How it works

1. Once a month, look at every S&P 500 stock's monthly chart

After each month ends, a frozen detector looks for three shapes that draw a clear ceiling on the monthly chart: a bull flag (a sharp rise, then a short pause), a cup and handle and an inverse head and shoulders. Only well-formed shapes count, and only when the price is sitting just under the ceiling, the level.

2. Three gates decide what is offered

• Market gate: no new trades while the wider market is weak.
• Not overstretched: a stock that has already run a long way is left alone.
• Seasonal gate: new trades only in the months that tested best; the rest of the year it only manages what it holds.

A signal that passes all three is offered; the rest are shown as held back, with the gate that stopped them.

3. Buy only if the price breaks through

An offered signal gets a buy-stop order at its level for the next month. It buys only if the price trades up through the level. A stop goes underneath from the start, set from the stock's own monthly range, so the most a trade can lose is known before it is bought.

4. Let winners run, cut losers

A losing trade is sold at its stop. A winning trade is kept until the monthly trend turns down; there is no profit target, so the big winners are allowed to become big. Trades are held for months, often years.

5. The account

£50,000 on paper, split into a few equal slots so no single stock can sink it. When more orders fill than there are free slots, the strongest signal takes the slot. Spare money sits in an S&P 500 fund. Dealing costs, a spread and fund charges are all counted.

Everything happens once a month, after the month ends. The site shows exactly what the paper account does, so you can copy it step by step, or simply watch. It is information, not advice: whether you copy a trade, and with how much, is up to you.

The quickest view is the This month's actions box at the top of the Home and Signals pages. It is refreshed soon after the 1st of every month and has three lists:

Just watching

You don't have to buy anything to follow along. Add the monthly reminder (the calendar links under This month's actions), open the site soon after the 1st, and tap the BUY orders to see why each one was picked. Over the following months, the Every trade page shows how each one turned out, and Past lists keeps each month's list exactly as it was published. It's a good way to learn the charts before risking a penny.

Before your first trade (once)

1. A share-dealing account that can buy US shares. Most UK platforms can, and many let you hold them in a Stocks and Shares ISA, so gains are free of UK tax. Check the platform offers a stop order to buy (often called a buy-stop or stop-entry order) and a stop-loss on US shares. If it doesn't do buy-stops, a price alert at the level works instead (see below).
2. The W-8BEN form. Your platform will ask you to fill it in online before you buy US shares. It cuts the US tax taken from dividends from 30% to 15% for UK residents.
3. Know your costs. Look up the dealing fee and, just as important, the currency conversion fee: every US trade turns pounds into dollars and back again. On small trades these can cost more than the trade makes.
4. Decide your pot. Type it into Your pot in This month's actions. It is split into five equal slots, like the paper account, and each BUY order then shows about how many shares a slot buys and about how much is lost if the stop is hit. Only use money you can leave alone for years and could afford to see fall a long way: the tests had a fall of about 60% (2008).

Each month, soon after the 1st

Do it in this order: sells first, then a check, then new orders.

1. SELL. If a stock you hold is on the SELL list, sell it, and cancel its stop-loss order. That frees its slot.
2. KEEP. For each stock you still hold, check its stop-loss order is still in place at the stop shown (some platforms cancel orders after a set time).
3. BUY. Count your free slots (five minus what you hold). For each BUY order you want, up to your free slots, place a buy-stop order at the level, for one slot's worth of shares. If there are more orders than free slots, start with the ones that have the most stars.

Placing a buy-stop

• Choose a stop (buy-stop) order, not a limit order, with the stop price at the level shown. It sits there and only buys if the price rises to the level. A limit order would do the opposite and buy straight away.
• Make it last until the end of the month if the platform lets you choose (“good till date”). If it only offers “good till cancelled”, put a reminder in your diary to cancel it on the last day of the month.
• No buy-stops on your platform? Set a price alert at the level instead, and buy when the alert fires. You may pay a little more than the level; that's normal.
• Already above the level when you look? The paper account bought on the day it crossed. Buying later, higher up, is not the same trade and starts further from the stop. The cleanest choice is to skip it; the trade will still show on the record either way.
• US markets open at 2.30pm and close at 9pm UK time (an hour different for a few weeks in spring and autumn), so that is when orders can fill.

