capstonetradingPre-Election Portfolio Setups and Choppy Market Indicator
We have witnessed so much choppiness in the market lately that we decided to measure the chop and look for opportunities.
How do you measure chop?
We use a strategy as an indicator to measure chop.
We used a strategy that sells highs and buys lows. Bollinger bands are an example. Trading Bollinger Bands in the E-mini Nasdaq this month would have made 22k.
We did not actually trade this strategy though as this is Saturday morning research. This research does gives us an idea as to the extent of how rare the current chop has been. We show you the details in the video.
There are two ways to take advantage of this Chop Indicator and how choppy the markets are as we are nine days away from the election.
Number One
It helps to realize the rare nature of this market in its choppiness and how this can be a turning point.
The cycle of choppiness is probably at an extreme and near the end of the cycle.
While several portfolios hit new equity peaks on Monday, the rest of the week, we went through some rapid drawdowns, which is typical during an extremely choppy time period. The current portfolios provide some incredible opportunities to start in a drawdown as we move into an election outcome just one week from this Tuesday. The 100K Daytrade Portfolio actually made a new equity peak yesterday in spite of the chop.
Point Number One is consistent with what we have discussed many times about starting during a drawdown.
Number Two
This next approach is much more aggressive and risky and it is not for most traders!
The details are in the video (or mini webinar).
You can actually add Chopper Gold to the All Strategy Access and it does not increase the worse case drawdown since June 2013! It actually reduces it by 1k since 2013.
Most of the time we look at the historical drawdowns since 2008 so we are shortening our look back to June 2013 when we do this. We have also mentioned that adding a strategy with a negative equity curve can improve your portfolio.
Having the opportunity to trade an increasingly choppy market while keeping your risk the same or slightly reducing your risk is desirable.
This strategy does trade very frequently and it does trade 23 hours per day. It exits on the last bar of the session and does not hold a position during a time period when the market is closed. We did not test this with the DontTradeOnHolidays function yet so further adjustment may be added which we anticipate would improve it.
This strategy is for experienced traders who understand this and the additional risk involved if you trade a strategy like this.
In the video (mini webinar) we discuss how adding Chopper Gold as well as EVP-1 NQ, VSD NQ, and 60M Breakout Short Only 1m (without the long reversal longs) can be added to the All Strategy Access while decreasing your risk profile based on the current drawdown in relation to the Max Drawdown going back to June 2013.
Adding a strategy such as Chopper Gold could also be done for a short period of time. Adding Chopper NQ would actually increase your risk profile since it is at an equity peak.
The Portfolio Calculator has been updated for download as well.
We now offer “Trade it for You” if you want to invest in this approach rather than being “hands on”