Let’s get this edition of the Weekly Round-Up under way. The Glastonbury Tor is sitting just above us, so all is well.
The theoretical portfolio that started at $100,000, now sits at: $142,625.10.
From January 1st, 2020 to time of writing is a return of a little over 42%.
This is a nice return considering we are only using 5 instruments and a very basic trading method. It demonstrates what can be done with a process being the most important feature in our trading. We took a probing approach to each trade – limiting our risk. We entered every trade for which we received a signal per our process. Everything documented – for you doubting Thomas’s.
It is important that you understand that to be a consistent trader you must be in the objective world of trades. If the process produces a trade that you decide, “no, wait, I don’t think so, I read something about gold…doing whatever” you have just re-entered the subjective realm of the trading world where all is dark and mysterious. On that path you will meet doom ( I must stop watching Lord of the Rings).
We are happy with our return, even if that is it for the year. We know that the market doesn’t move in nice tidy averages; it is explosive. The main thing is we will not press matters: we will let the market come to us, “here, kitty, kitty…”. Patience is a virtue. Wait for the conditions of your process to be met in totality. Don’t jump because you are impatient and it “looks like”. We don’t do anything based on “looks like” or “feels like”, we jump according to our rules.
I will demonstrate ours as we go.
S&P 500: SSO = UP, SDS = DOWN
Here is what we are looking for: we check the trend by the position of the blue EMA (21) versus the green EMA(55). In the case of the SSO, the blue is above the green indicating by this definition of trend that it is up. We now will only enter a long trade (we want to go with the trend). We don’t go short in this exercise for a number of reasons. If the the makings of a short trade are appearing, we would look to the inverse, SDS.
We now take a look at our trigger: the price and or the red EMA (8) crossing above the blue.
If that happens and a trade is commenced, it is reported here in detail. A trade being opened or closed are the only other posts that appear here during the week. Well, if something momentous occurs to me, I have been known to post it up.
Back to the subject at hand, we are sitting on ours for now.
Gold: UGL = UP, GLL = DOWN
UGL is our ETF proxy for gold rising. We did have a trade until early August. I have left the markings on the chart. If we look to the right, you can seen that the blue and the green EMAs are having a little chat. We shall have to wait and see what they get up to next.
Oil: UCO = UP, SCO = DOWN
Oil has been a slippery crittur for a while now. We did extremely well shorting it by way of SCO.
I should mention that I tend to look at both sides each day, unless one is in a pronounced trend. In that case the other side is going the other way – not ours, not really necessary to look at it.
You can see that the latest price candle has taken a bit of a jump. We need our moving averages to do their work before we do ours.
20 Year Treasuries: UBT = UP, TBT = DOWN
I am sure the thought of looking at treasuries has your hearts beating like the proverbial drum.
Treasuries and our next chart of the Dollar Index are with us to round out the line up. It is important to trade instruments that are affected by all market and economic stimuli (or as broad a sweep as possible).
In this way we usually have something making a splash. All the cylinders in an engine are not up at the same time and the same is true of different slices of the market.
As I have mentioned before, you could quite easily trade these symbols indefinitely and not miss a beat.
Alright, alright, to the chart…
As with other charts we need our moving averages to lead the way. They have decided to bunch together. It will be interesting to see which side the red (8) emerges. It is quite often the leader of the pack being the “fastest” i.e. the shortest.
Another sit on our hands chart.
Dollar Index: UUP = UP, UDN = DOWN
The Dollar index is actually a battle between the U.S. Dollar and a basket of weighted global currencies.
If the price of the Index rises it means that the U.S. dollar is gaining strength and if the price is declining it means the opposite. The UDN rises as the price of the Dollar Index declines. Translation: the U.S. Dollar as been declining against the basket for a while. It began to push back late August. If we looked at the inverse of UDN, which is UUP, we would see the exact opposite.
As you can see from the markings on the chart we had an open position for sometime in this symbol. We have seen a push back where we were stopped out.
The question now is was that a correction of an uptrend or the start of a downtrend?
By other definitions we are seeing the start of a downtrend. For this exercise, however, we will wait for the EMA definition to confirm.
I cover this definition in my book and video package – what a segue, I know!
Find details here: https;//ABEGINNERSGUIDETOTRADINGANDINVESTING.gr8.com/order_form.html
I think that is it for this week. if anything occurs, it will be reported here.
If you have any questions, please drop me a line: firstname.lastname@example.org.
It can be anything from your investing world.