The 200K Portfolio was down -$5,957.50 and the the 50K Portfolio was down -$1,800. We are down -$16,525 on the week in the 200K Portfolio. Five weeks ago the strategies lost -$20,885, during a five day losing streak. The following week, we were up five days in a row for a gain of $51K in the alternating Stock Index Portfolio 18 MIT/BLITZ 10 setup. Past performance is not indicative of future results, but I like the setup.
After hitting equity peaks on Wednesday, we are sitting right at a worse case drawdown on the hypothetical setup (but not in a worse case drawdown in live trading) and waiting for a bounce. You have to consider what you would do if you stopped trading after Wednesday's trade. You would have jumped in today or on Monday. This setup in an ideal drawdown alert especially with the recent gains and adjustemtns in live trading.
The drawdown alert is based on the cycles in the portfolio as well as the VIX Divergence and market sentiment setup. We dig into the data and see how this cycle works and how common it is. Fast drawdowns are more challenging because we project the same pace forward in our minds. Mangaging risk while going through drawdowns and patiently waiting for a winning streak is key in trading. Nice gains to equity peaks can be emotionally satisfying but seem to make drawdowns more painful than when we aren't at an equity peak. We tend to emotionally lock in gains on a daily basis.
The market has been incredibly choppy in a consolidation pattern. We had a major VIX Divergence again today as the VIX drops down to the 18 handle. Big rallies have been some of our most profitable days. The VIX Divergence setup and the extremely bearish sentiment give us a scenario for the market to continue Wednesday's rally next week after two day's of consolidation.
I have many ideas to test and a setup to test that will require some intensive Money Management Algorithms setups that include intra-day stop losses on the portfolio level (which is very hard to backtest for multiple strategy trading). The ideas and insights that I have during drawdowns are always helpful for future trading.
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