Two part daily post today. The first topic is how to merge two portfolios of different contract sizes for FOMC and the Daily Report.
This is a more advanced topic and we provide video in the training on how to fractionally merge two portfolios, why we do it this way, how we have the opportunity for a 3:1 reward to risk setup. This reduces risk while keeping our current place in the drawdown and improves our total return over drawdown.
How would we merge this out of sample portfolio with the Two or Three System Portfolio? We discuss it in the video.
The Stock Index Portfolio 18 was released on May 27, 2025. It realized a worse case drawdown in January 2026 but has recovered to equity peaks, making new equity peaks in February, March, and April of 2026 and is up on the month. We are coming up on the one year out of sample and this portfolio is leading other stock index portfolios this month. After this portfolio was released in May 2025 it made new equity peaks in June 2025 and then took 5 1/2 months to make another equity peak. After enduring longer than normal drawdowns and a new max drawdown it is responding well in 2026.
The final setup is 9 units of the Three System Portfolio and 3 units of the Stock Index Portfolio 18.
Trading System Report for 04-28-2026
Today was an outlier to the downside, with portfolio losses falling near the range of the largest losing days we have seen across the history of our trading system portfolios.
Historically, we have observed that some of the strongest days can follow some of the weakest days, and vice versa. Sloppy, difficult price action can sometimes precede a market environment with much better tone. The challenge is that the distinction between “tone” and “slop” cannot be measured perfectly in real time. A stronger tone can enter the market at any point, just as sloppy price action can re-emerge without warning.
This is an important point because profitability is not always determined simply by whether a strategy is trend-following, countertrend, or mean-reversion based. The character of the price action itself matters. Markets with clean tone, follow-through, and more orderly movement tend to be more favorable for systematic trading. Markets with erratic reversals, false starts, and inconsistent follow-through can be more difficult across multiple methodologies.
Tomorrow is FOMC Day. One historical observation we have seen is that periods where strategies have performed well leading into FOMC have sometimes struggled during the FOMC session itself. Conversely, periods that were choppy or difficult leading into FOMC have, in recent years, sometimes produced stronger performance on FOMC Day.
The context is worth noting.
Ultimately, regardless of the methodology—trend, countertrend, or mean reversion—we prefer to trade markets that have tone. Clean price action does not guarantee profitability, but it generally creates a better environment for strategies to execute their edge.
Additionally, the next two days after the bell and to end the month, we have 5 of the 7 Magnificent stocks reporting earnings.
Hypothetical Trading System Signals on 04-28-2026
25 System Portfolio NQ = -$20,825
7 System Portfolio NQ = -$5,925
3 System Portfolio NQ = -$3,930
2 System Portfolio NQ = -$4,385
Stock Index Portfolio 18 = -$2,760
Diversified Portfolio 57 (NQ Only) = -$5,275
Silver Portfolio = -$5,100
50K Portfolio (Micros) = -$840.50 (without Gold and Silver)