Saturday, December 31, 2016

472 Weeks in -- $22,963.28 Equity -- Up 13% For The Year...

Even though 13% gain in equity sounds OK, especially compared to the pitiful gains by CTAs this year - all of it was the gain in value of the 1330 oz.of silver being held over from last year.

It's been just over 9 years since I started this Infiniteyield Forex blog.  Of course, the bulk of posts were in the first couple of years.

I appreciate the feedback I still receive from traders that read it back then and actually tried out the concepts discussed here.  There is no substitute for proving your own edge and then trading it.  Only real, lasting, successful traders do that.

Only by the crucible of actually taking trades based on the faith of your proven convictions gets the success of having the correct (and large) positions on mammoth trends that others are too fearful of placing even token positions.

Most professional traders start being successful (and stay professional) by trading relatively simple trading systems/concepts.

Maybe they end up trading multiples of them and use sophisticated money-management, but their core trading systems tend to remain uncomplicated.

The best thing about simple systems is that they are not hard to test.

And one of the main reasons that systems like OneNightStand and FirstStrike keep generating profits for so many.  They're robust and SIMPLE.

I get emails every week from someone somewhere that's been trading ONS and/or FS for 5 years and they've been making $$$ in the Euro or Pound.  And then they've some questions about  whether it is OK to [fill in the blank...]

I don't really mind all that much, but the reason I bring it up is this:  Traders make money from taking opportunities that are only available for a very short period of time.  We must be opportunistic in how we expect to profit from those situations.  The textbook definition of opportunist is:

"Opportunists are people who see a chance to gain some advantage from a situation. An opportunist seizes every opportunity to improve things for himself."

That could mean taking ONS and finding "robust" ways to profit from it by changing the official rules of the system.  Very possible - if you have valid reasoning and proof behind your alterations.  Not just optimizing the parameters until your backtest shows a higher return.

Trading systems are just systems that profit from (human) behavioral tendencies.  If you are able to significantly "drill down" to an even more "telling" behavioral tendency..., so be it.  May the profits accrue.

I'll show you a great example.

Typically ONS is used for trading currencies like forex.  At least that is where it was discovered many years ago.

Using a little out-of-the-box thinking would get you thinking about how ONS might perform on the precious metals, because they were indeed the first official "currencies" used by humans.  To the point that there are millions of rational individuals, who right now think that gold and silver should be backing their country's currency.  Or actually be the currency that everything buy-able should be denominated in.

Trading Gold with ONS works great .   I've been trading it (along with my standard portfolio of currencies) according to the basic rules for over twenty years.  And with a deviation I'm going to show you today for the last 13.

ONS Example trades on Comex Gold in 2016:

Gold ONS Equity Curve (theoretical) 40+ years-- :

Gold tends to have 10 - 12 trades a year in ONS.  That's taking trades in both directions.

Pretty decent.  But there's another component that can bring even more edge to your profit equation.

Finite vs. Infinite

Even though a large amount of the easily obtained gold that exists on earth has been brought to the surface and is sitting in a vault somewhere, there is still plenty to be found.  Maybe deeper or in trace amounts. Nevertheless, there still is just a finite amount on this earth. No more, no less.

How about forex currencies?  

Since they are fiat currencies, they're absolutely designed to have infinite quantities created -- at will.  If the governing body of a central bank determines that they want more Euros, they push a button and BAM..., you've got more Euros.  Same with Dollars or Yen or British Pounds.

Precious metals are always priced in some currency like the USD or Euro, or Pound.  Since gold's total quantity is absolutely finite and all currencies it is denominated in are demonstrably infinite -- it is obvious that gold will be forced to rise vs currencies over any significant period of time.

Which should mean that Gold buy signals of via simple robust methods like ONS should have more potential reward vs. risk.

Gold ONS Equity Curve (theoretical) 40+ years--LONG TRADES ONLY:

For this reason I significantly increase my position size for my long ONS Gold trades.  I get greater profitability, better risk/reward and fewer trades per year (about 5 or 6 on average), reducing my exposure.

Trading doesn't have to be difficult.  Just  real data and statistics based on reliable human behavior.

Thinking helps too.

One question I've received numerous times over the last few years is,  "Why am I not keeping up the Challenge account and trading even a portion of it in Forex if the methods still work?"

Great question.

The methods (ONS and FS) still work and I actually think we are headed for some very exciting times with them starting with the conservative presidency of Donald Trump.  Money should finally start flowing to opportunity like we haven't seen in a decade.

I'm not trading the Infiniteyield Forex funds (and the subsequent reporting of said returns) because of regulations imposed since the account was started.  I was advised to back off by my attorney after similar websites received warnings from the CFTC since the Dodd-Frank Act was enacted thanks to everybody's buddy - Mr. O.

So, I've been trading my own funds -- as happy as one could in a severe environment that discouraged free trade for the last 6 - 7 years.  I know many of you understand exactly.

Best of wishes on the New Year - 2017.  May it be the best ever.


PS: Below I have the official summary of position equity for the end of 2016.  Cheers, everyone. JR

  Quick summary:

Silver value:        $21,186.90
Forex account:     $1,776.38
Total:                  $22,963.28