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Backtesting Mastery

I hope you have been benefiting from these posts. 

I realize that for many traders, they've never experienced a highly volatile bear market like this. Well no one has experienced it like this, just like any other bear market, this one is different.

However there are characteristics of all bear markets that are the same. That means that there are systems to trade and generate income during these markets, just like there are ways in roaring bull markets. 

Ironically my trading has grinding nearly to a halt during this period. 

For most traders, who still have their accounts and didn't completely blow up already, the volatility is very enticing.

These massive intraday swings are something we haven't seen before, and for traders who don't understand position sizing, they see 5% even 10% intraday moves, not realizing that they could make big money with 0.5% or 1% if they had the appropriate strategy and more importantly sized positions correctly. 

Do you know how your...

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Characteristics of other Bear Volatile markets compared

backtesting market regime Feb 15, 2021

We have been heads down over here digging deep in to finding a bunch of different characteristics of some of the most violent Bear Volatile regimes in history and how they compare to what we are looking at in this current market. 

This is all generated from doing the backtesting with the tools you learn in the Systems Building/Backtesting Mastery Course

We are keeping the price of the course at 50% discount for email subscribers exclusively, so take advantage of it during this chaotic market. 

On to some results...

Let's look at 2008 month to month basis. This was the monthly chart so this represents the data of a whole month






Observations

1) Mid January and February was the beginning of the Bear Volatile regime. We saw a break lower out of a sideways volatile market.

2) The Volatility for each month is much larger than the realized change per month. This shows that there is high noise to signal ratio in a bear volatile regime. 

3) Long Downside Candle...

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58 Year Backtest of SPX

Hope you are well during this crazy time. 

The "Thunderdomer's" are continuing their very intensive work of spending hours per day manually backtesting the Bear Volatile and Bear Quiet market regimes. 

We had Grant do a monster backtest of the $SPX from 1962 to today, of only the bear regimes, either determined by SQN or by an obvious price action flip. As your skills develop as a trader, by doing these massive backtests you can rely less upon the SQN, a lagging indicator, and more on price action. This is represented in Grants manual backtest as you'll see he entered some markets while not in bear volatile or bear quiet regimes. 

I have to say, I could feel Grants frustration through this backtest. He mentioned to me numerous times how hard of a time he was having trading bear regimes on a daily basis. 

Over nearly 60 years of trading this returned 15.77%, who wants that sort of return beside people who refresh ZeroHedge all day long?

Literally you miss out on...

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Two lab members built this system

I've been sending a bunch of emails this past week for Black Friday and Cyber Monday, yes we have a 50% discount and yes I'm going to pitch it....again!

But first let me provide you some value!

I wanted to share the work that two traders in the Trading Lab and alumni of the Systems Mastery course have collaborated on. 

The reason I teach the FVBO strategy is because it is a very high win rate strategy. That's easy. But one of the other reasons I teach it is that it teaches people how to trade mean reversion strategies. 

Mean reversions are breakouts that FAIL. 

This happens about 80% of the time, so markets actually breakout only 20% of the time. But most traders are always trading breakouts, which is a big reason why so many traders fail. 

It's very difficult to be wrong 80% of the time. That's 8 failed breakouts, by the time you get to trade number 9 you are fatigued, discouraged, lost a bunch of money and it's hard to stay optimistic. 

On the other...

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