All daily articles with regard to the short term market movement will go here.
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.
January had 2 trades, both losing trades. The first one had this terrible stop loss, where the market pushed to maximum loss and then returning back up in the anticipated direction.
This is the type of trade that causes doubt in the trader's mind the next time a stop loss is about to get hit. As mentioned several times, good trading is not always rewarded, and bad trading not always punished.
The second trade was the classic example of how a stop loss is protecting your account from getting wiped out in a single trade.
The yearly result of the Greed and Fear model portfolio for 2021 has been updated.
Another losing trade in the same week, the bad streak does not stop. The trading signal was very bullish, volatility was within a reasonable range, so a high probability trade was set up. But things turned really bad even before regular trading hours.
The first trade of the new year has taken place, but unfortunately, it was a losing trade again(!) If you look back at the last 5 trades, there was only one small winner, the other 4 were all 'regular' losing trades. As defined by my trading system, a single losing trade can never wipe out the entire account, but one after another can do serious damage.
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.
For trading on December 21st, there was a strong bullish signal, so an order was entered and emailed to all investors. The buy limit order was set at a level that has a significant chance of getting touched during an intraday pullback.
Combined with the buy limit, a bracket order was entered to close the position at pre-determined levels. This could be the stop loss (maximum allowed loss) or the sell limit (profit target). If either gets hit, the position is closed and the other remaining order is canceled.
With the strong signals, mostly bullish, and the lower daily ranges, come more trading opportunities. Sometimes there's a month with no trade at all, and now a couple in a row. It is just unfortunate that currently, they are mostly losing trades.
On the evening of December 8th, an e-mail went out to all investors with a new trading signal. We would buy long again at 3681,00 which is coincidentally the same level as our previous long trade was stopped out on December 7th. The trade was filled in the middle of regular trading hours, but then in less than 2 hours hit our stop loss. Then it kept gyrating around this level into the close.
The previous trade was a failed short trade, then the indicator flipped back to bullish mode so we set up a long trade. This is the type of flexibility a trader should have. Never chase your yesterday's opinion but take the loss and start over again.
The order was filled near the low of the day, and then the ES E-mini slowly climbed its way higher. At one point the position was up 20 points, so it seemed reasonable to pull up the stop loss. A pullback later in the session hit that stop loss and what was left was only a small profit of $244,00.
Later that session the ES went lower than the stop loss twice but managed close a bit higher. That's always the dilemma, how much of your unrealized profit are you willing to give back to the market before taking that small profit that is left.
On December 4th, we took the first short trade in a really long time. From many statistics, we know that to be successful with short trades, your timing has to be excellent, especially if trading counter-trend.
This particular short trade was based on a very solid bearish signal after a couple of sideways trading days. So short term, there wasn't really a trend up or down, and taking the strong bearish signal at this point seemed like a reasonable thing to do.
But our stop loss was set very tight, only 9 points above our entry point, which equals to 0,24%. The reasoning behind it was that if the price is able to get above that level, the whole bearish scenario wouldn't make much sense. The logical thing to do was take a small loss. Of course, everything was executed by our preset bracket order, without any no manual interaction.
Today's trade was again the only one this month. There were some trades set up earlier this month, but they never got filled. Today's trade had an overnight fill and stop-loss as well. At the moment of this writing, that stop-loss also was the exact low(!) This is what the market does sometimes. Good trading is not always rewarded as bad trading is not always punished.
Entry was 0,54% below the previous close, so we were anticipating a decent pullback. Overnight the market went up higher first, some 20 points. Next, it dropped right to our stop-loss and then took off again.
Post edit: later in the session, price drops significantly below our stop-loss level. Who would have thought....
November again did not give us many signals. In total there were 4 trades set up, but only one got filled which turned out to be a losing one. The net result for November is set at -$706,00
The yearly result of the Greed and Fear model portfolio for 2020 has been updated.
For the month of October, we don't have a single completed trade in the books. We placed two trades, but both were never filled. And again, the neural networks kept contradicting one and another, not giving clear signals on most trading days.
Coming week, we have elections in the US and also FOMC day on Thursday, so I'm expecting a lot of volatility in the days and possibly weeks ahead. Capital preservation is our number one concern, so you probably shouldn't expect any trades this week.
The yearly result of the Greed and Fear model portfolio for 2020 hasn't changed.
Today's trade was the only one this month. Yesterday evening, I entered an order and sent an e-mail to the investors. As always, the order was a limit order anticipating intraday pullback. When the limit was hit, it first looked like an almost exact hit. But an hour later the ES dropped roughly 13 points below the initial entry, and then later that session again.
From that low, it took off right through our profit target. The bracket order is such a fantastic order type that way. Once the profit target is reached, the position is closed automatically and profit taken. Towards the end of the session, we're seeing some selling, getting well below our profit point which always feels good.