Live Trading System: hosted by David Lee (Twitter ID: SimpleMoneyZone).
System Weekly Report:
System has two types of LONG signals in general:
Type A: oversold type of corrective bounce LONG
Type B: trend-catching type of breakout LONG
Our last LONG is Type B LONG. I fixed 2 trading rules for the sell signals in Type B LONG that are over-fitting in the trading system. These two rules were originally designed in Type B LONG to minimize the system drawdown during this type of LONG. However, I found that this can cause the system to underperform the market especially when we are dealing with a sloppy and news-driven short/mid-term trending-up market.
If these two rules were removed from our last Type B LONG, we would have straight LONG signals from 10/21/2022 LONG to 12/15/2022 FLAT without cycling in and out. It should also be pointed out that we would be stopped out and re-entered with some sub-trades within this entire LONG trade.
The recent case has not been encountered before so I have to learn this case in real time as an unseen case is revealed. The good thing is that this revision makes a lot of sense to me even though I didn’t realize that earlier until the recent trade. Another good thing is that this change will not affect all the other historical data for the Type B LONG because it has not happened before. Now it is included and the revised rules are consistent with all 10 years backtesting data. In addition, this change will not affect Type A LONG at all.
The system is FLAT at this point.
Timing model has been bearish since before the FOMC meeting. However the interesting thing is that the timing model is seeing some bounce next week then followed by further decline.
We have a decent chance for a SHORT signal setup next week as early as next Monday. At the same time, however, we are also close to a corrective Type A LONG signal if the market shows enough strength next week.
Everyone has a good weekend!
All the live trades from September can be found in the following link:
Disclaimer: Trading stocks involves high risks and you can lose money. You are responsible for your own investment decisions.