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Traveling Through The Market Regimes Of The Global Financial Crisis with Grant

basics market regime sqn Feb 15, 2021

Grant wrote this as he is currently doing substantial research on categorizing the characteristics of all market regimes historically. We got to talking about the 2008 Global Financial Crisis, as it's the closest parallel that we have to how much it shook everything and everyone.   

We are putting together an extensive research report on that, but I asked him to put together a step by step summary of how the S&P 500 traveled from Bull Quiet, to Bear Volatile and back again. This is just a brief taste of the report we are producing.   

Details about the report are forthcoming.  

Take it away Grant....  

Grant here to provide insights on one of the most elusive market regimes... the dreaded bear volatile market. We will be going through some of the most famous bear markets in history and sharing our insights and research. (Can bring up that we will be producing a report for purchase) The first of our bear market study will be the Great Financial...

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Why Become A Prop Trader

basics prop trading Feb 15, 2021

First of all, I got great feedback on Grants email yesterday, so guess what Grant, you'll be writing some more stuff soon! He is however deep on building our database of Bear Volatile markets historically. 

Ok on to prop trading. 

First let me point you to a very extensive live stream I did on the subject about a month ago. I went DEEP. If you really want to dig in to why become a prop trader and have the time, check it out. https://www.youtube.com/watch?v=pKLF9WwBpTI

The first question I always get from people is, why would I prop trade, I can just trade my own account. This is what I'm going to focus on today. 

There are a couple of types of prop firms out there, ones that hire you for your background such as computer science, mathematics, physics, basically some very hard science/math skills that you can do very complex and innovative modeling that produce results. If you fall in to that category then it's just a negotiation with the firm of what your...

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Market Regime Characteristics

Earlier this week I wrote about trading the different Market Regimes based off of the SQN Indicator. To be clear, there are a number of ways to go about categorizing Market Regimes, and the SQN is just one of them. 

Being able to categorize a market by regime is extremely useful, but without knowing the characteristics of the regimes (and how to exploit them for profit) is where the real power is.

Let's look at a couple of different ways to categorize market regimes. 

Macro Economics - this is probably the most quoted and talked about in business news, think interest rates, unemployment, growing GDP, PMI's, etc.. You will find no shortage of market categorization and predictions from this regime. 

Low Volatility/High Volatility/Trending/Mean Reversion - One of my favorite and most useful ways to categorize a market regime. This can be done using indicators like SQN and ATR (which I've written about before). These are derived from the actual price...

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Fbo and VBO 2.0 for students

basics education fbo vbo Feb 15, 2021

I've been talking about the new VBO2.0 Strategy a bit lately, and I wanted to get it out to those of you who have purchased the Consistently Profitable Trader Course or the Systems Mastery Course!

I've only given this out to you all and the members of the Trading Lab

I hope you enjoy it

For Consistently Profitable Trader Students, click here for the link to yours

For Systems Mastery Students, click here for the link to yours

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Todays Lab Livestream

basics education video Feb 15, 2021

Today we went deep on what it takes to successfully make 2R per month. It's really not that hard to do, but most traders can't consistently make just 2R per month. 

Making 2R per month is not the end game, but it is the beginning. Because once you unlock the keys to consistently earning 2R per month you can make 3R, 4R even 5R a month. 

That might not sound like a lot because you always hear stories about people making millions of dollars a day trading. But the real game is being consistent and showing up everyday. 

Here's some math on what 2R per month can actually provide. 

On a $10,000 account, 2R per month at 2% risk makes you $6k in profits in twelve months. I believe this is why most traders don't stick to a solid and simple system, $6k of profit doesn't sound like a lot, 60% profits makes it sound a little better, but most traders will abandon this 2R plan a month or two in. 

Let's look at what 2R a month compounded over 10 years earns.

In 10 years 2R...

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Matching Time In Regimes To Assets

basics market regime Feb 15, 2021

Today is like any other day for me. Wake up, read for a few hours, hang with my son, go for a walk listening to an audiobook or podcast, fire up the monitors, launch zoom and get to work in the trading lab. 

I've been working on slicing and dicing a bunch of data and as usual when I go into these data slicing modes, I generate a bunch of new interesting insights. Or rather rabbit holes. sometimes, the rabbit holes are fruitful, sometimes I just get to sharpen my data skills. Either way it's a win!

This week I wanted to work with Market Regimes, as I do. No surprise there. 

Here are some of the insights I gathered in my work so far. 

Instead of the typical "A bear market is a 20% decline from the highs" or any other random statement about the markets, I use a tool called the SQN (Systems Quality Number) to help me organize market regimes. 

The SQN measures the past 100 trading days close to close, square roots that, then averages it, then divides by the Standard...

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