Open Range has been the top signal generator in our automated trading systems portfolio since February 1. It has remained in sync with a noisy and chaotic market regime marked by volatility, uncertainty, and geopolitical stress.

The stock indexes can be difficult to trade when the market is constantly shifting between sharp reversals, sudden rallies, and heavy selling pressure. But this is also the type of environment where a disciplined, rules-based strategy can identify opportunities that discretionary traders may struggle to hold through.

Cutting Losses and Riding Winners

The Open Range strategy is designed to cut losses quickly and ride winners when the market finally produces a larger move. This is not a strategy built around being right on every trade. It is built around asymmetry.

One way to lock into this type of regime is to wait through three or four losing trades in a row and be willing to risk four or five consecutive losses before capturing a larger winning trade. That can be difficult psychologically, but it is part of maintaining the integrity of the system.

This Strategy Is Not for Every Trader

The Open Range strategy is not designed for traders who:

• Need a high percentage of winning trades.
• Need to micro-manage a strategy while it is in a trade.
• Need to trade for immediate income.

This is a strategy developed for growth. To give the strategy the best chance to perform as designed, its rules and structure must be maintained.

Why the Current Regime Matters

The market regime since February 1 has been different than the strategy’s longer-term history. In this video, we review how Open Range has performed in the current environment and compare that to the broader historical risk profile going back to January 1, 2020.

We also discuss an updated version of the strategy that includes one additional selective filter. The goal of this filter is not to force more trades, but to be more selective in the types of market conditions where the strategy participates.