LiveTradingSystem Free Weekly Report
Highlights (Sunday, September 9, 2023)
- August brought about a monthly all-time high for my trading account.
- We locked our +2.56% profit just after the Labor Day weekend.
- We are holding cash and waiting for the next move. Join now to sync.
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).
Trading System Review:
Copied from last week’s report:
“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.”
What’s happening this week:
We closed our long position on September 5, 2023 (Tuesday), which was initiated on August 22, 2023, with a +2.56% profit. Following that, we have been holding cash for the rest of the week because the timing model blocked the short trade. I have been working on extending the short signals to the timing model blocked situations. Although a +2.56% trade profit may seem small, over time, it will steadily increase my long-term trading account with minimal drawdown, unlike many who are seeking higher-risk short-term gains.
System Status and Market Outlook:
Copied from last week’s report:
“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.”
What I anticipate for the coming week:
Last week, I mentioned that we were anticipating a much easier sell signal this week. We did indeed get the sell signal on September 5, 2023 (Tuesday). Currently, I am awaiting a Type-A long signal to set up for the coming week. However, as of now, the market has not even entered the Type-A oversold zone. It seems like the market is seeking a bounce followed by another leg down. I am actively working on short signals that will function regardless of the timing model. Therefore, we may have a short trade setup next week, potentially followed by a Type-A long trade. Conversely, if the market demonstrates significant advances and improvements, we may also see a Type-B long signal triggered in the near future.
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.
