LiveTradingSystem Free Weekly Report
Highlights (Sunday, September 3, 2023)
- August brought about a monthly all-time high for my trading account.
- This week, our trading system achieved another weekly all-time high.
Live Trade – Investing Angles has opened a discord room.
Hosted by David Lee (Twitter ID: SimpleMoneyZone).
See a brief explanation of the strategy and results.
Live Trading System: hosted by David Lee (Twitter ID: SimpleMoneyZone).
Highlights of the Live Trading System:
Trading Signals in the Discord room
Live Trade – Investing Angles by David Lee.
My trading account without leverage
All-time highs every month and every week with minimal drawdown.
- August brought about a monthly all-time high for my trading account.
- This week, our trading system achieved another weekly all-time high.
- I will discuss the trading system status and September market outlook.
Trading System Review:
Copied from last week’s report:
“This week, we initiated a long position on August 22, 2023 (Tuesday). The market experienced a significant rally on August 23, 2023 (Wednesday), both during regular trading hours and in the aftermarket, driven by $NVDA’s earnings catalyst. Subsequently, on August 24, 2023 (Thursday), the market underwent a sharp selloff due to profit-taking and concerns over Powell’s speech at Jackson Hole. Further volatility ensued on August 25, 2023 (Friday), with an intraday selloff followed by a recovery by market closing. Surprisingly, despite these ups and downs, we still hold a paper gain of 18 SPX points. It’s uncertain how the market will behave next week, with potential battles between bulls and bears. Our strategy remains consistent: follow the system, relying on the math method rather than emotions, once a trade is initiated.”
What’s happening this week:
We initiated a full long position via $SPY on August 22, 2023 (last Tuesday). This long position has been maintained from August 22, 2023, until September 1st, 2023 (Friday). Our commitment to this long position endured through various bouts of volatility, navigating challenges like bearish engulfing patterns and an overall market bearish sentiment. As of now, following the system precisely has brought us a remarkable gain of 128 SPX points above our entry point.
It’s important to note that all trade adjustments are executed exclusively at market closing prices or shortly thereafter, particularly if signals require confirmation until the market’s close. This practice ensures equal entry and exit points for all involved. I refrain from adopting any biased bullish or bearish outlook. Instead, I focus on discussing impending trading signals my system is indicating and how we can best prepare for them in the near future. Speaking of our recent performance, August marked a monthly all-time high for my trading account, and this week, our trading system attained another weekly all-time high.
I’d like to stress that adhering to a trading system is no simple task. There are instances where I hold a position steadfastly for numerous trading days, weeks, or even months, seemingly without taking action, except for moving up the stop loss constantly. This journey can feel isolating and demanding, but as your list of successful trades expands, so will your confidence. It’s a gradual process that takes time. Once you embrace the approach and see its benefits, you’ll find yourself sticking to the rules without seeking alternatives.
System Status and Market Outlook:
Copied from last week’s report:
“Looking ahead to the coming week, we entered a long position this Tuesday, in line with our anticipation from the previous weekly report. Our focus now shifts to the direction in which the market is headed. According to the trading system, the potential for a sell signal next week seems more likely and attainable compared to this week. This implies that for the bullish momentum to be sustained, progress needs to be made sooner rather than later, in order to avert the possibility of a sell signal.
Predicting the exact timing of this signal remains complex at this point. If the bullish movement gains traction next week, it could push us further away from a sell signal within the current zone. On the other hand, if progress is limited, we might find ourselves in proximity to a sell signal. Furthermore, an overly aggressive bullish surge without additional supporting indicators could also trigger a sell signal. It’s a complex scenario to navigate.
In the context of trading, the intricacies make it challenging. Every trade is characterized by uncertainty, but the combined probability density function of all trades is certain. This concept might be hard to grasp, but it holds true. It underscores the importance of not becoming overly concerned about individual trades and being willing to accept losses as part of the process. Each losing trade brings us closer to finding the successful trade.”
What I anticipate for the coming week:
We were looking for sell signal this week. I mentioned that a sell signal this week is relative easier to be triggered than the last week. The good news is that the bullish direction followed through finally with our trading signal being long.
Right now, it is even easier to trigger a sell signal next week than this week. Let me be clear. If the bull can survive again next week and push a little bit more, then the situation can be more complex. This can cause us to have an even easier sell signal but at the same time we can experience a Type-B (breakout) long signal. That’s why trading is hard because bullish trend and bearish trend with optimal risk reward are happening at those detailed and delicate changes. To sum up, we are looking for an easier and easier sell signal then if this won’t happen or if it happens too late then the larger trend will become even more bullish. If we do finally get the Type-B long, it can also be short-lived and that may be final top for us to keep back in cash again. I hope this is clear with you.
