Trading for the month of March was still very difficult. In total 4 trades were made, all of them with 'small' results, no big winners, no big losers either. It was mainly due to strictly applying the stop-loss rule that no further damage was done.
Today was a short trade, not very common in the model portfolio. Most of the time, down days, happen during volatile times which can make it hard to place a correct order (opening en stop loss).
This time, all five neural networks had a perfect bearish outcome, and market circumstances allowed to place a trade that made sense with regard to risk-reward. When that opportunity comes up, even if it 'feels' uncomfortable, it's the right thing to do.
It's not very often that you're going to see trades of the day with gains that small. But just looking at the result doesn't tell the whole story here. This is the third trade this month, and the resemblance with the previous two trades is remarkable.
The market gods still have not given us a significant profitable trade ever since December last year(!) In February we decided to hold off, March now has only two trades. The first was a minor winner, the second a minor loser. And for me, there's a clear thing that stands out: stop loss!
Look again at the first trade this month, especially the chart that shows entry and exit. Then compare this with today's trading chart.
Finally, we had a profitable trade for the model portfolio. It's still a very minor one, but having losing trade one after another is very decremental to the faith you have as a trader in a specific trading methodology.
Picking a good entry-level and stop loss level is always difficult. But as we can see from the chart, entry was near perfect. But as the trade took place, I could see there was a lot of nervousness going on, even multiple factors compared with an average trading day. Price behavior at the entry was erratic, but then the recovery from that low seemed to set in. The fixed stop loss was pulled up in steps of 5 points very quickly, and lastly, a 4 point profit was locked in. Luckily so, because the market decided to go lower again, even well below our entry. At one point the position was up 32 points, so there was good reason to pull up that stop loss.
February had no trades at all. In the last two months, it seems as if the neural networks were a bit out of tune with the markets. And when we look at simulation results over time, such an underperformance takes place every now and then. In such an event, it may be wise to take a step back and review all steps and procedures.
Looking back, no critical errors were made. During this month, the neural networks were a bit more finetuned, but not very significantly.
The yearly result of the Greed and Fear model portfolio for 2021 hasn't changed.
- 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 2021.
The total net profit stands at $21469,- at the start of 2021 trading exactly one ES E-mini S&P 500 future contract. On average this equals $5367,50 net profit per year.
Before you invest in the model portfolio, make sure you understand the risks involved in trading futures.
Interactive Brokers (IB) is a popular broker, operating in several counties around the world, usually under local national names. Their trading platform is the same everywhere, it's the Trader Workstation or TWS. For novice users, it may be somewhat intimidating at first glance, but once you get a good understanding, you'll see it has a lot of powerful features to offer.
We have learned that disciplined trading is the only way to survive in this business. The best way to adhere to your own strict trading rules is to automate things. Let your orders take care of your trading, not your brain because the human brain usually fails in (short-term) trading. In order to achieve this, we need an extensive set of order types. TWS has just that, so let's get into it.
December had 4 trades, of which 3 were losers and just one small winner. The first trade was a short trade, not very common, but opportunities seemed right. The second one was a long trade and looked very promising, but was stopped out with only a small profit left. The third and fourth were stopped on maximum loss. But especially, the last one showed the importance of having a fixed and automatic (instead of mental) stop loss(!)
In total, this resulted in making December almost the worst performing month of this year.
The yearly result of the Greed and Fear model portfolio for 2020 has been updated.
In our previous post about gaps, we looked at market behavior around opening-gaps and would generally happen during that same trading session. But nothing spectacular came out, an opening-gap basically meant nothing for further price action that day. Also, the average size of an opening-gap turned out to be a few factors smaller than average daily volatility, so those margins were easily absorbed regardless of whether there was an opening gap or not.
Now suppose the opening-gap does not get closed during the same trading day. How does affect the market in the next couple of days? Does price gravitate back towards such a gap, as if it wants to pull in price or doesn't it have any significant meaning as we saw in the opening-gaps analysis? Let's dive in.
There's a lot of talk about so-called gaps. General wisdom says they will be closed. But is that true? Is there a statistical edge about gaps that we can use in our trading? Let's find out.
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".
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.