Watching the Bear Market Engage & Capturing It

Sections in this report

1)_Educational videos & resources on the instrument were trading
2) 1 July 1980  to 14 August 2019 EMA performance summary (using weekly)
3) Full disclosure of trading procedure
4) Verifying performance 1 July 1980 to 14 August 2019
5) Trading multiple time periods simultaneously 120, daily, weekly & monthly
6) Allocation strategy for trading multiple time periods
7) Links & instructions to track trades forward as they occur
8) Other ATAs traded, links to their performance, disclosure of  methodology
9) Creating your own ATA portfolio using any ATAs & leverage of your choice

2019 = Opportunity

Volatility and Bear markets are nothing new, traders like myself look forward to them.

Although I always trade with the trend up or down my profit/loss statements tell me over the last 25+ years bear markets generally have higher return on risk and make more in a shorter period of time. Looking at the chart below, I think you can appreciate the potential I see trading this market lower.

1983 through 2019 chart

1) Educational videos & resources on the in instrument traded

1.01) What is an Equity Index Futures?
1.02)
About S&P Futures and Contract Specifications?
1.03) Definition of Margin?
1.04)
The Benefits of Futures Margins?
1.05)
Fundamentals and Equity Index Futures
1.06)
Who Uses Equity Index Products?
1.07)
Why Trade Futures Instead of ETFs?
1.08) Futures Educational Videos & Resources

2) One proven solution to capture the move

The ATA trading methodology disclosed in this report is easy to understand, implement, captured the majority of every major up and down trend since 1980, outperformed the market and the majority of  ETF’s and  Hedge Funds we track.

Performance Summary 1 July 1980 through 14 August 2019

2.01) Performance is calculated trading one S&P E-Mini (ES) 1.00 = $50.00  from 1 July 1980 through 14 August 2019, never adding positions, assuming worst case order execution and deducting a ridiculously high $100.00 per round-turn trade to cover any bid/ask spreads, order execution issues, clearing and regulatory cost. For those just venturing into the world of trading ATAs there is a micro contact 1/10th the size of an E-Mini see S&P Micro (MES) 1.00 = $5.00.

Performance Summary  From 1 July 1980  to 14 August 2019
Start Date 28-Jul-1980 S&P 1980 – 2019 2,251.88%
End Date 31-Jul-2019 Net No leverage 3497.28%
Net Gain $211,200.50 Net 2 to 1 leverage 6,994.55%
Max-Draw -$13,973.00 Net 3 to 1 leverage 10,491.83%
Winning % 62.50% Net 4 to 1 leverage 13,989.10%
AVG Winner $11,164.11 S&P E-Mini (ES) 1.00 = $50.00
Losing % 37.50% S&P Micro (MES) 1.00  $5.00
AVG Loser -$1,814.71 Index Educational Videos & Resources
– Per Trade $100.00 Message me with any questions

You can set this program up as an Automated Trading Account (ATA) using the S&P E-Mini (ES) 1.00 = $50.00 or the S&P Micro (MES) 1.00  = $5.00.  for the performance of other ATAs see this page.

3) Trading Procedure

Longs
If price action is above the EMA9 and the EMA9 is above the EMA18 = long
Risk on long positions, if the EMA9 moves below the EMA18 exit longs and reverse to short.

Shorts
If price action is below the EMA9 and the EMA9 is below the EMA19 = short.
Risk on short positions, if the EMA9 moves above the EMA18 exit shorts and reverse to long.

The EMA4.5 crossing the EMA9 and EMA18 is a wake up call warning you to get prepared to modify your position should the EMA9 cross the EMA18.

There are no secret filters, no stops, no holy grail algorithms and you don’t require a direct line to Fed Reserve chair Powell to trade this.

4) Qualifying this procedure over the last 39 years in less than 5 minutes

To make performance verification easy I’ve divided the last 39 years into 13, 3 year periods, circled all trades and linked all charts for with trade date & price, entries & reversals enabling to easily verify performance. If you’d like to use the spreadsheet rather than the links below download it here open and enable editing, some operating systems may require you to save it as a new file.

