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LiveTradingSystem Weekly Report

Simple Money Zone Live Trading System = Weekend Summary – 04/08/2023

Hosted by David Lee (Twitter ID: SimpleMoneyZone).

Main theme this week: would you prefer to continuously adjust your stop loss higher as a trade remains profitable during a trending move together with our trading system, or would you rather allow your trade to get stopped out by invalidating a count and attempt to capture the reversal?

Highlights:

  1. Currently, we still have a good amount of unrealized profit to go long when the market trend is up, while many people are attempting to short the market.
  2. We have raised the stop of $SPY to 398.62, which is now finally above our entry price. We have more cushion with the profit this week, which is better than last week.
  3. We have won almost every trade for the past 9 trades, with only 1 resulting in a 0.02% loss. The current trade is guaranteed to be a winner.
  4. We will continue to hold our full-size long position via $SPY until the market crashes.

Trading system review:

Copied from last week’s report: “We put that loss behind us and focused on the future. We currently have a good chunk of unrealized profit at hand to long the market when the trend is up, while many people are trying to short the market. They are repeating their same mistakes of longing the market when the trend was down, while the system was short.”

What’s happening this week: This week, we held our long position and continued to move up our stop loss, which is now well above our entry level, for profit protection.

Trading system status:

Copied from last week’s report: “I have continued to improve the system, and the system drawdown is continuing to go down on both the intraday and trade basis. I have calibrated the system and made the stop less tight to avoid similar situations in the future. As I mentioned in the room, I am aware that someone is trading against my trading system. In my humble opinion, the current system is in good shape overall. The win rate, win-loss ratio, stop logic, and whipsaw-proof scheme have all greatly improved. I believe it is difficult for smart money to trade against this special trend-following system, which can work in choppy and chaotic environments. Unless institutional investors are willing to settle for small profits, they will probably not trade against my proprietary trading system. The system is not based on MACD or RSI or any simple price component. It is a very complex and comprehensive system, but not based on predictive models, so it cannot be exploited by institutions. Our strategy is simple and transparent to follow, using only the market closing price, so everyone gets the same entry and exit price. The timing model continues to get crazy about next week with more follow-ups rise, but again, I do not want to reveal too much as we want to flawlessly follow the trading system. The transition from the old system to the new system is going well so far.”

What’s happening this week: I am aware that following too many sources of information can be detrimental. This includes gurus on Twitter, various counts from different people, and news such as NFP, incoming CPI, Taiwan, Trump, and so on. Unfortunately, combining too much information not only wastes energy but also reduces your probability of winning. The reason is that combining different strategies without a smart approach can cause the win rate to drop significantly. This means that you will always follow the underperformance of various strategies, even though following them separately can give you better performance. Unless you can find the optimal way to combine them, like our trading system does, you cannot improve your performance. Instead, you will reduce your performance and increase your drawdown. I have tested the new system and found that this trend-following system can perform better in high volatility environments. Our system does not use any fractal or price prediction scheme that institutional players can take advantage of. However, even if more and more people follow the system, its performance may not decrease. Our system is a choppy trend-following system that cannot be taken advantage of unless smart money settles for small profits.

System and/or market outlook:

Copied from last week’s report: “As I mentioned in the Discord room in 03/30 (trending parameters rising with the market) and 03/29 (trending parameters rising even though the market declined intraday), all the Type-B (breakout Long) signals are now ready. This means that if the current Long Type-A (oversold Long) signal also has a sell signal, we might not have a short signal or flat signal but may directly go to Type-B (breakout Long signal). For the trading system, the long signals will overwrite the short signals. The current situation is that Type-B parameters are just ready but not very mature yet. It means the bear still has the last shot to take the bull down. Most likely, we may long for a while. However, this market is insane and can change my signal all at once. Another situation is if we have a Type-A sell signal but cannot enter Type-B buy signal. This happened earlier this year when we held cash for many days and were not trapped at the local top. However, we will not know until it happens. These details are way complicated, but as an end-user, there is no need to figure them out. I am talking about this just to help you understand a little bit more so you can rest assured. To sum up, we are waiting for a potential sell signal and that might take a while to happen.”

What I anticipate for the coming week: the market had a V-shape recovery this week and ended up almost flat this week. The system has been holding a long position for 15 consecutive trading days, and the market closed at a similar level to last Friday. The trading system has had a few profitable months, and this week the system is basically flat. Over trading in this environment unless you do it quick cannot beat the system well. You can always find a count that tells you the market will drop soon. But how do you know when. You will keep get invalidation and proved wrong. Why do I need to get proved wrong and invalidation when I can win the current trade while market is still up? Therefore, we are still waiting for a potential sell signal and that might take a while to happen. The system will get us out if it happens sooner than later.

Disclaimer: Trading stocks involves high risks, and you can lose money. You are responsible for your own investment decisions.

Live Trading System: hosted by David Lee (Twitter ID: SimpleMoneyZone).

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