Wednesday, February 9, 2011

New Trading Strategy - First 100 Trades

I bought to cover the futures contract I sold on the SP-500 several days ago - at 1313.00  As best as I can tell, "It is Coming" should have read "It is Coming, but Not Yet".  I have been proven incorrect in thinking the SP-500 was going to crater from its 5 negative divergences.  Clearly I underestimated the power of the FED's printing press activities.....which are temporarily able to overrun normal corrections with a flood of liquidity.  Anyway, my two 'short the SP-500' with futures contracts has resulted in a net loss of $250.  Ouch.
I have completed, more or less, the first 100 trades using my new trading strategy.  What follows is a copy of the spreadsheet I use to keep tabs on how the strategy is doing from day to day.  In brief, the buy signals are generated from a positive divergence with respect to the True Strength Index (TSI) indicator and the movement of price.  The sell signal is simply, for this exercise, a 2% limit order.  If price, after buying the open at the market, continues higher than 2% within the first 3 days, the trade is considered a success.
Anyway, so far 88 trades have completed the 3 day window and the results are in the 85% success range, which I consider a good start.  Of late I have been just throwing in any stock that made a minimal positive divergence without any regard to other rather common sense considerations. And the results of the past few days reveal that this will not return acceptable back to using my brains a little, I guess.  Truly, it seems nearly impossible to design a strategy that is purely automated and boasts a success rate above 80%.  Any feedback or ideas, suggestions will be appreciated.


  1. Looking good, 85% is nothing to be modest about!
    Also btw whats the cycle count now, do you think the intermediate cycle has run its course or do we have ourselves another daily cycle? (that was one of my favorite post lol and those relating to the C-Wave)

  2. The daily cycle bottomed about 11 days ago and hopefully the intermediate cycle bottomed along with it.

  3. Hi John,

    Do you think the chance of having an intermediate cycle bottom in the next couple of weeks high? I.e. should we stay away from miners / PM for now and wait until Gold breaks the downward trend and gives a clear uptrend signal?

    Also, what is your target of AGQ in the new up leg?


  4. Hi Fung -- yes, I think the chance that gold will have made an intermediate cycle bottom in the next two weeks is literally a certainty. It either already has, as I now believe, or it will at the conclusion of this half way done daily cycle. There is a rather massive inverted head and shoulders pattern already in place with 1310 at the head. It seems unlikely that gold needs to add more to that pattern. When the US Dollar resumes its sky dive it will be game on.

    At this very moment miners are generally rolling over and I would be inclined to wait a few days to wait for signs they have bottomed and are turning up before buying aggressively.

    Honestly Fung, I saw this intermediate correction coming a long time ago and made my own personal decision to just hold my positions and wait it out. I know it is a bull market and if I am patient it will all work out for good.

    I have not given any thought lately to how high AGQ will go, but I am sure it will be spectacular. Silver has been leading gold all throughout this C wave and I see no reason for that to not continue from here. You can either try to get tricky with your purchase using TSI, etc. or you can simply start accumulating and hold on for the ride. Either way you will come out fine.