Procedure, EMA9 above EMA18 = long,  EMA9 below EMA18 = short, that’s it, clean and easy to verify, cumulative performance is on your right.

Period 1  July 1980 – July 1983

Date & Chart L or S Price Value Profit/Loss Cumulative
28-Jul-1980 Long 120.78 $6,039.00 $0.00
06-Jul-1981 Short 129.37 $6,467.50 $329.50 $329.50
06-Sep-1982 Long 120.97 $6,048.50 $320.00 $649.50

Period 2  July 1983 – July 1987

Date – Chart L or S Price Value Profit/Loss Cumulative
30-Jan-1984 Short 160.91 $8,045.50 $1,897.00 $2,546.50
14-Jan-1985 Long 171.32 $8,566.00 -$620.50 $1,926.00
06-Oct-1986 Short 233.84 $11,692.00 $3,026.00 $4,952.00

Period 3 Chart July 1986 – July 1989  &  Daily here for 1987 crash

Date – Chart L or S Price Value Profit/Loss Cumulative
03-Nov-1986 Long 245.77 $12,288.50 -$696.50 $4,255.50
15-Oct-1987 Short 298.08 $14,904.00 $2,515.50 $6,771.00
06-Jun-1988 Long 266.45 $13,322.50 $1,481.50 $8,252.50

Period 4  July 1989 -July 1992

Date – Chart L or S Price Value Profit/Loss Cumulative
15-Jan-1990 Short 339.93 $16,996.50 $3,574.00 $11,826.50
07-May-1990 Long 340.53 $17,026.50 -$130.00 $11,696.50
30-Jul-1990 Short 344.86 $17,243.00 $116.50 $11,813.00
14-Jan-1991 Long 332.23 $16,611.50 $531.50 $12,344.50
18-Nov-1991 Short 376.14 $18,807.00 $2,095.50 $14,440.00
23-Dec-1991 Long 387.05 $19,352.50 -$645.50 $13,794.50

Period 5  July 1992 -July 1995

Date – Chart L or S Price Value Profit/Loss Cumulative
28-Sep-1992 Short 414.27 $20,713.50 $1,261.00 $15,055.50
26-Oct-1992 Long 418.68 $20,934.00 -$320.50 $14,735.00
28-Mar-1994 Short 460.58 $23,029.00 $1,995.00 $16,730.00
01-Aug-1994 Long 458.28 $22,914.00 $15.00 $16,745.00
21-Nov-1994 Short 461.69 $23,084.50 $70.50 $16,815.50
16-Jan-1995 Long 464.78 $23,239.00 -$254.50 $16,561.00

Period 6  July 1995 – July 1998 The EMA9 never crossed below the EMA18, the long was maintained during this 3 year year period.

Period 7  July 1998 – July 2000

Date – Chart L or S Price Value Profit/Loss Cumulative
03-Aug-1998 Short 1089.45 $54,472.50 $31,133.50 $47,694.50
26-Oct-1998 Long 1070.67 $53,533.50 $839.00 $48,533.50
27-Sep-1999 Short 1282.81 $64,140.50 $10,607.00 $59,140.50
25-Oct-1999 Long 1362.93 $68,146.50 -$4,106.00 $55,034.50

Period 8 July 2000 – July 2003

Date – Chart L or S Price Value Profit/Loss Cumulative
25-Sep-2000 Short 1450.30 $72,515.00 $4,268.50 $59,303.00
24-Dec-2001 Long 1161.02 $58,051.00 $14,364.00 $73,667.00
28-Jan-2002 Short 1122.20 $56,110.00 -$2,041.00 $71,626.00
04-Mar-2002 Long 1164.31 $58,215.50 -$2,205.50 $69,420.50
15-Apr-2002 Short 1125.17 $56,258.50 -$2,057.00 $67,363.50
28-Apr-2003 Long 930.08 $46,504.00 $9,654.50 $77,018.00

