Futures Micro and Mini Portfolios Weekly Update
***Before I recap this week’s performance, you need to read what I have written about “forecasting” and when you are finished- please read it again.
One of the biggest mistakes investors and traders make is to hold to the premise that you must be able to forecast to make money in the markets. That is why “forecasting” services and predictions are so popular. How many times have you analyzed or forecasted a market?
People attempting to tell you (for a price- like a fortune teller) what the best stocks are to hold for the future, what interest rates will do a year from now, or if gold will be higher or lower in a week. Gurus galore and they tell you with great hubris how they have a special connection to the future. The reality is, no one can predict or forecast markets with any consistency over long periods of time.
Fortune tellers make predictions as do most investors. What they don’t get is that no one can predict or know the future. Trend following is about reacting to the now situation and thus we never attempt to pick tops and bottoms or attempt to decide if a price is too high or too low. We want to mirror what the market is doing 100% of the time.
If you think you are smarter than the market (price is too low or too high) then you are setting yourself up for failure. You don’t know that price is too low to sell or too high to buy because that very knowledge is impossible. Only the market knows, is always right-and that does not include you. If your ego is so big that you need to be “right” as opposed to making money, then by all means “forecast.”
In back-testing and eight years of real-time trading, my algorithm has been on the right side of every intermediate and major term market move in history. It can do that because it automatically adjusts and changes course (if need be) to mirror the market and it cannot miss a market move because of its very construction.
There is no market too low to sell or a market too high to buy. If the market tells us to buy- we buy and if it tells us to sell, we are willing to sell it right down to zero.
The market predicts itself-not us or some phony analysis. Get your ego out of it and be humble toward the market. The market totally respects humility and severely punishes “know-it alls.”
As you might imagine, trend following is not very popular despite its highly profitable track record. That is because if trend following was widely accepted, there would be no need for about 97% of the people employed in the financial industry. There would be no need for fundamental analysis, no technical analysis and no need for any financial media other than to report on investment results. Trend followers receive almost no media coverage. Now, why would that be?
Another incredible week as five of the seven Model Portfolios closed at all-time historic weekly high equity marks. Those of you that are disciplined and following the models 100% of the time, have made a large amount of money- both since the end of the drawdown and on an absolute basis.
We have nine open Mega-Trades the kind of trades that few traders can achieve but we do all the time. Very few traders (even most trend traders) can achieve the gains we do on a regular basis. I have stated that getting into a trade is simple but managing that trade after entry is what determines the strength of the trading method being used
Of the 29 markets in the portfolio, we have 25 winners and 4 losers. The average profit for the winners is $3,377.00 and the average loser is $328.13. Couple that with a winning open trade percentage of 86.2%, and we get a profit factor of 64.32. This means that for every $1,000 we have at risk, the expected ROI is $64,320!
This kind of performance is unheard of in futures trading or any trading for that matter. Need I say more about the many benefits of not forecasting the market and simply following it?
**Trades can be entered during the electronic night session or in the morning. However, in volatile stock index and currency markets, you should enter a trade as soon as possible
-meaning the beginning of the electronic night session as it will tend to be a more profitable entry point. Trades shown in the Model Portfolio spreadsheet are the fills I get for my own trades. Your trade entries can be better or worse.