Just last week I was interviewed by Better System Trader for an upcoming podcast. I always enjoy discussing trading and trading system approaches with other system traders because these types of interviews always re-challenge my own thinking and understanding of what I do since other's perceptions can bring out new thoughts. The podcast will be out next week (and I will send you the link when it is out) and one of the questions was about my Money Management Algorithms.
Here's the deal. I prefer to develop a strategy for a particular regime and then trade it when it is doing well instead of trying to determine the start and end of a regime. I find it easier to manage a strategy than to predict the market regime. Regime changes happen quickly and are difficult to spot until the pattern is well developed. The Money Management Algorithms help me determine when a system is doing well.
Exhaust and Reverse is a prime example of a simple strategy that works well in a low volatility, melt up, bull market regimes. It will lose big time though in a high volatility bear market. This strategy includes periods of time where the equity curve is amazing while there are other periods of time, when the equity curve does poorly.
In the video below we go over the details of this strategy and how applying a simple open equity dual period moving average to both the 1 minute and 5 minute version of this strategy helps to boost average trade profit and lower drawdowns as well as "side step" the bear markets of this long only strategy.
I have decided to include the open code for Exhaust and Reverse E-mini S&P with the workspace from the video below in the Members Area for the Money Management Algorithms.
Melt up bull markets come and go and are not easy to day trade or swing trade. This is a strategy that you can add to your current portfolio.
If you have the Money Management Algorithms, you can login to the Members Area below later this afternoon to download the update (give me a few hours). The updates will include both Tradestation, MultiCharts, and NinjaTrader 8.
If you do not currently have the Money Management Algorithms, you can learn more about how this tool is available to you to help you manage your trading strategies and get access to this open code strategy when you become a member.