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LiveTradingSystem Free Weekly Report

Highlights (Saturday, November 18, 2023)

  1. The system account is closing at another weekly all-time high this week. (same as last week)
  2. The system is looking for a potential pullback followed by a breakout long. (same as last week)
  3. Please pay attention to the following picture for instructions if you cannot access the Discord. This is important.

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.

#trading $SPX $SPY $SH $QQQ.

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

Trading System Review:

Copied from last week’s report:

“Our new logic system with the caution rules got the long signal triggered on Monday. We took the long signal with full size long position. This week has been simple for us. We took the long and sit tight for the whole week without doing anything. We had many markets news this week. I thought we were going to lose quite a bit this week. Fortunately, all the bad news and bad data helped us to have the most profitable week this year. You may not understand how lucky I was this week. Things are not always this lucky. I just have to take all of them statistically. Lucky things happen sometimes when statistics are on our side. I keep this part short this week.”

What’s happening this week:

We have done nothing this week except for sitting tight by holding the long for 15 trading days in a row.

We got another ATH this week.

System Status and Market Outlook:

Copied from last week’s report:

“I believe the system is nearing a Type-A long exit signal next week, although it’s uncertain. There are multiple factors that could trigger this Type-A long exit, and if it is to occur, it seems we may be approximately 1-3 days away from such a signal.

Should a Type-A long exit materialize, it doesn’t preclude the system from identifying a Type-B long buy signal subsequently. The real question is whether there will be a brief short signal or a temporary move to cash during this transition. A 1-day short signal or a 1-day move to cash preceding the Type-B long signal appears feasible. Given that the timing model remains bearish, short positions are still permissible under the system’s guidelines.

As shown in the picture above, the nature of this bear market rally differs from previous ones, primarily because this time we’ve completed the weekly decline. Currently, we’re situated at the midpoint of a weekly rally. Consequently, I believe that the bulls haven’t concluded their activity in the market just yet.”

What I anticipate for the coming week:

My three key indicators are nearing the threshold that would suggest an exit from the current Type-A oversold long position. Despite this, there’s a possibility that the market could continue its upward trajectory without a significant pullback. If an exit signal for this position is triggered, it’s important to acknowledge that the signal might be premature, as a Type-B breakout long position could immediately follow the sell-off of our current Type-A long.

Currently, the timing model is set to short; however, with the closing of the short window this week, it’s probable that the system will move to a cash instead of a short position if we do get the sell signal. We will then await further signals, which could either be a new short or a Type-B breakout long. Should the Type-B breakout signal materialize, we will have to commit to a potentially longer holding period. This will require a disciplined approach to managing our emotions throughout the duration of the Type-B breakout long, which, by nature, tends to be a lengthy journey.

Wishing everyone a great weekend!

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.

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