Yesterday, December 9, 2020, Gap Continuation 2020 made a brand new equity peak capturing over 250 points (or over $5k in profits) shorting the E-mini Nasdaq.
Gap Continuation 2020 was developed during the pandemic back in March and is an update that we implemented in the 25K-50K Portfolio on March 1, 2020.
We updated it from Gap Continuation 2019. There was only one additional rule added in Gap Continuation 2020. The additional rule, required the average range of the bars should be below a certain threshold in order to trigger a trade signal. If we want to use a tight stop loss of 15 points or $300, we can't trade it when there is massive volatility.
Yesterday, we had a very smooth sell off - which we haven't seen in awhile. Both Gap Continuation 2019 and 2020 took the same trade and did well.
Gap Continuation 2020 is one of our favorite strategies and was placed in the 25K-50K Portfolio on March 1, 2020. Through October 15, 2020, the Gap Continuation 2019 did out perform Gap Continuation 2020. Since October 15, 2020, Gap Continuation 2020 has out performed Gap Continuation 2019.
Going into 2021, Gap Continuation 2020 is still the best approach.
Additionally we discuss how a larger stop loss of $700 improves the average trade profit for both setups as well as the overall return. The Gap Continuation 2019 has a lower drawdown with a larger stop loss of $700 instead of $300.