Out of Bounds!

Set your boundaries and stick to them.

Overnight SPX futures have crossed the trend, which hasn’t been highlighted here.

Why?

I use closing prices.

With the constant stream of data and news to contend with, to be profitable, we need to set boundaries.

I think it is pretty obvious now that “news” plays no part at all in my process. “Fundamentals”? Well, I wouldn’t know a financial statement of an SP500 company even if you smacked me around the face with it!

So, what are my boundaries?

First, I only use data I can backtest myself. If I have no idea how to read an income statement, you can be sure I cannot dissect and backtest fundamental data.

Second, I use closing prices. There are so many pitfalls we can succumb to without trying to tie ourselves in knots reacting to intraday prices. I chose to step aside from that and plan trades based on the last closing price.

It is very liberating.

Now, things may have changed…

If we look above at the last two times we got a maximal down strength value, it was very short-lived.

Good job my portfolio is full of green stuff, so I don’t have to wrestle with everything above.

We have a slug of cash, and we have stop levels for every position. If a final flush comes, we can ride it out. If this is the start of a major drawdown, we can ride it out.

If, just a small little if, this is the last gasp of selling, well then we have cash to buy some cheap stuff everyone just sold 2-3 weeks too late ;)

Closed equity = 20.1%

Open equity = 26.3%

Stop loss Drawdown = 20.8%

I am a random dude on the internet none of this is trading advice this is me sharing my portfolio and trying to share how I think about things. Do your own research and where possible share it with the group.

Every day is a school day.