The dip-buying strategy worked as expected. On tomorrow’s open I will close all 5 positions, 4 of which will likely close with profits. For this round of dips, 4 of 7 are probable winners, making a 57% win rate.
Open Positions
Tomorrow evening I will post the exact exit prices, and then we can see if the system made any money on this battery of trades.
Finishing Touches
Optimization of the Power Dip position-sizing method suggests that the maximum number of positions held at one time could be greater than 5, and likely closer to 10. The positions above have been traded at 2% risk per trade. Risk will have to be reduced to 1% in order to include more than 5 positions, or there will not be enough capital. Future dip buying trades will be position-sized at 1% risk.
Good stuff, Dr. Woodshedder…
Whats your outlook on the short-term? Arent we suppose to test the 50EMAs on the SPX?
Mike, it would appear we are going to test the 200 day first.
Remember, tops take a lot longer to form than bottoms. Think of an animal in the throes of death. Most creatures don’t just give up. Neither will the creatures of the market.
But of course, there will be a 50 day test. Whether it is sooner or later, who knows.
I just turned very bearish when the QQQQ’s (previous leaders) couldnt hold out the 200EMA. In fact, last week there was a clear break down and momentum showed it.
What do you think? QQQQ’s will return above 200EMA?