Period 9 July 2003 – July 2006

Date – Chart L or S Price Value Profit/Loss Cumulative
12-Jul-2004 Short 1101.39 $55,069.50 $8,465.50 $85,483.50
06-Sep-2004 Long 1123.92 $56,196.00 -$1,226.50 $84,257.00
18-Apr-2005 Short 1152.12 $57,606.00 $1,310.00 $85,567.00
23-May-2005 Long 1189.28 $59,464.00 -$1,958.00 $83,609.00
10-Oct-2005 Short 1186.57 $59,328.50 -$235.50 $83,373.50
31-Oct-2005 Long 1220.14 $61,007.00 -$1,778.50 $81,595.00
05-Jun-2006 Short 1252.30 $62,615.00 $1,508.00 $83,103.00

Period 10 June 2006 – July 2009

Date – Chart L or S Price Value Profit/Loss Cumulative
21-Aug-2006 Long 1295.09 $64,754.50 -$2,239.50 $80,863.50
30-Jul-2007 Short 1458.93 $72,946.50 $8,092.00 $91,195.00
17-Sep-2007 Long 1484.24 $74,212.00 -$1,365.50 $89,829.50
05-Nov-2007 Short 1453.53 $72,676.50 -$1,635.50 $88,194.00
04-May-2009 Long 879.21 $43,960.50 $28,616.00 $116,810.00

Period 11 July 2009 – July 2012

Date – Chart L or S Price Value Profit/Loss Cumulative
17-May-2010 Short 1136.52 $56,826.00 $12,765.50 $129,575.50
06-Sep-2010 Long 1109.25 $55,462.50 $1,263.50 $130,839.00
01-Aug-2011 Short 1286.94 $64,347.00 $8,784.50 $139,623.50
17-Oct-2011 Long 1224.47 $61,223.50 $3,023.50 $142,647.00
14-May-2012 Short 1351.93 $67,596.50 $6,273.00 $148,920.00
02-Jul-2012 Long 1362.33 $68,116.50 -$620.00 $148,300.00

Period 12 July 2012 – July 2015 The EMA9 never crossed below the EMA18, maintained the long for this 3 year year period.

Period 13 July 2015 – Current

Date – Chart L or S Price Value Profit/Loss Cumulative
17-Aug-2015 Short 1970.89 $98,544.50 $30,328.00 $178,628.00
12-Oct-2015 Long 2033.11 $101,655.50 -$3,211.00 $175,417.00
04-Jan-2016 Short 1922.03 $96,101.50 -$5,654.00 $169,763.00
07-Mar-2016 Long 2022.19 $101,109.50 -$5,108.00 $164,655.00
08-Oct-2018 Short 2767.13 $138,356.50 $37,147.00 $201,802.00
04-Feb-2019 Long 2707.88 $135,394.00 $2,862.50 $204,664.50
23-Jul-2019 Settle 2951.90 $147,595.00 $12,101.00 $216,765.50

5) Trading multiple time periods simultaneously

In this example I’m trading the same EMA4.5, EMA9 and EMA18 on 4 different  time periods, 120 minute, daily, weekly and monthly simultaneously over an 18 month period.

I’ve deducted $38.90 per round-turn trade to cover all bid/ask spreads, clearing, and regulatory fees including automated order entry and 24 hour a day position monitoring. Using an ATA I’m paying the brokerage team in Chicago to place and monitor all trades for me, guarantee order accuracy and maximum account risk (called a maintenance balance) defined in writing before the first trade goes on.

6) Performance

Linked Here is a spreadsheet containing the trade-by-trade performance, I’ve  linked all charts with entry, offsets, dates & prices enabling easy performance verification, download, open and enable editing (with some operating systems you may have to save it as a new file)

On the spreadsheet you can change the number of contracts traded for each time period in cells B5, B7, B9 & B11. To change the staring balance see cell D3, contract size cell B3, use $50.00 a point for trading the S&P E-Mini (ES) or $5.00 a point for S&P Micro (MES) , to modify the Bid/Ask spread and all fees deducted per trade change cell B13 to $39.80 for the S&P E-Mini (ES) or $12.95 for the S&P Micro (MES), margin requirement, cell B15, use $6,300 for S&P E-Mini (ES) or $630 for S&P Micro (MES).