No trade is easy. The hard trade is sometimes an easy trade. If you cannot do it well and if you are a paid subscriber, then you feel free to contact with me for a zoom meeting to discuss how to resolve it and understand more about the trading system by looking at the system details together.
The Psychology of Our Live Trading:
This week, our focus was on identifying a potential sell signal. I previously mentioned that triggering a sell signal this week would be relatively easier compared to the previous week. The positive news is that the bullish momentum carried forward, aligning with our Type-A (oversold) long trading signal. So, after all, we are still holding our long position without triggering any sell signal.
At present, it appears even more feasible to initiate a sell signal next week compared to the current week. Let me clarify this point further. If the bullish trend persists in the upcoming week and gains more traction, the situation could become more intricate. This scenario might lead to an even more straightforward sell signal. Concurrently, we might also encounter a Type-B (breakout) long signal. The intricacy of trading emerges from these nuanced shifts between bullish and bearish trends, each offering optimal risk-reward ratios.
To sum up, our focus remains on identifying increasingly feasible sell signals. However, if such a signal fails to materialize or occurs later than anticipated, the overarching trend could turn even more bullish. If we eventually trigger the Type-B long signal, it could be short-lived, potentially marking the final peak before transitioning back to cash. I hope this clarifies the situation for you.
It’s important to emphasize that no trade is inherently easy. At times, a seemingly tough trade can turn out to be straightforward. If you are a paid subscriber and find challenges in executing these trades effectively, please feel free to contact me for a Zoom meeting. We can discuss strategies to overcome these challenges and delve deeper into understanding the trading system by examining its intricacies together.
Trading System Backtesting Statistics
- I just reviewed the backtesting statistics of the system and found that it holds cash for about 25% of the time, with 60% of the time allocated to long positions and 15% of the time allocated to short positions. This is a low-frequency swing trading system that averages about 2 trades per month. Over the past decade, the system has generated a simple interest return of approximately 400%, with the potential for even higher compound interest returns.
- The win/loss ratio for long positions is around 4:1, while for short positions, it’s around 2:1. This suggests that the system may hold cash for roughly one week per month. As such, patience and confidence in the system are key to long-term success. The overall win rate for the system is around 80%, with a 75% win rate for long positions and an 85% win rate for short positions. It’s worth noting that the maximum drawdown for the long position is around 5%, while for short positions, it’s 7.5%. Therefore, to avoid significant drawdowns and potential damage to your trading psychology, it may be beneficial going long using 100% $SPY and going short using 50% $SH.
- Regarding holding periods, the long position for Type-A (oversold) lasts around 8 trading days, while Type-B (breakout) long positions last around 16 trading days. Short positions typically last around 5 trading days. Therefore, patience and discipline are critical in achieving long-term returns. However, it’s important to note that these time periods do not take into account stop-out cases.
- Overall, the system has been performing well in recent months, but it’s important to continue monitoring its performance in real-time.
How to follow the Trading System:
- It is very user friendly and time friendly to follow our Trading System.
- Live Trading Signals are sent as soon as they are confirmed.
- Trade changes occur only at market closing price or shortly after, if the signals cannot be confirmed until market closing price.
- This ensures that everyone has the same entry and exit price.
- I am using MOC order myself (TOS or Fidelty has it)
- I also have extended hours trading available.
- Stops are set in advance. Intra-day stop out alerts may not be sent.
- Stops are updated every night if necessary.
Trading Strategies:
I have been reading Sun Tzu’s “The Art of War” and would like to emphasize its three core ideas: 1) use strength to defeat weakness, which means taking easy trades over difficult ones, 2) be patient and wait for the right moment to strike, and 3) calculate potential losses and avoid failure.
The job of the system is to find the easiest way to make money once the market shows its hand. My job is to take all the trades as long as the system gives a signal. Your job is to acknowledge that we only have an 70%-80% win rate and 2~3:1 win/loss ratio based on backtesting only and be responsible for your own trade once the signal is triggered by the system. We won’t have a 100% win rate forever, that’s for sure. But I have the courage to take all the trades 100% as they come, and I will be responsible for my own trades 100% as they come, whether they result in a win or not.
Please retweet my pinned tweet at the top of my profile. Thank you for your support!
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).
Fresh signals coming soon! Don’t miss out. #trading $SPX $SPY $SH $QQQ.
