Building a Portfolio (And Good, Sharable Ideas)

Building a Portfolio (And Good, Sharable Ideas)

July 17, 2023

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Lately, I’ve seen a really fun trend.

More and more, people have been taking the free ideas in the Newsletter, tweaking them, and emailing me with some excellent solutions.

Which is the whole point of the Newsletter.

I try to present well thought-out ideas, but there’s no way anyone can see every possible angle.

If you read something that’s useful and make it better, it would be awesome if you shared it. Then I can share with the group.

And the virtuous circle of beating the market grows.

So, thank you for your emails. And hopefully, here’s another interesting idea.

I got an email the other day asking for an expansion on the Daily RSI ES system last week. He said he’d like to see what a portfolio might look like.

Sounds fun.

Keep in mind, we’re going to keep it very simple. It’s easier for discussion purposes and we have noticed that simple many times works better.

We’ll start where we ended last week, with the Daily RSI ES.D system. Here again were the Annual returns trading 1 hypothetical lot each time:

This one had a very high win rate and excellent hypothetical return numbers.

The problem was the two straight losing years.

Does an index fund have two straight losing years? Of course.

Do people care about that? No.

Should people care about a good system that has two small losing years? No, in theory.

But, unfortunately, traders can take a losing year as well as they can take a sharp stick in the eye.

So, can we make this better?

We can, theoretically, if we add another system.

But what kind of system?

Common sense would say that this next system would have to be completely different and uncorrelated.

However, what if we like indexes? We understand them, they’re super liquid, and they’re easy to follow. I don’t want to add a different session time, different dollar amounts per point, and an instrument I have no understanding of how and why it trades.

Can another index help our portfolio?

Yes. If we change the timeframe.

Surprisingly, we can get diversified uncorrelation just by taking the same instrument and using a different time window.

So, in our next Newsletter, that’s what we’ll do.

We’ll add another ES chart and see if that helps.

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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.