Performance below is based on trading one E-Mini S&P (ES) contract for each time period, 120 Minute, Daily, Weekly and Monthly.

Performance dates from 1 January 2018 to 14 August 2019

Net profit = $163,147.10
Maximum drawdown = -$23,158.90
Drawdown period 26 March 2018 – 6 July 2018
Total number of trades = 180
Average winning trade = $2,565.57
Average losing trade = $819.64
Percent winning trades = 41.67%
Percent losing trades = 58.33%
Maximum margin requirement = $25,200 (shown in cell D17)
Closed out trades = $140,798.40 (shown in cell D13)
Open trade equity (14 August) = $23,348.60 (cell D15)
Starting balance 2 January 2018 = $100,000.00 (cell D3)
Ending balance 28 June 2019 = $263,147.00 (cell D17)
Trade-by-trade performance = vertical column M

Linked Here is the spreadsheet containing the trade-by-trade performance and all links for performance verification.

7) To track this procedure forward

Follow procedure reviewed in section 3, use the same procedure for all 4 time periods, EMA’s are already dropped into to charts, charts are updated every 10 minutes enabling you to track trades for the period(s) of your choice as they occur.

Using 120 minute price bars this chart
Daily price bars this chart
Weekly this chart
Monthly this chart

When all 4 periods generate a short you’ve just confirmed the beginning of the next bear market, 119 years of price history tells us we won’t see a new significant high for a minimum of 2 years up to 13.5 years.

Obviously you can enhance performance using additional indicators for trend confirmation like the ones linked here, trading additional time periods simultaneously and/or implementing strategies like collars that define risk on every trade and for the duration of every trading period. I did this spreadsheet a few years back on collars and dropped in an instructional video into the spreadsheet on how to set up a collar, experiment with different collar strategies and time periods.

8) Here’s a line up of  some of the more basic programs that use enhanced EMA strategy.

All trade with the trend long or short using fully disclosed trading methodology. Message me with a date, time, contact details and I’ll walk you through any of them, when we’re done you’ll be able to duplicate trades and performance.

Link ATA Mini-mum Start Date Average Per Year Maximum Drawdown 2019
8.01 GSI-NC 250K 2011 63.31% 22.46% 35.73%
8.02 FX-C 100K 2007 75.82% -25.07% 12.14%
8.03 GE-F 50K 2014 104.43% -31.27% 122.82%
8.04 CFD-NC 50K 2015 94.31% -33.99% 72.66%
8.05 FX-C 2X 50K 2007 151.63% -50.14% 24.32%
8.06 S&P-NC 35K 2011 98.83% -54.45% 78.13%
8.07 GC-NC 30K 2009 105.27% -39.68% 148.63%
8.08 LS-R 30K 2015 84.09% -47.39% 9.71%
8.09 GC-C 25K 2005 105.18% -49.10% 106.14%
8.10 FX-NC 25K 2012 96.30% -51.89% 68.34%
8.11 S&P-C 25K 2007 113.28% -49.83% 65.06%
8.12 WFX-NC 25K 2010 103.15% -48.77% 15.75%
8.13 FX-CA 25K 2007 128.93% -54.85% 13.06%
8.14 SPM-NC 12.5K 2011 92.23% -53.31% 59.83%
8.15 LSR -M 10K 2015 89.78% -47.36% 27.63%
8.16 WFX-ST 7.5K 2016 118.09% -66.08% 31.57%

Automated Trading Accounts enable you to trade any combination of programs automatically with overall account risk defined before the first trade goes on.

9)  See this link  to create your own portfolio using any combination of   programs.

10) Controlling Overall Account Risk

Initial Balance = Starting Amount
Maintenance Balance = Account balance if hit all positions are liquidated.
Video Defining Overall Account Risk.

