So Simple It Just Might Work

June 15, 2022

There’s no way of getting around it.

A painfully-mediocre system faithfully traded over the long-term will beat a vastly-superior system traded by a skeptic.

Putting 10-20% of our monthly income under the mattress for forty years will lead to a shocking amount of money when it comes time to retire.

Putting 10-20% of our monthly income into a lousy index fund for forty years has made a lot of people rich.

The mattress does not produce any excess return and an index fund produces a paltry amount of return (and sometimes none at all).

However, if you trust those two methodologies and do them long-term, the success rate is phenomenal.

When it comes to trading, doing something for a long time matters most.

How do we do something long-term?

We trust it.

How do we trust something?

Keep it simple.

The mattress is simple. An index fund is simple.

What if we used a simple trading strategy?

Back in the 3/7/2021 Newsletter, we talked about a long-term system on the 4-hour chart. We used the Master Trend robot and the RSI to enter trades.

The idea? When the RSI goes Overbought, big momentum is occurring. Let’s buy and ride that momentum. Pretty simple, right?

The RSI was set to 8 Length and Overbought/Oversold were the default 70/30 combination. The profit target was 325 pips and the stop was 130 pips. That’s it. See what we’ve done?

We’re using a well-researched indicator on a highly-trending instrument, and we’re trying to go with the trend. Our reward to risk is about 3 to 1, and we haven’t really done any optimizing. If we don’t optimize, we don’t curve fit. If we don’t curve fit, we’ll definitely get some losing.

But we’ll always be there for the trend. There’s nothing complicated preventing us from doing one simple task: follow the trend when the trend might be occurring.

So, how has this ridiculously simple system done since it was in the Newsletter over a year ago? Remember, we’ve been living in one of the most volatile trading periods in history.

Here’s how it’s done since March 2021:

It’s made over $8k using 1 lot each time with no compounding. Yes, it’s lost some trades, but it’s also been there when the trends were strong.

Dedicating ourselves to a simple system would have hypothetically turned out well for us since last March.

We’ll discuss some longer-term results in our next Newsletter.

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.