings or new positions and answer any questions that our members might raise.

Starting A Portfolio

You can get started at any time regardless of how far positions have moved from the model entry or how many profit targets we have reached. By starting positions at roughly the same size as the model’s current holdings, your portfolio will closely track the model going forward (so if the model is up 5% your positions/portfolio should be up 5%).

To get started you will enter the same positions as the model portfolio and make each position replicate the allocation percentage of the portfolio (position size). For instance, if the model portfolio position #1 is equal to 12% of the portfolio value, then your position #1 should be 12% of the capital you’ve allocated to this strategy. 

We have a “Share Calculator” in the open positions that will make it very easy to figure out exactly how many shares of each position to buy at any given time in order for your portfolio to replicate the day to day performance of the model.

The Position Calculator provides the sample number of shares for portfolios of $10,000. You can use the values to calculate the number of shares for any custom-sized portfolio. For instance, if you are trading a $5,000 portfolio, you would just take the $10,000 portfolio and buy half as many shares.

You can also use the “multiple” method to determine how many shares to buy. If you are trading a $17,000 portfolio, $17,000 is a 1.7 multiple of $10,000. So you can figure out how many shares to buy by taking the $10,000 portfolio recommendation and multiplying it by 1.7. So if it recommended buying 100 shares, the $17,000 portfolio would buy 170 shares.

Keep in mind that your portfolio size will constantly grow or shrink based on market action and to accurately calculate position size and take advantage of compounding, you will need to base your position size on your actual portfolio, and not the round numbers shown in the default increments ( $10,000).

Since the trades are already in progress, your entry price will be different from the model and your stops or targets could be closer or further away than the original model position, but what is important is that your real-time portfolio performance should very closely replicate the published results. We recommend using the model’s stops and targets regardless of your entry price to ensure that your portfolio matches the model on a go-forward basis.

When you start a portfolio from scratch, use the “% of Total Portfolio” and “Shares to Own Per $—-” to establish new positions with the correct allocation. When you start a new portfolio the important relationship is each position’s value as a percentage of the portfolio. This allows you to start a portfolio and follow the performance of the model regardless of where the trades are setup or what the recent market action has done.

To enter new model trades, you will buy approximately 1/7th of your capital allocated to the model.

At times, some of the portfolios might have a position in “cash” or have already reached multiple targets and have very little exposure to a position left. The real-time portfolio position sizing recommendations take these factors into consideration when showing the recommended share totals.

Once you have established your initial portfolio sizes and positions, you can continue to track the current positions and follow along with the stops, targets, and trade updates in the “Model Portfolio” section of the member area.