We started a new 250K Portfolio as well as a new Stock Index Portfolio 27 today. The live trading system results for the 250K Portfolio, 67 strategies were -$4,625 versus -9k for the hypotheticals. We hit a -10.24% drawdown level and are pausing the portfolio in favor of a single strategy approach for the remainder of February.
We have had steeper drawdowns but we want to incrementally manage risk here.
March through May is one of the best times to use trading systems historically in both our live trading and if we look at it historically across many different portfolios and trading systems.
The Stock Index Portfolio 27 E-mini was down -$4,215 while the Stock Index Portfolio Micro was down -$422, taking the same trades in a new portfolio setup that we outlined and sent out to subscribers yesterday. I recommend pausing here and using the single strategy approach outlined in the video and described below and in anticipation of a strong seasonal time period for trading systems in March through May.
We want to give ourselves a chance to bounce back here and essentially tread water while we work to sync up with the markets and prepare for March. If we minimize our drawdowns, once we are in sync with the markets, we can recover more quickly.
We reduced risk by trading 1/2 the size today. A full unit in the new 250K Portfolio was down about -9k today. It was a good decision to trade smaller. Since we traded half the size, we lost less. We hit our portfolio threshold though and will reduce our trading to single strategies, risking 1/2% or $1,250 per day. We may not trade every day. Tomorrow is NVDA earnings after the bell so the opportunities in the indexes may be limited.
We are focused mainly on long only stock index strategies such as Viper, and entering trades using a better entry algorithm, after a pullback and oversold momentum. I see this approach work really well lately while at the same time, it isn't an approach that works historically. Viper also has a 30 point profit target so it can take advantage of short term moves instead of sitting through 10 trend changes per day. We detail this approach in the video.
One of the reasons our strategies are challenged is that often times when a strategy that hasn't worked historically, happens to be working really well right now and in the recent market, it can become a new market pattern that challenges your existing strategies. The pattern that hasn't worked historically is; waiting for a significant pullback beyond the entry price on each trade entry. This approach usually misses the winners. I have always looked for ways to enter on a pullback with a better entry. Backtesting this approach historically doesn't show positive results until recently. The last 6 months the market works against all of our trade entries. Waiting for a significant pullback is the ideal approach and one I would naturally prefer.
Robot is another example of this approach. Robot has a tight stop of $400. It is more positive to enter at the stop loss level and then risk the same amount in the recent market environment.
Additionally, we may have to consider each 30-60 minute period of time as a different trading period instead of each day as a trading period. We may have to hit the "reset" button on what we consider the mode of the market for the day and consider constant trend changes intra-day that only last 30-60 minutes and trade for 20-30 point profit targets.
While this drawdown and losing streak are discouraging, quickly locking into new market patterns before the crowd, can give us a trading advantage.
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