When an order fills

1. Straight away, place a stop-loss order (a sell stop) at the stop shown for that stock, set to last until you cancel it. That is the most the trade is allowed to lose. If the price opens below it after bad news, it sells at the opening price, which can be lower.
2. Once all five of your slots are full, cancel any buy-stops still waiting, so you never hold more than five.
3. Cancel any buy-stops that haven't filled by the end of the month. A new list comes after the next month ends.

When to sell

• A losing trade sells itself: the stop-loss order you placed does it, on whatever day the price falls to it.
• A winning trade is held until the monthly trend turns down. There is no profit target and no reason to sell early: the big winners are where the results come from. After each month ends, any trade the rules sold appears in the SELL list, with the reason. If one of yours is on that list, that is the signal to sell.
• Everything else is in the KEEP list: leave it alone and make sure its stop-loss order is still there.
• Open any trade on the Home page for its breakdown: whether it is still held, what would end it, and, once sold, when and why.

Things that trip people up

• Most trades are ordinary. About half lose, often at the stop. A run of several stops in a row is normal. The results come from the few that run for months or years, so skipping trades because the last few lost is how people miss the winners.
• Your results won't exactly match the paper account. Fees, exchange rates, the day you place orders and how many slots you have free all differ a little. The record shows the rules, not your account.
• Very small slots. Under about £200 a trade, fees and currency conversion can eat several percent before the price moves. Some platforms offer lower fees or fractional shares.
• Don't move a stop down to avoid a loss. The stop is the plan.

This is a free, educational paper record, not financial advice. Prices can fall as well as rise and you can get back less than you put in. If you are unsure whether investing is right for you, speak to a regulated financial adviser.

Every chart on this site is a monthly chart: one candle for each month. You do not need to know anything about charts to follow the record, but a minute here makes the trade breakdowns much easier to read.

Why monthly? The same shapes were tested on daily and weekly charts first. On daily charts the picks did worse than random stocks bought under the same rules; on weekly charts the trades lost to simply holding an S&P 500 fund. Only the monthly chart showed an edge. Checking the monthly shapes every week, instead of once a month, did not improve it either. Monthly charts filter out the noise, the shapes take longer to form, and the moves that follow tend to be bigger and last longer.

Candles

Each candle shows four prices for its month. The thick body runs from where the month opened to where it closed; the thin wick shows the highest and lowest prices traded. Green means the month closed higher than it opened, red lower.

The trend line

The grey line is an exponential moving average (EMA): an average of the past months' closing prices, recalculated each month, that gives the most recent months more weight than older ones, so it turns sooner than a plain average when the trend changes. It ignores the month-to-month noise and shows which way the price has been heading. When the price sits above it, the trend is up. Trader Launchpad uses it to decide when a winning trade's run is over.

The three shapes

Each shape is a pause after a rise, or a recovery after a fall, that draws a clear ceiling: the level (gold). The idea is simple: when the price finally pushes through a ceiling it has been held under, it often keeps going. Only well-formed shapes count, and only when the price is close to the level.

A trade breakdown

Open any trade on the record and you get a chart like this. The gold dashed line is the level where the buy-stop sat, the red dashed line is the stop that limits the loss, and the tags on the right give their prices and the last price. The blue dot is where the trade was bought and the gold dot where it was sold; their tags on the right carry the same dot and the price. The shaded band is the time it was held.

Over 20 years of US large caps (2006–2026, dollars, prices only) the same rules made about 12–13% a year, against about 9% for the S&P 500 index and about 7% for random S&P 500 stocks bought in the same months under the same rules. Replayed 200 times with different luck over which trades got a slot, it beat the index every time, nine times in ten by between 10% and 16% a year. The lead was lumpy: most of it came from a few very big winners, it was behind the index in plenty of single years, and a fall of about 60% happened (2008). The rules did no better than random stocks in the UK, Europe or US mid caps, on daily charts or on ETFs. That is why this record is US only, and why it is a live test rather than a promise.

Each month is sealed with a SHA-256 fingerprint that includes the previous month's, and the fingerprint is published. Anyone can check later that no month was changed. The same record drives Trader Launchpad, the desktop app, so the site and the app cannot disagree.