Buy on Monday to Beat the Market

Jan. 19, 2024

Famous self-help experts love modeling.

Success leaves clues, right?

If you want to get great results, take the attributes of people getting great results and incorporate them into your process.

So let’s model the market and try to beat it.

First, we have to assume the market always goes up. The index funders do, so we will too.

That being the case, we’ll make our system entry: Buy on Monday.

But not at the open. Too much wildness. We’ll wait for things to settle down. So we’ll buy after 1 pm ET.

However, the problem with buy-and-hold is the holding. It’s the holding that creates the awful drawdowns. To combat that, we’ll only hold our position until Wednesday. That keeps us from holding over a weekend or overstaying our welcome in a winning trade.

Next, we’ll use a “negative” risk to reward.

Index funders gladly risk a 50-80% drawdown to make 7-8% per year. That seems crazy but they think it’s great.

So we’ll make our target way less than our stop. What’s good for the goose…

Where does that leave us?

Here are the details:

The Buy on Monday ES (E-Mini) System

• Buy on Monday after 1 pm ET
• Close out at the same time as entry on Wednesday if we haven’t hit our target
• Target is 17x less than the stop (a little more than index funders but you can’t get too much of a good thing)
• Use ATR for target and stop so that we adjust to volatility over time

Will that do the trick?

Here’s the Equity Curve on the ES.D chart from 1997-2024 trading 1 contract each time:

There is a gap between equity peaks but the gap is several years less than buying-and-holding SPY.

And this strategy turns a hypothetical $10k into $93k over that time. That’s higher than SPY:

And this strategy is dramatically more profitable if you compounded yearly. Plus it has a winning percentage near 90%.

I guess modeling works.

Talk to you soon.

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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.