Beets, Bands, and Bears

July 10, 2022

This week we’re trying to find ways to handle a scary Bear Market.

QUESTION: What kind of Bear Market strategy is best?

We’ve already learned this week that dividends can make money during a “bad” market and a moving average strategy can thrive. Is there anything else?

Yes. Bollinger Bands™.

Volatility bands are useful because they tell us when things have gotten crazy. Inside the Bands, boring. Outside the bands, a savage trend might be forming.

By trading when price moves outside the bands, which they will do in Bear Markets, we can possibly make good money. Let’s take a look.

Here’s a simple system using Bollinger Bands™ on the GBPJPY using a long-term, 4-hour chart. You can see all the details of this system in this video: https://youtu.be/kOFlnvXfYVg?t=1231

How has this simple volatility breakout system done in the scary Bear Market of 2022?

It’s done remarkably well. It’s created over $19,000 of hypothetical profit on a hypothetical $30k account. That would be a 63% return in these scary times. Oh, and only an 8% drawdown.

That’s better than beets or Battlestar Galactica.

There’s no reason we have to buy-and-hold. We could do other things. We could let the horrible performance of our buy-and-hold accounts nudge us in a different, more profitable direction.

As we’ve said, scary times can be the best times.

If we’re willing to consider other things.

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Disclaimer:
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.