Trendfinder Trading Systems

It was a losing week for every system.

Trendfinder’s emini day trading systems did not have any trades today.

It was another choppy sideways day after the big gap down.  Most systems had short trades (Bobcat I and Lion also went long) and exited with losses or small gains during the sideways action.  Panther was the big winner going short during the mid-day pullback and holding till the close.

We had another consolidation day (in fact the 2nd inside day in a row for the S&P).  This led to a loss for each system that traded.  Bobcat I, Bobcat II, Lion, Lion II, Lion II Alt and Panther went short this morning.  Jaguar, Jaguar Alt and Lion then took trades to the long side.

Every system that traded went long and suffered a loss after the market drifted down slowly the rest of the day.

Trendfinder’s emini day trading systems did not have any trades today.

A client emailed me some questions about the changes I’ve made to some of the systems and their recent results.  I thought the email had some good questions (& answers) and might be beneficial to share them.  The email was from last Friday (2/25).  Here it is:

Bobcat and Cougar were improved last fall, and performance still suffered in Jan. What happened there?

> January was just a choppy month intraday.  I doubt many (if any) trend type daytrading systems for the stock indices did well that month.  Bobcat didn’t do too bad, especially considering how choppy the market was.

Jaguar and Leopard were improved a couple of weeks ago. Does that account for the recent good performance?

> Actually no.  The update made for Jaguar hasn’t affected any trades so far (it only comes into play in very low volatility).  One of the updates for Leopard (for very low volatility) hasn’t affected any trades so far, and the addition I made to it (increase number of trades) has had almost no effect so far – but it’s only been a couple weeks.  The recent good performance is due to increased volatility (increased movement intraday).

As I look back over the charts of your systems, 2008’s major volatility accounted for a lot of the gains. Otherwise we’ve had short bursts of profit with long flat spots. Do you think the improvements will produce a steadier uptrending chart?

> Because of 2008’s large volatility, I now test all systems with 2008 trades removed.  I do run the trades for 2008 during a final check just to make sure it does okay.  I’ve been thinking about doing a blog post showing performance results with 2008 trades removed.  Although profits are typically cut in half, the equity curve is actually smoother.  And yes, I do think the improvements will produce a steadier uptrending equity curve (that’s certainly the goal at least!).

Anything else you can comment on?

> The main thing that negatively impacts the trading results for these systems is a quiet market.  That is what happened in 2009 and in January this year.  In 2009 I made an improvement to the systems I had then (and when I created Lion II) and used what I learned in developing the newer systems.  After the poor results the first half of January, I analyzed again those quiet periods and made adjustments to help protect us when we have quiet markets again.  Of course, only the future will tell if my adjustments made an improvement or not.

It is possible the markets could get quiet again….if they do then my systems will probably flat-line and/or enter a prolonged drawdown.  That is just the nature of the game – you never know when a good trend day like today [2/25] will come along, so you just have to trade them all and ride out the choppy times (which is a majority of the time unfortunately!).  For example, 2011 got off to a very bad start, yet Lion II and Tiger are making new all-time equity highs already (and Bobcat II is very close).

Hope all that info helps!

gary

Only two systems managed a gain this week due to the bad whipsaw day on Wednesday.

Trendfinder’s emini day trading systems did not have any trades today.

Almost every system went long today.  The market went pretty much sideways after the first few hours so gains and losses were small.