Rough Rice is Scary But Profitable

July 3, 2024

This week we’re talking about diversification in Futures.

In stocks, it’s almost always a bad idea.

If you want to make the most money. 

In Futures, it’s almost always a good idea.

In our last Newsletter, we looked at Rough Rice (RR) on a Daily chart. It’s looked good recently and is nicely profitable the past two years.

Here are the details to that system:

Magic Bollinger Band™ Mean Reversion RR (Daily)

• Long entry: when price crosses above the lower Band (length 55, 1.1 st dev)
• Short entry: when price crosses below the upper Band (length 50, 1.1 st dev)
• Time exit Long: 19 days
• Time exit Short: 25 days

Do you see why it’s scary?

First, there’s no stoploss. That makes everyone nervous.

Second, there’s no target. Some people don’t mind that, though.

Third, it has different settings for Longs and Shorts. Curve-fitting alert!

Fourth, it’s mean reverting. This, of course, means that it’s going to suffer during times when Rough Rice trends hard.

On the other hand, when there are no strong trends, the magic of Bollinger Bands™ could help us do very well. Here are the Annual Returns since 2018:

No losing years. That’s pretty fantastic.

But surely there are some times that have monster trends. Won’t that lead to some down years?

Yes.

Here are the Annual Returns via Portfolio Architect (in dollar amounts):

Here’s the Curve on a sample $10k account:

Despite the losing years, that Curve actually looks very good. How good?

The SPY would turn $10k into $64k in this time period.

RR hypothetically turned $10k into $83k.

That’s quite a beat-down.

Like an index fund, not having a stoploss turned out just fine.

But is there anything we can do about the losing periods?

We’ll take a look at that in the next Newsletter.

Join the free Newsletter list here .

Get Robot information HERE.
Visit my Performance Page HERE.
Buy my new book HERE.
The Inevitability of Becoming Rich is HERE.
My latest YouTube video is HERE.

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.