Futures Micro and Mini Portfolios Weekly Update
We stated last week that it was time to “press” or add to positions in your specific Model Portfolio if the equity line was below the regression trend line and you were sufficiently capitalized. In most cases, you were generously rewarded this week. Look at these top of the heap returns over last week:
17k +$3,363.37 (huge percentage increase)
The others had small gains or losses. The point is, we want to take advantage of drawdowns because they do not last.
Some of you newer subscribers are not used to trend following. 98% of the futures industry has a financial self-interest in you trading short term. They make a lot more money in commissions that way and have for years. In addition, short term trading produces top and bottom pickers which is a no-win strategy regardless of what you want to believe.
There are three phases of trend following and in this example, I am assuming we have been in a strong uptrend (higher highs and higher lows) for some time.
1. The first phase of a potential trend change is that we stop going up and we start to move sideways also known as consolidation.
2. The second phase is that the market breaks to the downside out of this consolidation.
3. The third phase is that the breakout to the downside continues and price has declined ten to fifteen percent from the downside breakout.
The third phase is when our algorithm reverses from long to short and we get aboard for the ride. We rely on direction and duration and our objective is to hit a home run on every trade we enter. We are taking the big chunk out of the middle and leaving tops and bottoms to others.
*Notice that nowhere above did I mention picking tops or bottoms as part of our strategy. If you are addicted to picking tops and bottoms (the vast majority of traders are) you are going to lose a lot of money trading futures or anything for that matter since all markets are the same.
We make big money by being long term position trend traders- nothing more-nothing less. You need to be 100% disciplined to replicate the Model Portfolios and the more you deviate from full discipline, the worse your performance.
***New Trade Alert***
Trades can be entered during the electronic night session or in the morning. There is some flexibility in terms of when you enter a new trade and this is because our profits are not marginal. Trade prices shown on the Model Portfolio spreadsheet are what I get for my own trades. Yours can be better or worse.
Don’t be shortsighted and look at one day or one week, this is about the long run, our returns are the best in the industry, history tells us if we follow the model and the rules we make lots of money.