SCOTT WELSH TRADING BLOG

New Strategy, Old Fundamentals

New Strategy, Old Fundamentals

Dec. 15, 2021

I love fundamentals.

I love things that are true today and will still be true years from now.

I dislike fads. I dislike what’s hot right now.

So, naturally, I tend to dislike my most recent systems. The less they’ve traded in the live market, the less I like (and trust) them.

And what’s my most recent system? Master Trend.

I started trading it in 2021. Yes, I researched it heavily and worked on it for a long time before offering it to the public and putting it on my live accounts.

But I’ll always like older robots better than new robots. It takes time to get into my good graces.

Furthermore, 2021 was a horrible year to start trading a new robot. All markets have been twisty, manic-depressive, and nonsensical. The bullishness has been unfounded and the rejection of new breakouts has been uncommon. Hedge funds have suffered and many traders have suffered.

Knowing what I know now, I should have started Master Trend next year and hoped it wouldn’t be so odd.

However, Master Trend is a trend following robot. Trend following is not a fad. It’s not so hot right now. It’s something that has been around for a very long time and will be around far into the future.

Knowing that, maybe this year was as good as any to get started. You never know when the trends might show up.

So, how has it done? Let’s take a look.

First we’ll examine a Master Trend strategy we talked about in the Newsletter in early March. This one trades Bollinger Bandâ„¢ breakouts before 12 pm EST on the 4H chart. I gave away the settings in the Newsletter and you can see them again here:

Long Profit: 450 pips
Short Profit: 425 pips
Stop: 120 pips
Break-Even: 75 pips
Time Exit Long: 240
Time Exit Short: 110
Band Settings: 80 length, 1 standard deviation

This one’s done pretty well. Trading 1 lot each time, it’s returned $3,573 this year (on the GBPJPY): https://www.screencast.com/t/Uw1SXhmypVO

But it hasn’t been easy. Take a look at the Equity Curve:

It started the year off great and then went through some losses as the market became unpredictable. But in true trend following form, it came back as the consistent trends came back.

On a hypothetical $20k account, it would be up about 17% in 2021. (It would be up more with a smaller account and less on a higher account; and this test didn’t use an aggressive trade size).

A new strategy starting in 2021 had every reason to do poorly. But this Master Trend chart has done pretty well.

The takeaway? Fundamentals have a chance to do well in any environment.

But is this a one-off?

We’ll find out as we look at more charts in the Newsletters this week.

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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.