The Pearl Harbor system, designed to operate in the E-mini S&P futures market, has demonstrated consistent and positive performance since its launch on March 27, 2023. Since that date, it has recorded a total of $62,827 in gains, showcasing its potential for recent performance. However, as with any leveraged strategy, it is crucial to set clear limits to manage risk and maximize returns, especially in volatile markets.
Monte Carlo Simulations and Drawdown Analysis
To evaluate potential future scenarios and provide a more precise understanding of risks, Monte Carlo simulations were conducted based on the system’s historical performance. These simulations offer a detailed perspective on the system’s behavior across different investment horizons and allow for forecasting the impact of potential drawdowns (losses).
Short-Term Scenarios: In the past year, no simulation has exceeded a drawdown of $17,824, demonstrating that the system maintains great stability even in adverse market conditions over the short term.
Scenarios from 2017 to 2024: Simulations covering the period from the system’s launch in 2017 to 2024 reveal a few instances where the drawdown exceeded $17,824. This underscores the importance of considering longer investment horizons when assessing risks, particularly for more conservative long-term investors.
Average and Median Drawdowns:
- Average Drawdown: $20,0063.06
- Median Drawdown: $18,711.12
- Max Drawdown: $48.695.12
Distribution of Results: The distribution analysis suggests that extreme drawdowns are highly unlikely, allowing investors to set a reasonable trailing stop without compromising the system’s potential.
Exit Strategies for Different Investment Horizons
The Pearl Harbor system has proven to be reliable for short-term investors, but the exit strategy should be adjusted to market conditions and the investor’s objectives.
For Short-Term Investors:
The recommended trailing stop is twice the worst historical drawdown, i.e., $20,936. This limit provides effective capital protection while allowing the system to operate flexibly over the short term.
For Long-Term Investors:
For long-term investors, the exit threshold should be set at $48,695, which is the worst drawdown observed in the simulations. Although this event is unlikely, it is important to be prepared for any scenario where capital risk becomes significant, warranting the system’s deactivation.
Exit Rules:
- Trailing Stop for Short-Term Investors: Set a limit of $20,936 (twice the worst historical drawdown) for the 2025-2026 period.
- Exit Threshold for Long-Term Investors: Set a limit of $48,695.59 as the maximum allowed drawdown before considering exit.
Liderbot’s Opinion
If you are already part of the Pearl Harbor system, the recommendation is to maintain the position with a trailing stop set at twice the worst historical drawdown for 2025-2026, i.e., $20,936.
Given that Pearl Harbor has a shorter track record than the Joseja 2 Mini Nasdaq system, it makes little sense to take on greater long-term risk at this time. It is preferable to adopt a more cautious approach and protect capital in the short term, especially when performance history is limited.
If you have not yet invested, there are currently more affordable options in the market that may better suit your risk profile. A viable option is to create a diversified portfolio that combines multiple investment systems with a lower initial capital requirement, allowing you to reduce risk and improve portfolio management without committing a large amount of capital to a single strategy.
The key is to tailor your investment strategy to your risk profile and avoid concentrating your entire investment in a single system, especially one with limited historical data and in potentially volatile markets.
Disclaimer: The information provided in this article is for informational and educational purposes only and does not constitute financial or investment advice, nor does it guarantee any results. Investments in financial markets, including leveraged strategies like those described, involve significant risks, including the potential loss of all or part of the invested capital.