What is the probability that a system with 8 years of outperforming the market will continue to do so? I wish I had that exact answer, but I can say that, for now, it’s the best system available.
It is currently experiencing a drawdown of $11,395, and on Friday it triggered a long entry in the Nasdaq.
The most favorable environment for this system is an upward-trending market (though it also takes short positions).
In a previous article, we explained that a short- to medium-term investor should not tolerate more than double their maximum drawdown, set at $36,040
Advantages
– The best track record available
Disadvantages
– Psychologically challenging and requires iron discipline
If you’ve been waiting for a good time to enter, this is a very attractive opportunity, as the Nasdaq is in a strong uptrend and the system is already positioned long. To maximize its potential, it’s best to activate it right away instead of waiting for the next trade, given that the current market environment is particularly favorable.
Historically, the results of Joseja 2 mini Nasdaq in January have been as follows:
It’s important to stress that waiting for the next trade is not advisable, as the current environment and the possibility of repeating a strong January like last year call for immediate activation. If the trend continues, we could see a very positive month.
The arrival of Donald Trump at the White House creates a fairly optimistic scenario for these types of strategies.
And remember, trade like a bot.
If it fails to break the 21600 resistance and goes short at 21200, would it be better to disable the system and reactivate it when it goes long again on the second attempt at a breakout?
The temptation to focus solely on long positions, based on their historical profitability and the Nasdaq’s performance, is understandable. However, it is essential to review all the figures: in 2022, the Nasdaq retreated more than 30%, while this system achieved a gain of $43,815—equivalent to 35% of the current suggested capital of $125,000. In 2018, the Nasdaq fell 3%, while this system gained 17.5%. Technical analysis relies on historical data, and uncertainty is normal when investing in these instruments, as there is no record of a system that has beaten the market for 20 consecutive years. Algorithmic trading is maturing, and the evolution of these systems has never been shown so transparently. It is your responsibility to analyze the numbers thoroughly. I am also learning as the market evolves.
2017 and 2021 were both post election years with transition years with January as a loosing month. Just observing. But my question would be if a trader should consider getting out of markets in transition periods?
I wouldn’t exit the market during those periods. Adjust your positions, use hedges and stops, but don’t step away entirely: there are also opportunities in transitions, unless for some reason you don’t feel comfortable trading in those years.
Thanks Javier. So far the trade looks great!