When I trade these programs I like to define the overall account risk before the first trade goes on, should the program fail I’m out, as the program makes money I move the maintenance balance higher to lock in gains in the event the program fails in the future. I’ll stay with the program as long as it performs and my maintenance balance isn’t violated. I’ve come to the point where I look at these programs as if they were one trade with a stop loss based on account valuation to cauterize any potential financial hemorrhage enabling me to survive and trade another day, for more on initial and maintenance balances see this link.

11) If you’re going to track your ATA or trade this strategy on your own get organized.

Set up your platform by sector, in the example below one glance at the EMA 4.5,9,18 Index profile page gives me all the information I need to track the 9 Stock Indices I’m in trading using these EMAs on 5 different time periods per Index.

List your market symbols alphabetically left to right, time periods traded vertically shortest to longest in descending order, this enables you to sort trades alphabetically & time, look at the charts and knock out ATA trade and position confirmations quickly.

You should be able to fit up to 9 markets across, 5 time periods deep.

When your trading 5+ time periods in 45+ markets, set up different profile pages using the exact same format for each, in this example FX1, FX2, FX3, FX4, FX5.

One glance at each the FX profile page tells me the direction for each market, each time period and which markets have the cleanest trends to trade allowing me to check my positions quickly and confirm the ATA team is doing their job correctly.

FX2

FX3

FX4

FX5

Once you get the hang of it you can go though 45 different markets trading 5 time periods in each in less than 5 minutes.

When your trading, Indices, Currencies, Energies, Interest Rates, Individual Stocks, ETFs and CFD’s using multiple time periods its easy to have several hundred positions on in multiple accounts at once, it’s imperative to stay organized and always have a one click eject button in place enabling immediate liquidation of all positions and/or to cancel all open orders. Have another for every sector, one for each program and one for all positions in a given market, you’ll probably never use them but it’s nice to know they’re there if things get quick & nasty.

11) Be prepared for volatility

There is a very big difference in order execution capabilities in 2019 versus all other bear markets in history, internet speed and computer capability are literally 10 times faster in 2019 than 2007, in 2019 order execution is 100’s of times faster, we’ve gone from flip phones and open outcry on the Exchange floor to online order execution in nano seconds in 2019.

5 February 2018 chart using 10 minute bars

Going to be a fun year packed with major market moves in just about every sector.

12) Analysis pages & quick links for every major Stock Index, updated every 10 minutes.

# Analysis Page Hour 2 Hour Day Week
Trend
12.01 S&P 500 H 2H D W T
12.02 NASDAQ H 2H D W T
12.03 Dow H 2H D W T
12.04 Russell 2000 H 2H D W T
12.05 Euro Stoxx 50 H 2H D W T
12.06 Euro Stoxx E600 H 2H D W T
12.07 DAX Index H 2H D W T
12.08 CAC 40 H 2H D W T
12.09 Swiss Index H 2H D W T
12.10 Hang Seng H 2H D W T
12.11 Nikkei H 2H D W T
12.12 ASX 200 Index H 2H D W T
12.13 FTSE 100 H 2H D W T

13) Analysis pages for Currencies, Metals, Energies, Rates, CFDs, Individual Stocks & ETFs, updated every 10 minutes.

14) Services we provide, rankings reports and asset allocation software we use.

15) Educational videos & resources

15.01 Futures General Information
15.02 Options General Information
15.03 Currency Futures
15.04 Stock Index Futures
15.05 Interest Rate Futures
15.06 Metals Futures
15.07 Energy Futures
15.08 CME Learning Center
15.09 Futures Fundamentals
15.10 Education Material
15.11 Resource Center
15.12 Research Reports
15.13 Podcasts
15.14 Monthly FX Review
15.15 Media Room

16) Account minimums USD or major currency equivalent

Futures & Forex ATAs, $7,500 to $100,000 (open to all investors)
Stocks & ETF ATAs, $100,000 to $2,500,000 (open to all investors)
CTA & Hedge Funds $250,000 to $10,000,000 (Must be a QEP)
How To Open An Account

If you have questions send a message or contact me anytime.

Regards,
Peter Knight Advisor
Asset Investment Management

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Risk Disclosure     Defining Overall ATA Account Risk

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