Systems Trading - Learn To Build

market regime strategy systems trading vbo Feb 15, 2021

One of my core concepts about trading is stacking edges. If you don't know what an edge is in trading then we REALLY need to talk! 

An edge is a quantifiable/statistical advantage with a certain asset class, a trading strategy or you yourself, as in you can focus incredibly well for example. 

When you can stack multiple and complimentary edges together, you can come up with some really powerful trading systems. 

One of the most important tools in my tool kit, is categorizing the market regime. If you've read any of my emails lately then you are well aware of what I'm referring to. 

Categorizing the market regime gives you valuable information about how the market is trading and you can then apply the appropriate trading strategy to the market instead of trying to use what worked 2 times last week (out of 10) or for the past few years. 

This market is completely different than that market, and it warrants a completely different strategy. 

The Vol Breakout (VBO) strategy is absolutely killing it these days, on the short side, obviously, across all time frames. 

The interesting thing about VBO is that it works best in Bear Volatile and it's second best in Bull Volatile. 

Depending on time frame the VBO is a >70% win rate in Bear Volatile and what's even more useful is that the runners go a long way.

You can get 20R+ trades, multiple times in a trading day on a 3 minute chart, or you could've taken the VBO short on ES March 9th at 2715 and be sitting comfortably vs freaking out.

Or maybe you prefer a 4 hour chart to trade from, in which case the set up of the year was back in February around 3400 level, or 3-4 places since


To be clear I'm not running victory laps here, but if you haver been trading this market and not getting monster runs like that, the VBO strategy should be in your tool box. 

Knowing the VBO strategy is one thing, but having that deep knowledge of the ins and outs of the strategy is big. But having 1,000's of backtested trades in a Bear Volatile regime burned into your brain is what gives you the confidence to take a trade like that on. 

Having the ability to see the setup in front of you knowing that the ES is already down 5% and still being able to short it is what backtesting strategies and building your own systems is all about.

It's time to level up your trading skills.

This market is unforgiving right now. Don't be trading it without knowing exactly what your edges are and what sort of outcome to expect from your trades.

I know a lot of you might be taking some heat in your trading right now so I want you to take a look at this and think hard about what the best use of your time would be right now, trading without an edge or doing the work to make yourself a top tier trader. This is the best way I know how Backtesting Mastery course 



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