First July Trade

The following information is for educational and entertainment purposes only. Rio Verde Trading and the author make no claim that anyone can or will achieve similar results in their trading.

21 July: Monday’s trade set up in IWM was confirmed on Tuesday. Bought to open 30 IWM at 124.55.

22 July: Exit signal generated on Wednesday; sold to close 30 IWM at 124.75. Net profit $2.00.

Another not so exciting trade. No trading system is perfect, including this one. Every system has it’s good years and poor years. Most trades for this system are a small profit or small loss, with an occasional big winning trade, which really makes the system worthwhile;  and less frequently a large losing trade.

The secret is be consistent, take every trade generated by the system, the big winning trade will come eventually. In the mean time most of my capital is invested in gold and silver mining stocks, some of which are producing nice dividends.

Going over my trades for this year I see that I am averaging 1.5 trades per month. February and April of this year did not produce any trades at all. It is an inherent characteristic of this system that it does better in bear markets than bull markets. Trade signals are generated by down closes, bear markets have more down closes than bull markets, therefore bear markets generate more trades and bull markets generate fewer trades. In the last six or so years we have had no significant market correction, bull market therefore fewer trades. Although this bull market is getting pretty long in the tooth, see here.

The point is be consistent, be patient, wait for the trades to come to you. Back testing has shown this system works. In looking at my back testing records as well as the history of my actual trades, slow years like this are not uncommon, they are not much fun either!

Here is an excerpt from my Blog of December 20, 2014, Interesting Statistics, Trading the SPY; which illustrates bear market performance in the SPY as compared to my trading system.

“In 2007 SPY had a  loss of -6.38, while the trading system had a gain of 19.26.

In 2008 SPY had a loss for the year of -54.54, while the trading system had a profit of 36.84.”

Note: the above quote and statistic is based on back testing, not actual trades.