The month of June was a tough one for the Greed and Fear model portfolio. The neural network made a lot of false predictions. It wanted to go short for most of the month, but that didn' t work out too well since the S&P 500 rallied most of the time. And the occasional long signal also turned out false.
There were three long trades, all three losing trades. One was stopped out overnight after some Twitter messages, where the futures suddenly dropped 50 points and then quickly recovered. The other two trades went almost directly from entry to stop loss after which prices continued to fall to close 5% lower on the day. That's why having a fixed stop loss in place is so extremely important.
That's just the nature of trading, you can do everything right and still lose money. In total, a loss of $2543,00 was posted. The yearly result of the Greed and Fear model portfolio for 2020 has been updated.
- Written by Raoul Suurmeijer
- Category: Results
In 2017, a start was made with verified actual trading results. Now we continue doing so for the year 2020. The result is based on trading only 1 E-mini S&P future with a (minimum) $10.000,- base amount. This is the Greed and Fear model portfolio. With the accumulated profits, the value of this portfolio stands at $25370,50 at the start of 2020.
The easiest way to replicate the Greed and Fear model portfolio is by using the autotrading facility. There's a section that explains how that all works. But there can also be good reasons not to use autotrading.
If you use any search engine and type in the phrase "How to become a successful short term trader" or anything similar, you will find roughly 70 million(!) websites that will help you in achieving that goal, or so it seems. While in reality, there's only one right and honest answer which is more like this: "There is an extremely low probability you will ever be successful in short term trading, and you will most likely lose all funds in your account".
Every now and then when I'm reading an article from the world of behavioral economics discussing a particular phenomenon, it makes you realize once again how much trading and investing is about human behavior.
First, autotrading is a great development for the trading community, both for investors as well as traders. It gets rid of all the fluff and ambiguous analysis that float around the internet, that whole crazy circus feeding the modern gold-rush.
Early visitors of this blog have seen my daily posts for years now with the so-called Greed and Fear indicator and to which direction it was pointing. This was my initial attempt to expose the indicator to the public. Along the way, the performance was measured of course, to see if it was any good and useful in trading. The most honest way to measure this performance was by counting index points 'it called right' subtracted by 'index points it called wrong', as I've explained here in more detail.
But during all those years, I never explained in some more detail what the Greed and Fear indicator really was, while this is probably one of the most fascinating subjects today: a neural network! The more widely known terminology would be machine learning, artificial intelligence, etc. There are subtle differences, but it all comes down to 'intelligent software'.