Rules-Based Strategy Update: TQQQ Trend Following October 2018
The TQQQ Trend Following system is a modified buy and hold system that uses a 3x leveraged ETF that tracks the Nasdaq 100 (QQQ). The Trend Following component means that the system will buy and sell TQQQ based on where QQQ trades in comparison to its moving averages.
Since this uses a leveraged ETF, the system has a higher degree of risk. However, by using trend following principles the risk is managed to a more appropriate level. That said, there may be times when the system goes into a big drawdown before the end of the month, which means that having some intestinal fortitude to hold through those periods is important.
You can continue to see the progress results of this system by subscribing to the Robotic Investing newsletter. I will email you whenever a new post goes live, including all of the strategy updates I track on the site.
I am also working on a new TQQQ system that I plan to add to the site in the coming months. Just working on the system a bit more so stay tuned.
TQQQ Trend Following Rules-Based Investing
This portfolio trades based on specific rules that tell the investor when to buy and sell TQQQ. Here are the rules of the strategy:
- TQQQ must be in a positive uptrend to trade. It must be trading above its 200 and 50 day simple moving average. If not, then TQQQ is not purchased.
- TQQQ is purchased at the Open following two consecutive days trading above the 200 day simple moving average.
- Set a trailing stop at the 50 day simple moving average.
- If TQQQ closes below the 50 day simple moving average, then sell next day at the Open.
- As long as TQQQ continues to trade above the 200 day simple moving average, then repurchase TQQQ at the open on the third day after the two previous closes were above the 50 day simple moving average.
Again, this is a riskier strategy but has provided solid returns in the past. Using the market filter lowers drawdowns (see more in this post: TQQQ Trend Following).
Signals: TQQQ Trend Following
Each month I generate the signals for the portfolio using TC2000. If you want to give TC2000 a try in order to generate the signals for the strategies on Robotic Investing, then use this link for $25 off.
There is no change for September 2018 – the system continues to hold TQQQ.
Using the chart in TC2000, it is easy to see that the QQQ is trading above the 200 and 50 day moving average on a daily chart:
Strategy Tracking & Performance: TQQQ Trend Following
Here is the portfolio tracker and performance chart for TQQQ Trend Following. The Morningstar Portfolio Tracker is used to track all the systems at Robotic Investing. As you can see the strategy performed better than the S&P500 over the month.
Each of the portfolios tracked use a hypothetical $50,000 starting value. This portfolio was started on July 2nd, 2018.
I update all of the strategies at Robotic Investing on a monthly basis. If you want to get notified when each strategy is updated, then please consider subscribing to my newsletter. You will only receive emails when posts have been updated.
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